From L to R: Neeraj Rawal – COO & Senior Vice President (POLYMERUPDATE); Feroz Khan – Sr. Researcher & Editor (POLYMERUPDATE); Marie Christin Shenouda – Regional Communications Manager Asia South (Borouge); Pushp Raj Singhvi – Managing Director (Borouge India); Wim Roels – CEO (Borouge); Anil Krishna – GM & VP Sales-ISC (Borouge); Lekhraj Ghai – Sr. Researcher & Sr. Editor (POLYMERUPDATE)

During Plastivision India 2013, Borouge, the UAE-based provider of innovative, value creating plastics solutions conducted a press briefing to present its developments, future investments and its business strategies in India. The press meet, held at Hotel Trident in Mumbai, India, included presentations from Wim Roels - CEO Borouge, Anil Krishna - VP (Sales) and General Manager-Indian Subcontinent and Tarmo Raudsepp - Senior Vice President Asia South.

Wim Roels started the briefing and spoke on "Investing in the future," one of the three segments of the presentation, that showcased Borouge's developments and upcoming projects. Wim Roels informed about the "Borouge family" that comprises Abu Dhabi National Oil Company (ADNOC), Borouge, Austria-based Borealis and Nova Chemicals. Mr. Roels explained that Borouge is active in the polyolefins business in Asia, Borealis is mainly active in Europe and Nova Chemicals is active in the Americas and thus together they have a global reach and can provide polyolefins solutions to their customers all over the world. The Borouge family also includes International Petroleum Investment Company (IPIC), the majority shareholder of Borealis and full owner of Nova Chemicals. Mr. Roels said that Borouge is now focusing on three major industry areas that include infrastructure, the automotive business in which they are already active in China and the advanced packaging business. Wim Roels outlined the history of Borouge's growth from the 450,000 mt/year Borouge 1 to the 4.5 million mt/year Borouge 3 that is on track for completion in 2014.

Speaking next at the meet was Anil Krishna the newly appointed General Manager and Vice President Sales, Indian sub-continent, who spoke on "Growing in India" and why India is a focus area for Borouge. Mr. Krishna detailed Borouge's presence in India since 1999, its setting up an office in Mumbai in 2012 and its plans to establish a new office in Delhi during the course of 2014. Borouge has also initiated "Water for the World" through which it facilitates access to clean water for rural Indian communities. Mr. Krishna pointed out that the rapid urbanization, growing population, rising middle-class, food shortage, land degradation and fresh water depletion in India are expected to have an impact on the industry, particularly the infrastructure, automotive and packaging industries. He stated that India, with a 6.4 million mt/year demand as of 2012, is the world's third largest market for polyolefins and the packaging industry accounts for more than 70% of the polyolefins demand in India. Moreover, India's growing focus on renewable energy will see an increase in material substitution from conventional steel to plastic pipes and in extra high voltage wires and cables for long distance transmissions.

Tarmo Raudsepp then concluded the presentation by speaking on "Sustainable plastics solutions" and Borouge's intention to provide value creations and innovations in a sustainable manner. He emphasized the role of People, Profit and Planet in sustainability. Mr. Raudsepp explained that India holds 17% of the world's population and only 4% of the world's water resources. Furthermore, India's population, which currently stands at 1.2 billion, is expected to surpass that of China by 2030. Of the available water resources in India, 70% is used in the agricultural sector, 20% is used in the industry and only 10% is used for domestic consumption. Borouge aims to reduce the water consumption in the agricultural sector by promoting and providing pipes for drip irrigation. Drip irrigation has the following advantages over the conventional furrow and sprinkler irrigation methods: prevents loss of water by evaporation, requires less power to build pressure and prevents insect infestation and crop diseases. Drip Irrigation is expected to reduce water usage by 75% and the Government of India is keen on increasing the drip-irrigated land in India from a current 2 million hectares to a potential 27 million hectares. Mr. Raudsepp said that the pipes made by Borouge use five different compounds that are mixed together and last 3-7 times more than conventional pipes. He also listed the advantages of Borouge polyethylene films in greenhouses and in packaging.

During the press briefing, POLYMERUPDATE representatives had an opportunity to interact with Wim Roels. Below are a few excerpts from the interview:

• On the ongoing expansion at Borouge
Borouge 3 is on track and the project is being given the final finishing touches and is expected to start very soon. Although we never give out percentages, considering that the project is in the stage of commissioning to prepare for start-up, it is definitely more than 90% complete. There are 8 different plants in the project and they will come on-stream one after the other during the course of 2014. By the end of 2014 all the plants will be up and running and Borouge will be able to supply material from the new capacity to its customers. Borouge has invested more than USD 10 billion towards the growth of the company in the last 4-5 years.

• On whether Borouge plans to start an innovation centre or a research centre in India
Operations at the newly established Innovation Centre in Abu Dhabi have started a month ago. We also have a Research and Development Centre in Shanghai that has been operational since two years. Till now, most of the technological know-how has been contributed by Borealis and now that capability will be built within Borouge to meet Asia-specific demands. We are aware of the potential India has as a research location with its broad availability of well-educated people and about other Gulf companies like SABIC being interested in India as a research location. However, we would like to first focus on getting the already put-up centers in Abu Dhabi and Shanghai operational. We will then evaluate where to put up the next centre as establishing an innovation or application centre is a big step and is not about just investing in the 'hardware' but also about getting the 'software,' such as the systems, people and mindsets, to integrate and work together. At present, Borouge is operating in three major regions: Middle East, Asia South and Asia North. Middle East includes exports to Africa and Europe. Asia South covers the Indian peninsula, Southeast Asia and Australia and Asia North covers China and Korea. Being an Emirati company our first priority is to get the Abu Dhabi Innovation Centre up and running before discussing our next move.

• On the sales and marketing strategy of Borouge
Borouge is a 50:50 joint venture between ADNOC and Borealis. Borouge has a marketing agreement with Borealis, which means that Borouge is the exclusive agent for all products of Borouge and Borealis in Asia and East Africa. At the same time, Borealis is the exclusive agent for all the products of Borealis and Borouge in Europe and West Africa. Thus, Borouge is the meeting point where businesses from Europe, Middle East and Asia come together.

• On the stagnancy in the European market
Europe is going through a difficult phase and its economy is indeed slowing down. The industry in Europe is undergoing some restructuring to fit into the economy which is why some oil wells are closed. It will thus take some time for Europe to recover. However, some segments such as consumer packaging in Europe that are still growing and look interesting. Borouge exports material to Europe through Borealis and that business is still going strong. On the other hand, certain segments such as infrastructure in Europe are still lacking owing to the rigid policies of the recession-hit European countries.

• On the African polyolefins market
Although China is growing at a faster rate, the growth in Africa has been steady and Africa is becoming more and more interesting. We are looking at more development and growth of Borouge in the African market.

• On the shale gas boom in America and its impact on Borouge
At present, shale gas is a North American issue and is likely to remain a North American issue even in the future. We do not believe that all the forecasts/plans that have been announced in connection with shale gas will come through as engineering/construction costs have increased exponentially owing to all the activity going on due to the shale gas boom. We believe that a significant part of the announced projects will never be built. Indeed, the shale gas boom will result in a lot of volume creation and the market in North America will become highly competitive. However, a major portion of the new volume will be used up in North America itself owing to its increased growth and consumption. Next, some of the new volume will be exported to Latin America and then there will be some exports to Asia and Europe; but the amount exported relative to the total growth in Asia will be insignificant, and thus the shale gas boom is not likely to change the momentum of our business in Asia. Asia will remain a rapidly growing market and there will be a lot of opportunities for further growth throughout Asia, which means that Borouge will remain highly active in Asia.
Although, the shale gas boom in North America will not directly impact Borouge, it will definitely impact the economy and industry and hence in the long term (more than 10 years from now), it may have an indirect impact on Borouge. However, with the strong integration of Borouge with both its owners, feedstock-wise with ADNOC and technology-wise with Borealis, Borouge is in a strong position to face any challenges that might arise due to the shale gas revolution.

• On shale gas and coal developments in China
Considering that the main markets for Borouge lie in Asia and Europe, China is very important in the scheme of things. A shale gas revolution is anticipated in China but it is expected to take time. Shale gas can be of various forms, from dry methane to wet shale oil. In China, most of the available shale gas is in the form of methane which will not be useful in the petrochemical industry that uses wet gases such as ethane and propane. Furthermore, geological development in China will be much more complex than in North America. Thus, for a shale gas boom in China to really impact the petrochemical business will take at least 5-10 years. However, the significant coal-to-olefins development in China is an issue of concern and could impact our business in China. There is abundant coal stranded in Western China which is extremely difficult to transport to the eastern parts of China owing to the high costs involved. China is trying to convert that stranded coal into chemicals, petrochemicals and plastics. This could have an impact on the plastics market in China as it creates a source of local supply that is based on integrated and competitive feedstock. Thus in China, coal rather than shale gas is expected to have a bigger impact on the market in the immediate future.

• On the Gulf's prospects as a converting/processing hub
The Gulf market is highly important to us. The converting industry is growing rapidly in Saudi Arabia and UAE. The Gulf, with its negligible import duties and low taxes, provides an attractive environment and the converting/processing industry will grow more and more in the Gulf.

• On plans of Borouge to invest in manufacturing in India
Borouge has a 50,000 mt/year compounding manufacturing unit in China and may in the future look at opening such plants in other countries. The growth of a strong middle class in India and the availability of a large, well-educated and trained work force make India an interesting location. Borouge has been studying the compounding activity in India; however, owing to the less than expected growth in the automotive industry in India, plans to venture into the manufacturing business in India are currently on hold. Moreover, Borouge does not aim to become the largest plastics supplier in India but to become a niche specialty material supplier. Nevertheless, as China is becoming more and more expensive as a manufacturing location a large number of manufacturers are likely to move out of China to other locations such as South East Asia and India. However, the significant import duties in India act as a deterrent; whereas, the import duties in countries like Vietnam are almost zero. Thus, India has a golden opportunity to attract the exported manufacturing businesses from China if it is able to provide a feasible investment environment, well-educated labor and access to raw material at competitive prices.

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