Borouge’s planned maintenance to impact its output by 0.5 million tonnes in 2024

Abu Dhabi-headquartered leading petrochemical company, Borouge Plc, is likely to witness a substantial impact on its annual production volume due to the planned maintenance shutdown of its plants in the calendar year 2024. Sources have indicated that the company’s overall production may decline by 0.5 million tonnes, comprising 10 percent of Borouge’s annual output, because of the plant closure for maintenance.

“In line with a commitment to operational excellence, the Borouge 3 plant and associated feedstock operations are scheduled for a planned maintenance shutdown in the calendar year 2024. The rigorous approach to maintenance ensures optimal reliability, contributing to the quality and operational excellence that provides a key comparative advantage for Europe,” the company said in a report. However, the details of the planned maintenance could not be ascertained, but analysts forecast the information to be announced later this year.

Listed on the Abu Dhabi Securities Exchange, Borouge is a leading petrochemical company that provides innovative and differentiated polyolefin solutions for the infrastructure, energy, mobility, healthcare, agriculture, and advanced packaging industries. The company employs more than 3,100 people and serves customers in over 86 countries across Asia, the Middle East and Africa. Founded in 1998 through a strategic partnership between ADNOC and Borealis, Borouge was formed to build and operate a polyolefins complex in Al Ruwais Industrial City, United Arab Emirates, which today is one of the world’s largest integrated polyolefin complexes. ADNOC owns a majority 54 percent stake and Borealis holds a 36 percent stake in the company.

Expansion project on track
Borouge has been focusing on value creation with continuous expansion in production capacity and required investment. The company is actively advancing its polyethylene production capabilities, with the ongoing Borouge 4 project, under the ownership of ADNOC and Borealis. The facility is expected to be completed in 2025 and is set to expand its capacity by over 30 percent or 1.4 million tonnes per annum (MTPA) to a full production capacity of 6.4 MTPA. This strategic project is pivotal to the company’s strategy to achieve sustained growth and will support the delivery of its growing product portfolio. The petrochemical company also continues to explore international expansion opportunities.

The company operates state-of-the-art manufacturing facilities in Al Ruwais, one of the world’s largest integrated polyolefin complexes. The company achieved outstanding production utilization rates in 2023, with fourth-quarter polyethylene (PE) production reaching 112 percent and polypropylene (PP) production at 99 percent. This contributed to total production volume increasing 6 percent in 2023, despite the successful Borouge 2 plant turnaround impact.

2023 net profit at US$1-bn
Borouge Plc which provides innovative and differentiated polyolefins solutions, has delivered a strong performance in the fourth quarter of the calendar year 2023, reporting a 16 percent year-on-year increase in net profit to US$288 million, bringing full-year net profit to US$1 billion. The company maintained its performance trajectory, with fourth-quarter net profit increasing 2 percent quarter-on-quarter (qoq), marking a third consecutive increase in quarterly earnings. The company’s focus on operational and commercial excellence is driving strong performance in the face of challenging global market conditions. Costs in the fourth quarter were 16 percent lower on the year-on-year (yoy) basis.

The company’s value enhancement programme, centered on revenue optimization and cost efficiencies, has significantly mitigated a subdued global pricing and demand environment in the last year. The ambitious programme has achieved a positive impact of $607 million, surpassing both its initial calendar year 2023 target of US$400 million and the later revised target of US$500 million. Total revenue in the October-December 2023 quarter was reported unchanged from the sequential quarter and a decline by 6 percent yoy basis on weaker global demand, while costs reduced a 16 percent over the same period. The company’s net profit of US$288 million in the quarter increased 16 percent yoy, supported by significant contributions from the Value Enhancement Programme. The company’s net profit increased by 2 percent qoq reflecting the company’s resilience despite global polyolefins pricing remaining broadly flat.

Hazeem Sultan Al Suwaidi, Chief Executive Officer of Borouge, commented, “Over the past twelve months we have demonstrated the resilience of our business model and ability to leverage our strong brand positioning, technical capabilities, operational scale, and excellence to outperform in challenging market conditions. Operational efficiencies played a significant role in driving bottomline performance with our Value Enhancement Programme delivering beyond its set targets. We maintained a clear focus on cost discipline with zero compromise on safety, outstanding product innovation, quality, and our commitment to the value we provide to our stakeholders.”

Global demand challenge
Net profit for the year stood at US$1 billion, impacted by a 16 percent decline in average selling prices as global polyolefins demand reduced from peak levels in 2022, which was partially offset by a 1 percent increase in sales volume to 5.1 million tonnes. Operational excellence played a central role in the company’s resilient performance, with the company achieving high utilization rates of 101 percent for PE and 97 percent for PP, a significant increase from 2022 levels. The high-value infrastructure solutions segment represented 39 percent of total sales in 2023, highlighting its strong positioning in this key growth market.

Going forward, the company is likely to remain agile in adapting to market dynamics and the customers’ evolving needs. The company is focussed on differentiated product development, maintaining price premia across various products, and continuing to drive further value creation as it solidifies market-leading positions. The strategic Borouge 4 project is progressing well and will be pivotal to delivering on growth aspirations, particularly in high-growth segments and the development of sustainable solutions that cater to customers’ evolving needs in this space.

Suwaidi further stated that Borouge will continue to focus its sales on high-growth geographies, and high-value segments including infrastructure and adjacent industries. The company reiterated the through-the-cycle premia guidance supported by its first-quartile cost position, operational scale through one of the world’s largest integrated polyolefins complexes, superior Borealis Borstar proprietary technology, and its competitive positioning in key high-growth markets and high-value market segments.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com