Insight: Abu Dhabi makes big strides in Americas chemicals

NEW YORK (ICIS) – Abu Dhabi, the emirate and capital of the United Arab Emirates (UAE), is making major moves in the Americas through its national oil company, ADNOC, and the investment arm, the Abu Dhabi Investment Authority (ADIA).

The latest is a joint bid with private equity firm Apollo for Brazil-based Braskem, Brazil’s sole polyolefins producer, which also owns a majority stake in Mexico’s largest integrated polyethylene (PE) complex, as well as Mexico’s major polyolefins (PE) complex. Propylene (PP) facilities US and Europe.

Learn about the sources of the negotiations

comfirmed ADNOC and Apollo’s non-binding offer for Braskem was sent to controlling shareholder Novonor and its creditor banks late on Friday, May 5, told ICIS on May 8.

Abu Dhabi’s sovereign investment fund, Mubadala, has bought an oil refinery in Brazil’s Bahia state from Petrobras in 2021 for $1.65 billion. The Mubadala refinery is close to Camacari, one of Brazil’s petrochemical hubs, where Brasco has several production facilities.

Abu Dhabi also partners with Apollo in successful $8.1 billion investment
bid For Univar Solutions, a US-based chemical distributor. Apollo will be the majority shareholder and a subsidiary of ADIA will hold a minority stake.

Univar is a leading chemical distributor in North America, with sales of $7.5 billion in the U.S., $1.1 billion in Canada, and $0.8 billion in Latin America (including Mexico), based on 2022 figures. It also had sales of $2.1 billion in Europe.

Mubadala also owns Canada-based NOVA Chemicals, a large integrated PE producer with a growing recycled plastics business.

NOVA was previously owned by Abu Dhabi’s IPIC (International Petroleum Investment Company), which bought it at the height of the financial crisis in 2009 and transferred ownership to Mubadala in 2017.

In the US, Bayport Polymers – which plans to start its PE project in Texas this year – is a 50/50 joint venture between Total Petrochemicals & Refining USA and Novealis Holdings, itself a joint venture between NOVA Chemicals and Borealis. As mentioned earlier, NOVA is owned by Mubadala, while Borealis is 75% owned by Austria-based OMV and 25% by ADNOC.

NOVA Chemicals also operates a cracker in Geismar, Louisiana, USA, which it acquired from Williams Companies in 2017. The cracker is not integrated into any downstream units and NOVA has decided to keep it for the time being following the asset’s sale process in 2022.

take the lead
If ADNOC and Apollo succeed in their joint bid for Brazil’s Braskem and complete the acquisition of US-based Univar Solutions, Abu Dhabi could significantly boost its chemicals business in the Americas.

Through its investment vehicles and Petronas, it will have the largest polyolefin producer in South America and the only such producer in Brazil, the largest PE producer in Mexico (Braskem Idesa), the largest PE producer in Canada (NOVA Chemicals) , as well as a major stake in the Bayport Polymers integrated PE project in Texas, USA, and a stand-alone cracker in Louisiana through NOVA.

In addition, it will own a stake in North America’s leading chemical distribution network (Univar Solutions).

The exact details of any potential synergies between all the businesses are unclear as the various tools operate these businesses well independently, but when you look at the large base of customers and suppliers connected by a strong distribution infrastructure, one can Imagine the potential.

North American return
Univar Solutions CEO David Jukes highlights the renaissance of North American manufacturing and the reindustrialization of the economy at a conference in February 2023
interview Worked with ICIS prior to announcing deals with Apollo and ADIA.

“We have a real competitive advantage in re-industrialized North America, and our asset footprint means we have tremendous growth opportunities here. No one has a better continuum of inorganic and organic chemistry assets in North America than we do,” said Jukes.

“You can’t easily replace these assets. You can’t go out and quickly build oil depots, duplicate rail sidings, and 600-700 cars for a specific product. All these new industries are pouring into the United States,” he added, referring to semiconductor manufacturing and Manufactured products for the green energy transition.

The $280 billion US CHIPS and Science Act aims to build local semiconductor manufacturing capacity, and the $369 billion US Inflation Reduction Act (IRA) to incentivize the manufacture of electric vehicle (EV) batteries, solar cells, wind turbines, and building hydrogen and Carbon capture and storage (CCS) infrastructure will spur a revival of high-tech manufacturing in the US, which will require vast quantities of chemicals.

This incentivizes manufacturing not only in the United States, but also in Canada and Mexico, which have free trade agreements with the United States.

Reflow or “friend support” is a key trend that will shape the dynamics of the global chemical industry for decades to come.

Chemical and other manufacturing companies are lining up to take maximum advantage of incentives from the U.S. IRA, the CHIPS Act, and the Infrastructure Investment and Jobs Act—all of which prioritize the development and use of materials, components, and products produced in the U.S. and in the U.S. In some cases, Mexico and Canada.

Brazil’s potential as a low-cost producer
While South America isn’t specifically part of the picture when it comes to U.S. government incentives, Brazil has the potential to become a cost-competitive producer as it seeks to increase its supply of ethane feedstock from state-developed offshore pre-salt formations. Operates oil and gas company Petrobras.

Meanwhile, it has been importing U.S. ethane feedstock for its cracker in Duque de Caxias in Rio de Janeiro state.

Once local supplies are sufficient, Braskem can undertake a major
expansion Ethylene and PE capacity on site – something it has been considering

Since 2015.

“We would be interested [in the expansion] If more NGL [natural gas liquids]
Available from Pre-Salt Reserve [as] We are interested in accessing these volumes. The most competitive investment in Brazil today will be the expansion of our cracker in Rio de Janeiro,” Braskem Chief Financial Officer Pedro Freitas said on March 23.

“This would be the best option for the country to distribute additional raw material if there is raw material available. We have been tracking pre-salt activity and have ongoing dialogue with industry players to position [to have access to those
feedstocks],’ he added.

Additional reporting by Jonathan Lopez and Al Greenwood

insight article author Joseph Zhang

The thumbnail shows the Abu Dhabi coastline with the ADNOC logo. Source: Shutterstock