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Adani partners UAE's Adnoc, Germany's BASF for $4 billion chemical venture

The total investment for establishment of the chemical complex in Gujarat's Mundra is estimated to be up to $4 billion (about Rs 28,400 crore), the companies said in a statement, but did not state which firm will hold how much stake.

PTI|
Oct 17, 2019, 07.51 PM IST
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The partners aim to finalise the joint feasibility study by the end of Q1 2020. Production is intended to commence in 2024.
NEW DELHI: Billionaire Gautam Adani-run Adani Group has forged a partnership with UAE's oil firm Adnoc, German chemical giant BASF and Austria's Borealis to study the feasibility of setting up a USD 4 billion chemical complex at Mundra in Gujarat by 2024.

The four firms have signed a memorandum of understanding (MoU) to "engage in a joint feasibility study to further evaluate a collaboration for establishment of a chemical complex in Mundra, Gujarat," the companies said in a statement.

In January this year, Adani Group had announced plans to set up a Rs 16,000 crore chemical factory at Mundra in partnership with BASF.

The present MoU, the statement said, was the next step of the January announcement.

"With the inclusion of Abu Dhabi National Oil Company (Adnoc) and (Europe's second-largest producer of polyethylene and polypropylene) Borealis as potential partners, the parties are examining various structuring options for the chemical complex that will leverage the technical, financial and operational strengths of each company," it said.

The total investment is estimated to be up to USD 4 billion (about Rs 28,400 crore), it added, but did not state which company will hold how much stake.

The partners aim to finalise the joint feasibility study by the end of Q1 2020. Production is intended to commence in 2024.

"The collaboration includes evaluating a joint world-scale propane dehydrogenation (PDH) plant to produce propylene-based on propane feedstock to be supplied by ADNOC. Propylene will be partially used as feedstock for a polypropylene (PP) complex, owned by ADNOC and Borealis," it said.

The PP complex will be the first overseas production joint investment by ADNOC and Borealis as part of a strategic framework with their current joint venture Borouge.

Furthermore, propylene will be the key raw material for the previously announced acrylics value chain complex comprising glacial acrylic acid (GAA), Oxo-C4 (butanols and 2-ethyl hexanol), butyl acrylate (BA) and potentially other downstream products as part of a joint venture of BASF and Adani in which BASF holds a majority.

"The designated site is planned at Mundra port in Gujarat, India, and the products are predominantly for the Indian market, serving a wide range of local industries, including construction, automotive and coatings," the statement said.

Besides investing in the chemical factory, the partners will also invest in wind and solar power plant at the site to meet electricity requirement of the unit.

"The partners are evaluating co-investment in a wind and solar park with the plans at an advanced stage of development," it said.

"If realized, this would be the world's first CO2-neutral petrochemical site to be fully powered by renewable energy, fully in line with the partners' commitment to sustainability and energy efficiency."

The products produced would be predominantly for the Indian market to serve a wide range of local industries, including construction, automotive and coatings, whose growing demand is currently supplied via imports.

Commenting on the MoU signing, Sultan Al Jaber, UAE Minister of State and ADNOC Group CEO, said: "This exciting collaboration is in line with ADNOC's strategy to foster mutually beneficial partnerships. As a value-adding partner, ADNOC will play a crucial role as the propane feedstock supplier to this project."

"As the fastest growing global energy market, India is crucial to our international growth ambitions in the downstream sector. As such, this project allows ADNOC and its partners to capture the promising growth in the Indian polyolefins market," he said.

Adnoc has also signed an initial pact to take a stake in a mega refinery-cum-petrochemical complex planned by state-owned oil firms led by IOC in Maharashtra.

Adani Group Chairman Gautam Adani stated: "We are very pleased to collaborate with our international partners to establish a chemical manufacturing complex at Mundra Port. We stand committed to the 'Make in India' initiative and serve the larger purpose of aligning growth opportunities with the creation of goodness for the nation."

"BASF remains committed to investing in India's growth. We will play a key role in driving this joint collaboration which is also pioneering in terms of sustainability. We look forward to working together with our partners in establishing a chemical cluster in Mundra and supplying the Indian market with high-quality downstream products," said Martin Brudermueller, Chairman of the Board of Executive Directors of BASF SE.

Alfred Stern, CEO of Borealis, added: "This partnership is a unique opportunity to strengthen our PP presence in India with proprietary Borealis Borstar PP technology and to create value and tangible benefits through innovation for customers across multiple industries."

As per the January announcement, BASF was to hold a majority controlling stake in the new chemical venture. It will, however, hold a minority interest in the power venture.

Headquartered in Ahmedabad, Adani Group is one of India's largest integrated infrastructure conglomerates with interests in resources (coal mining and trading), logistics (ports, logistics, shipping and rail), energy (renewable and thermal power generation, transmission and distribution), agro (commodities, edible oil, food products, cold storage and grain silos), real estate, public transport infrastructure, consumer finance and defence sectors.
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