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• 
  Adnoc set to become a chemicals major

  1 September 2025

  This package also includes:
  > Regional chemicals spending set to soar 

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  At a time when global chemicals giants like Saudi Basic Industries Corporation (Sabic) and Dow Chemical are facing financial pressure due to rising feedstock costs and decreasing sales margins, Abu Dhabi National Oil Company (Adnoc) – a relatively small player in the space – is undertaking an ambitious inorganic growth strategy.

  In the past 12 months, the company has initiated merger and acquisition transactions that could propel it towards becoming a major global chemicals producer.

  The Abu Dhabi energy giant took the first step in that direction by announcing the acquisition of German chemicals producer Covestro in October 2024, making a takeover offer of €14.7bn ($16.3bn). Covestro’s expertise lies in areas such as chemical recycling, which are key for the future of the energy industry and a target area for Adnoc.

  The agreement between XRG – Adnoc’s international business subsidiary – and Covestro, which will run until the end of 2028, includes several obligations on the part of Adnoc, including maintaining Covestro’s existing business activities, corporate governance and organisational business structure.

  Regulatory approvals

  Adnoc’s takeover deal for Covestro has received approvals from regulators in India and South Africa. However, it is still under scrutiny in the EU, with the European Commission having launched an in-depth investigation into the pending deal under its Foreign Subsidies Regulation, which targets non-EU firms perceived to benefit from unfair state subsidy.

  [Adnoc] has initiated merger and acquisition transactions that could propel it towards becoming a major global chemicals producer

  In early August, the European Commission said it had 90 working days – until 2 December – to make a decision. Adnoc, meanwhile, has contested the investigation into its takeover bid for Covestro, saying that the transaction will add value for all stakeholders.

  Covestro’s supervisory and management boards have supported the takeover offer from Adnoc, and in April the firm said it remains hopeful that the transaction will close in the second half of 2025.

  Potential merger

  Adnoc announced a bigger transaction than the Covestro acquisition deal in March, with Austrian energy company OMV. The two companies agreed the terms of a binding framework agreement for a proposed combination of their shareholdings in Abu Dhabi’s Borouge and Austria-based chemicals producer Borealis.

  Simultaneously, Adnoc also entered into a share purchase agreement with Canada-based Nova Chemicals Holdings – a company indirectly wholly owned by Abu Dhabi’s sovereign wealth institution, Mubadala Investment Company – for 100% of Nova Chemicals Corporation.

  Adnoc and OMV have also agreed that on completion of the planned merger of Borouge and Borealis, the new entity – which will be known as Borouge Group International – will acquire Nova Chemicals Corporation for $13.4bn including debt, further expanding its footprint in North America.

  Borouge Group International will be listed on the Abu Dhabi Securities Exchange (ADX), subject to approval by the UAE Securities & Commodities Authority (SCA) and ADX.

  Under the terms of the agreement, Adnoc and OMV will hold equal stakes of 46.94% in Borouge Group International, with joint control and equal partnership. The remaining 6.12% will be in free float, subject to SCA approval and assuming all existing Borouge free float shareholders agree to exchange their existing shares in Borouge for shares in Borouge Group International.

  Adnoc and OMV will hold equal stakes of 46.94% in Borouge Group International, with joint control and equal partnership

  Upon completion of the deal, Adnoc will transfer its stake in Borouge Group International to XRG, which is also on course to take control of its parent company’s 24.9% stake in OMV.

  The purchase price is about 7.5 times the company’s expected long-term profits before interest, taxes, depreciation and amortisation (Ebitda), and is expected to be debt financed through capital markets. 

  Borouge Group International plans to raise up to $4bn of primary capital in 2026 to qualify for inclusion on global stock index MSCI and secure an investment-grade credit rating, targeting through-the-cycle net leverage of up to 2.5 times Ebitda.

  The proposed deal assumes a primary cash injection of €1.6bn ($1.67bn) by OMV into Borouge Group International. This will be reduced on closing in line with the equity value of Borouge and Borealis after expected dividend payments up to completion.

  The upcoming Borouge 4 project – which is the fourth expansion phase of Borouge’s petrochemicals complex in Ruwais, Abu Dhabi – is likely to be among the key growth drivers, with projected recontribution by the end of 2026, when the estimated $6.2bn project is expected to be commissioned.

  Recontribution of Borouge 4, when fully operational, is expected to be at a cost of approximately $7.5bn including debt, and accretive to operating cash flows and dividends per share, with an estimated through-the-cycle Ebitda of approximately $900m.

  If Adnoc’s potential takeover of Covestro were to be blocked by the European Commission, the acquisition of Nova, together with the recontribution of the Borouge 4 petrochemicals project, will still create a major polyolefins producer in the form of Borouge Group International, which could be valued at more than $60bn and would be the world’s fourth-largest by nameplate production capacity. 

  

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  Indrajit Sen
• 
  Local/Saudi joint venture wins Oman industrial city deal

  1 September 2025

  

   

  A joint venture of Omani firm Sarooj Construction Company and Saudi Arabia's Al-Rawaf Contracting has secured a contract worth RO17.4m ($45m) covering the construction of infrastructure facilities for the first phase of Al-Mudhaibi Industrial City in the sultanate’s North Al-Sharqiyah Governorate.

  The first phase of the infrastructure development covers an area of about 2.5 million square metres (sq m).

  The scope includes the construction of road, water and sewerage networks; lighting; water tanks; security fences; surveillance devices; and several industrial units, each with an area of 500 sq m, in the development's Madayn complex.

  The development will also have administrative offices with manufacturing workshops, private parking lots and truck entrances.

  The contract was awarded by Oman’s Public Establishment for Industrial Estates (Madayn).

  According to an official statement, the industrial city is expected to be a key enabler for the industrial sector in Oman’s North Al-Sharqiyah Governorate, which offers potential in mining, food and tourism, among other industries.

  According to UK analytics firm GlobalData, the construction industry in Oman expanded by 2.1% in real terms in 2024, supported by rising foreign direct investment (FDI) in rail and road infrastructure, renewable energy and housing projects. According to the National Centre for Statistical Information, the total FDI in the country rose by 25.2% in 2023.

  The Omani construction industry is expected to register an annual average growth rate of 4.2% in 2025-28, supported by investments as part of the Oman Vision 2040 plan.

  The industrial construction sector was expected to grow by 2.8% in real terms in 2024, before rebounding at an annual average growth rate of 4.1% in 2025-28, supported by investments in the construction of manufacturing and mining facilities.

  

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  Yasir Iqbal
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  Libya oil project due to come online this year

  1 September 2025

  

   

  The new early production facility (EPF) that is being installed at Libya’s Mabruk field is expected to come online between 15 November and 15 December this year, according to industry sources.

  The facility is expected to have production ramped up to 30,000-35,000 barrels a day (b/d) of oil before the end of January 2026.

  The Mabruk oil field is operated by Mabruk Oil Operations, a joint venture of Libya’s National Oil Corporation (NOC) and France’s TotalEnergies.

  One source said: “When the facility comes online, production will be gradually increased over a time period of around four to six weeks.

  “Six weeks will be enough to optimise production. Things are going very well with the project and it is being rigged up right now.

  “There is some uncertainty about how much oil the wells are going to produce and how much the wells have been damaged.”

  The Mabruk field currently has a small EPF installed that has a maximum production of about 7,000 b/d.

  Several wells are connected to the existing EPF at the moment, but when the bigger EPF comes online, all of the wells from the field will be hooked up to the new facility.

  Production operations via the small EPF started on 9 March 2025 at a rate of 5,000 b/d, according to NOC.

  When production started in March, it was the first time that the field had produced oil in more than 10 years.

  In 2015, the terrorist group Islamic State attacked the Mabruk oil field in Libya, killing guards, abducting foreign workers and forcing the field to shut down.

  The larger EPF that is being installed is being leased by Mabruk Oil Operations from US-based SLB.

  It is being installed by Libya-based Black Gold Automation & Control, which has been subcontracted by SLB

  The smaller EPF, which was commissioned earlier this year, was installed directly by SLB.

  More than a year ago, SLB was awarded the project to develop upstream facilities at the Mabruk field as part of a scheme to restart production.

  The project had an estimated investment value of $150m.

  The onshore Mabruk field, also known as C17, is located about 140 kilometres southeast of Libya’s El-Sider oil terminal.

  Produced crude oil from the field will be transported to the nearby Al-Dhara oil field and then will be exported from the El-Sider oil terminal.

  

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  Wil Crisp
• 
  Regional chemicals spending set to soar

  29 August 2025

  This package also includes:
  > Adnoc set to become a chemicals major 

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  With the energy transition gaining momentum and demand for transport fuels plateauing, it is no longer lucrative for state-owned hydrocarbons producers in the Middle East and North Africa (Mena) region to channel significant amounts of their crude oil towards refineries.

  This does not mean that regional energy producers have curtailed their spending on refinery expansions or greenfield projects, however. A total of $21.62bn was spent on Mena downstream oil projects in 2024, with capital expenditure (capex) at nearly $7bn so far this year, according to data from regional projects tracker MEED Projects.

  Mena energy producers have also ramped up their investment in expanding gas processing potential, as global demand for natural gas – especially from the power generation sector – rises exponentially. 

  The region invested a total of $25.67bn in gas processing projects in 2024, and in 2025, MEED Projects puts that figure at $9.3bn year-to-date.

  Meanwhile, the surge in petrochemicals projects in the Mena region over the years has also been significant. 

  The drive among regional players to increase petrochemicals output capacity is being facilitated by a rapid rise in chemicals demand from various industries and supply chains, as well as by the fact that converting oil and gas molecules into high-value chemicals is economically rewarding for hydrocarbons producers.

  

  Preparing for growth

  Global petrochemicals capacity is poised to grow significantly by 2030. Asia is set to dominate this, driven by a high demand for petrochemicals in the automotive, construction and electronics industries, according to UK analytics firm GlobalData.

  The Middle East is also set to undergo an increase in production capacity, with a total capacity of 122.1 million tonnes a year (t/y) projected in 2025-30. Capex on production plants is expected to reach $69bn in the coming years, according to a recent report by GlobalData.

  Steady spending

  An estimated $17.8bn was spent on engineering, procurement and construction (EPC) contracts for chemicals projects in 2024, with spending year-to-date of about $5.8bn, MEED Projects says.

  The region’s biggest chemicals project under EPC execution is the $11bn Amiral project in Saudi Arabia, which represents the expansion of Saudi Aramco Total Refining & Petrochemical Company (Satorp) in the petrochemicals sector. 

  Satorp, in which Saudi Aramco and France’s TotalEnergies hold 62.5% and 37.5% stakes, respectively, operates a
  refinery complex in Jubail that has the capacity to process 465,000 barrels a day (b/d) of Aramco’s Arabian Heavy crude oil grade to produce refined products such as diesel, jet fuel, gasoline, liquefied petroleum gas, benzene, paraxylene, propylene, coke and sulphur.

  Integrated with the existing Satorp refinery in Jubail, the Amiral complex will house one of the largest mixed-load steam crackers in the Gulf, with the capacity to produce 1.65 million tonnes a year (t/y) of ethylene and other industrial gases.

  This expansion is expected to attract more than $4bn in additional investment in several industrial sectors, including carbon fibres, lubricants, drilling fluids, detergents, food additives, automotive parts and tyres.

  Another large-scale project under execution is the Al-Faw integrated refinery and petrochemicals project in Iraq. State-owned Southern Refineries Company brought on board China National Chemical Engineering Company in May 2024 to develop the estimated $8bn project.

  The Al-Faw project is being implemented in two stages. The first phase involves developing a refinery will have a capacity of 300,000 b/d and will produce oil derivatives for both domestic and international markets. The second phase relates to the construction of a petrochemicals complex with a capacity of 3 million t/y.

  EPC works are also progressing on the $6bn Ras Laffan petrochemicals complex in Qatar, which will have an ethane cracker that will be the largest in the Middle East and one of the largest in the world.

  The project is being developed by a joint venture (JV) of QatarEnergy and US-based Chevron Phillips Chemical (CPChem). QatarEnergy owns a majority 70% stake in the JV. CPChem, which is 50:50 owned by US firms Chevron and Phillips 66, holds the remaining 30%.

  The Ras Laffan petrochemicals complex is expected to begin production in 2026. It consists of an ethane cracker with a capacity of 2.1 million t/y of ethylene. This will raise Qatar’s ethylene production potential by nearly 70%.

  The complex includes two polyethylene trains with a combined output of 1.68 million t/y of high-density polyethylene polymer products, raising Qatar’s overall petrochemicals production capacity by 82%, to almost 14 million t/y.

  A JV of South Korean contractor Samsung Engineering and CTCI of Taiwan was awarded the EPC contract for the ethylene plant, which is understood to be valued at $3.5bn. The EPC contract for the polyethylene plant was awarded to Italian contractor Maire Tecnimont, which announced that the value of its contract was $1.3bn.

  

  Chemicals uptick

  While the downstream hydrocarbons sector in the Mena region has so far seen significant capex allocated to refinery modification and expansion projects, and robust spending on gas processing projects, chemicals schemes are set to dominate spending going forward.

  Data from MEED Projects suggests that the value of planned chemicals projects in the Mena region is four times greater than the combined value of downstream oil and gas projects.

  Saudi Arabia’s liquids-to-chemicals programme, which aims to attain a conversion rate of 4 million b/d of Saudi Aramco’s crude oil production into high-value chemicals, accounts for the majority of planned chemicals projects in the region.

  Aramco has divided its liquids-to-chemicals programme in Saudi Arabia into four main projects. It has made progress this year by signing JV investment agreements with international partners for these projects:

  • Conversion of the Saudi Aramco Jubail Refinery Company (Sasref) complex in Jubail into an integrated refinery and petrochemicals complex through the addition of a mixed-feed cracker. The project also involves building an ethane cracker that will draw feedstock from the Sasref refinery. Front-end engineering and design on the project is under way and is being performed by Samsung E&A.
     
  • Conversion of the Yanbu Aramco Sinopec Refining Company (Yasref) complex in Yanbu into an integrated refinery and petrochemicals complex through the addition of a mixed-feed cracker. China’s Sinopec is a JV partner in the project.
     
  • Conversion of the Saudi Aramco Mobil Refinery Company (Samref) complex in Yanbu into an integrated refinery and petrochemicals complex through the addition of a mixed-feed cracker. US oil and gas producer ExxonMobil has signed a memorandum of understanding with Aramco to potentially invest in the project.
     
  • Building a crude oil-to-chemicals complex in Ras Al-Khair in the kingdom’s Eastern Province. Progress on this project remains slow.

  Separately, Aramco subsidiary Saudi Basic Industries Corporation (Sabic) is in advanced negotiations with bidders for a project that involves building an integrated blue ammonia and urea manufacturing complex at the existing facility of its affiliate, Sabic Agri-Nutrients Company, in Jubail.

  The $2bn-$3bn project, which is known as the low-carbon hydrogen San VI complex, is part of Sabic’s Horizon 1 low-carbon hydrogen programme that will be developed at Sabic Agri-Nutrients’ facility in Jubail Industrial City.

  The planned San VI complex will have an output capacity of 1.2 million metric t/y of blue ammonia and 1.1 million metric t/y of urea and specialised agri-nutrients.

   

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  Indrajit Sen
• 
  Kuwait’s political hiatus brings opportunity

  29 August 2025

  Commentary
  John Bambridge
  Analysis editor

  After Kuwaiti Emir Sheikh Mishal Al-Ahmad Al-Jaber Al-Sabah took the unusual step of suspending Kuwait’s parliament in May 2024, the country anticipated a rush of reforms and the unblocking of the project pipeline.

  In March 2025, the government delivered on the most significant part of that, passing the long-awaited new public debt law, allowing $65bn in sovereign and Islamic bonds to be issued over the next 50 years. In June, Kuwait began moving ahead with plans to issue bonds worth an estimated KD2bn ($6.6bn) to cover its projected financing needs for the 2025-26 fiscal year.

  With the ability to now take on debt as needed, the country’s budget can be decoupled to a degree from the volatility of global oil market cycles. Also significant is the reported consideration of the setup of a KD50bn ($163bn) domestic investment fund that could become a transformative engine for Kuwait’s future.

  March also heralded a new mortgage law that has ended prior restrictions, bringing property loans more in line with international norms in a way that will open up new avenues of growth for the banking and real estate sectors.

  In the projects market, however, while the value of planned projects has swollen, actual contract awards increased only modestly in 2024 and are on track for a similar performance in 2025. The more optimistic industry analysts have chalked this up as a temporary situation that will be corrected when the projects now in pre-execution push through to the execution phase. More cynical observers have suggested, however, that there may be more wrong with Kuwait’s project sector than just budgeting.

  The Al-Zour North independent power and water plant phase 2 & 3 is a case in point, having travelled through several planning iterations from the point of its launch in 2006 up until its final award in August. This comes despite Kuwait’s rapid approach to the limits of its own power generation capacity – limits it then exceeded in April 2025, when soaring temperatures caused demand for electricity to outstrip supply, bringing power cuts.

  Despite all this, the award of the long-awaited Al-Zour North scheme is a hopeful sign that Kuwait is on the move once again – as it will need to be. With an enfeebled private sector, atrophied contracting industry and mounting public wage bill, the policy needs of the day are great in Kuwait.

  While the emir’s consolidation of power has given the government a rare opportunity to act decisively – with the political hiatus already delivering key outcomes that years of parliamentary debate could not – the real test will be whether a credible economic transformation can be set in motion while Kuwait still has the time to act.

  

   

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  MEED’s September 2025 report on Kuwait includes:

  > GOVERNMENT: Kuwait looks to capitalise on consolidation of power
  > ECONOMY: Kuwait aims for investment to revive economy
  > BANKING: Change is coming for Kuwait’s banks
  > OIL & GAS: Kuwaiti oil activity rising after parliament suspension
  > POWER & WATER: Signs of project progress for Kuwait's power and water sector
  > CONSTRUCTION: Momentum builds in Kuwait construction
  > DATABANK: Kuwait’s growth picture improves

  To see previous issues of MEED Business Review, please click here

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  John Bambridge