INTERVIEW: Borealis may finalize fertilizer unit sale in 2021 amid emissions reduction

Borealis, the Austrian petrochemical producer that is 75% owned by OMV, may finalize the sale of its fertilizer business by the end of this year as the company seeks to lower its Scope 1 and Scope 2 emissions, its CEO told S&P Global Platts Nov. 17.

Borealis, whose remaining 25% interest is held by UAE sovereign wealth fund Mubadala Investment Co., is at "an advanced stage" of negotiations with potential bidders for its nitrogen business, Thomas Gangl said in an interview on the sidelines of ADIPEC in Abu Dhabi.

The fertilizer business "is a big part of our CO2 emissions and we are at the moment in the sale process for that," Gangl said. "Maybe we can still do it [the sale] this year."

Borealis, which produces 5.8 million mt/year of petrochemicals from its operations and joint ventures, is seeking to reduce its carbon footprint because OMV intends to reach net-zero greenhouse gas emissions from its operations (Scope 1 and 2) by 2050 or sooner.

In 2020, Borealis produced 4,050 kt of EU-ETS CO2 equivalent emissions, a 12% drop from 4,625 kt in 2019 due to lower production amid COVID-19 and an unexpected stoppage of its cracker and ammonia plants. For 2021, Borealis plans to emit no more than 4,527 kt of EU-ETS CO2 equivalent emissions.

New projects

Despite plans to lower its emissions, Borealis is moving ahead with new additions in the US, Belgium and the UAE.

Borealis' Baystar joint venture steam cracker in Port Arthur, Texas, is in commissioning, but a date for its startup is not fixed, Gangl said.

"We need to still overcome some challenges," he said. "It's normal when you start up the unit for the first time, you need to run all the different equipment."

The ethane-based steam cracker -- initially developed by TotalEnergies -- has a capacity of 1 million mt/year and will be accompanied by a 625,000 mt/year polyethylene unit at Pasadena, Texas. The new polyethylene unit will nearly double the site's polyethylene capacity to 1.025 million mt/year.

Baystar was developed in 2018 as a joint venture between TotalEnergies, NOVA Chemicals and Borealis, with Borealis acquiring NOVA Chemical's shares in 2019 to become a 50% partner.

Borealis expects to start its 750,000 mt/year PDH unit in Kallo, Belgium in 2023 after COVID-19-related delays.

The plant was scheduled to start by the end of 2022 and is located alongside an existing Borealis 480,000 mt/year PDH unit and polypropylene production site closely linked to the Antwerp gas terminal.

Borouge JV with ADNOC

In the UAE, Borealis and Abu Dhabi National Oil Co. announced Nov. 15 that they had reached a final investment decision for a $6.2 billion expansion of the Borouge joint venture in the industrial city of Ruwais to produce 1.4 million mt/year of polyethylene.

Expected to become operational in 2025, the Borouge 4 project includes the construction of a 1.5 million mt ethane cracker and two polyethylene plants. It will make the site, which already has three units, the world's largest single-site polyolefin complex at 6.4 million mt/year, the companies said.

Borealis expects the overall Borouge complex, where some flaring takes place, to lower its emissions with the fourth expansion phase.

"So today we have still flaring on a normal operation basis and with Borouge 4 we will stop continuous flaring and we will also do a study together with Borouge on carbon capture and sequestration," Gangl said. "The target here is to reduce our Scope 1 emissions for Borouge 4, the emissions that go out of the stacks, by 80%."

Borouge 4 products will be mainly sold in Asia, the Middle East and some parts of Africa, with a huge demand seen for materials used in the infrastructure and energy sectors, he said.

"If you are looking into the overall growth in polyolefins, there will be a strong growth over the next 10-15 years with annual growth rate of 3% globally," Gangl said.

"If there is no bigger shutdown of economies and if shortages with the chips [industry] and those things don't get worse, of course there will be a further pickup in petrochemical demand (next year)."

The chip shortage is a concern impacting the vital automotive industry, Gangl said. The petrochemical industry also faces two immediate challenges: logistical constraints and high feedstock prices.

"What I hear from them (logistics companies) is that until the middle of next year this logistics issue will still continue," Gangl said. "This will lead to elevated price levels in Europe and the balance will not be the same for the entire year."