The Abu Dhabi National Oil Company (ADNOC) and the Austrian firm OMV Aktiengesellschaft have announced significant progress in their initiative to establish Borealis International AG, which includes the signing of an asset utilization agreement for the Borouge 4 facility.
The development of Borealis International AG is progressing as planned, with the integration of Borealis PLC and the acquisition of Nova Chemicals also on track. These transactions are anticipated to close by the end of March 2026, pending the fulfillment of necessary conditions and criteria.
Borouge 4 will be a state-of-the-art complex dedicated to producing polyolefins, featuring ethane cracking capacity of 1.5 million tons, alongside a polyethylene production capacity of 1.4 million tons. Production at the first plant is expected to commence within the current quarter. The facility will utilize the latest Borstar® technology for producing advanced, high-quality polyethylene, with ownership shares split between ADNOC (70%) and OMV (30%). It aims to become the largest polyolefin production complex in a single location worldwide.
The agreement allows Borealis PLC and subsequently Borealis International AG to operate and market the output from the Borouge 4 facility in exchange for asset usage fees at cost. This arrangement provides both parties with financial flexibility and the potential for cumulative net profits estimated at $400 million, translating to an average annual profit increase of approximately 10% for Borealis PLC over the next three years following full operation.
The agreement concerning the Borouge 4 facility will remain in effect until Borealis International AG acquires it from its current owners, projected not to occur before 2029, allowing flexibility in future capital expenditures.
Production operations at Borouge 4 are slated to gradually ramp up throughout 2026. After signing the agreement, Borealis International AG will gain access to a total production capacity of 13.6 million tons across Europe, the Middle East, and North America, further solidifying its rank as the fourth-largest polyolefin producer globally. It is expected that the combined entity will maintain competitive profit margins and enhance collaboration and integration within its operations.
Borealis International AG is also projected to receive credit ratings of A (Negative Outlook) from S&P, Baa1 (Stable Outlook) from Moody’s, and A- (Stable Outlook) from Fitch, highlighting its strong financial standing and capital structure. ADNOC and OMV are committed to maintaining investment-grade credit ratings for Borealis International AG.
Production Integration
Borealis International AG will leverage one of the most geographically diversified platforms in the polyolefins sector, achieving integration across three continents to meet global customer demands. This global presence, coupled with long-term support from its shareholders and a robust capital structure, is expected to strengthen the company’s resilience during business cycles and its capability to deliver sustainable returns to shareholders.
ADNOC and OMV stress the importance of the previously announced share exchange proposal to create a streamlined structure that maximizes the value from this new global growth platform.
The proposed timing for the share exchange, which involves converting shares of Borealis PLC into shares of Borealis International AG, aligns with the group’s future capital increase plans, aimed at enhancing value for all shareholders. The offer is expected to be made in 2027, contingent upon prevailing market conditions and obtaining approval from the UAE Securities and Commodities Authority.
Credit Ratings
Until then, Borealis International AG will be privately owned (non-public company), while shares of Borealis PLC will remain listed on the Abu Dhabi Securities Exchange. The recent credit ratings take into account various factors influencing the timing and flexibility for future capital increases, as well as the planned acquisition of the Borouge 4 facility by Borealis International.
Shareholders of Borealis PLC, along with ADNOC and OMV as the owners of Borealis International AG, are expected to benefit from a gradual increase in value facilitated by the agreement. Additionally, shareholders of Borealis PLC are likely to benefit from a commitment to an annual dividend payout of 16.2 fils per share, which will be upheld by Borealis International AG following the completion of the proposed share exchange.
Upon completion of the transactions, both XRG and OMV will own equal stakes of 50% each in Borealis International AG, with shared control and an equal partnership. As long-term partners, both companies are dedicated to enhancing the capabilities of Borealis International AG, including fostering business integrations.