Borealis' growing markets in Middle East and Asia to boost expansion

24-Aug-05

Denmark based petrochemicals group Borealis, the world's sixth largest polyolefin producer, has reported a fall in Q2 profits. Owned by Abu Dhabi's International Petroleum Investment Co. (IPIC) and Austrian OMV, Borealis net profit for April-June stood at 51 million euros (US$62.4 million), down from Q1-2005 profits of 135 million euros. This fall can be attributed to rising oil and feedstock prices combined with low demand and sliding polyolefin prices in Europe. Borealis, however, seems well placed to endure any slump in its markets, due to its planned successful transformation over the past four years in key market segments, focused on continued implementation of its value creation strategy based on innovation. Converter de-stocking, which was prevalent during the quarter, shows signs of changing. Planned expansion in the Middle East will also boost company performance. International Petroleum Investment Company (IPIC) of Abu Dhabi and OMV AG of Austria are already planning to purchase Statoil's 50% shareholding in Borealis A/S. About 65% is to be acquired by IPIC and the remaining 35% by OMV by Q4, subject to regulatory approvals being received. Borouge, Borealis' joint venture with the Abu Dhabi National Oil Company has improved after the Q1 expansion of its Borstar® polyethylene (PE) capacity from 450,000 to 600,000 tpa. It has progressed favourably responding to the growing market needs in the Middle East and Asia. In Europe, the firm's capacity expansion program includes construction of a new 350,000 tpa PE plant in Austria to be started up in Q4.