Borealis chief executive Thomas Gangl speaks at a panel discussion at Adipec in Abu Dhabi. Victor Besa / The National
Borealis chief executive Thomas Gangl speaks at a panel discussion at Adipec in Abu Dhabi. Victor Besa / The National
Borealis chief executive Thomas Gangl speaks at a panel discussion at Adipec in Abu Dhabi. Victor Besa / The National
Borealis chief executive Thomas Gangl speaks at a panel discussion at Adipec in Abu Dhabi. Victor Besa / The National

Business

Energy

Austria’s Borealis 'will not downsize' amid high energy prices in Europe

Elevated crude and natural gas costs have shrunk the margins of the chemical industry, plastics company's chief says

John Benny

November 03, 2022

  • English
  • Arabic

Austrian plastics company Borealis will not cut jobs or reduce its production capacity as high energy prices shrink industry margins.

“We see some announcements from other companies of downsizing and reducing capacities in Europe,” chief executive Thomas Gangl told The National on Wednesday on he sidelines of the Abu Dhabi International Petroleum Exhibition and Conference (Adipec).

“For us, this is not a topic. We have a very stable asset base.”

Last week, Germany’s BASF announced cost-reduction measures until the end of 2024 to save the world’s largest chemical company €500 million ($495m) annually amid high natural gas and power prices.

Natural gas prices in Europe have soared since Russia, the region’s largest supplier of gas, began curtailing exports in response to EU sanctions.

The Dutch TTF gas futures contract, the benchmark in Europe, has fallen in recent weeks as natural gas storage levels rise but is still up nearly 200 per cent from 2021 levels.

Natural gas liquids and naphtha created from crude oil during the refining process are used as feedstock to manufacture a variety of petrochemicals.

“Europe has prepared well for this winter …. we need to make sure that energy prices are coming down again,” said Mr Gangl.

Borouge, the joint venture between Adnoc and Borealis, reported a 14 per cent rise in its nine-month revenue last week on higher sales volumes of polypropylene, a key petrochemical.

There was a “significant” increase in polypropylene sales but “the overall situation is tougher than what we had before”, said Mr Gangl.

Borouge, which listed on the Abu Dhabi Securities Exchange in June after raising $2 billion in an initial public offering in Abu Dhabi's biggest listing, said it remained confident about reporting a profit for the 2022 financial year.

After its listing, Borouge was included in the FTSE Global Equity Index Series, which is used by investors globally to guide asset-allocation decisions and support portfolio construction.

_____________________________

Adipec 2022: day three — in pictures

The Abu Dhabi International Petroleum Exhibition and Conference (Adipec) is expected to draw 2,200 exhibitors this year. All photos: Victor Besa / The National
The Abu Dhabi International Petroleum Exhibition and Conference (Adipec) is expected to draw 2,200 exhibitors this year. All photos: Victor Besa / The National
The National's stand at Adipec.
The National's stand at Adipec.
Adipec highlights oil and gas investment needs amid the current energy crisis.
Adipec highlights oil and gas investment needs amid the current energy crisis.
The conference features high-profile speakers, including energy ministers from the UAE, Saudi Arabia, India and Bahrain.
The conference features high-profile speakers, including energy ministers from the UAE, Saudi Arabia, India and Bahrain.
Executives discuss how to transform business operations through the power of business intelligence during a panel discussion at Adipec.
Executives discuss how to transform business operations through the power of business intelligence during a panel discussion at Adipec.
Employees of energy services business Wood pose for a group picture at Adipec.
Employees of energy services business Wood pose for a group picture at Adipec.
Ruth Ssentamu, Uganda's Minister of Energy and Mineral Development, responds to moderator Paul Wallace during a ministerial panel discussion on creating a 'just, equitable and sustainable future'.
Ruth Ssentamu, Uganda's Minister of Energy and Mineral Development, responds to moderator Paul Wallace during a ministerial panel discussion on creating a 'just, equitable and sustainable future'.
Global oil and gas spending is expected to shrink this year, despite crude hovering around $95 a barrel.
Global oil and gas spending is expected to shrink this year, despite crude hovering around $95 a barrel.
P&O Maritime Logistics chief executive Martin Helweg speaks during a panel discussion titled 'Globalisation under threat: managing supply chains in an age of disruption'.
P&O Maritime Logistics chief executive Martin Helweg speaks during a panel discussion titled 'Globalisation under threat: managing supply chains in an age of disruption'.
More than 40 ministers and 38 company heads, along with 12,000 delegates from around the world, deliver more than 350 sessions, organisers have said.
More than 40 ministers and 38 company heads, along with 12,000 delegates from around the world, deliver more than 350 sessions, organisers have said.
A model belonging to Austrian energy company OMV on display at Wood's stand at Adipec.
A model belonging to Austrian energy company OMV on display at Wood's stand at Adipec.

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“This is a cyclical business, especially with demand slowing down due to inflation effects [and] China's growth not where it used to be,” said Mr Gangl.

Frequent lockdowns under its zero-Covid policy have dampened China’s economic growth in recent quarters.

Russia’s invasion of Ukraine and global supply chain bottlenecks pushed shipping rates higher in the first half of 2022.

“The freight rates are coming down [and] this is a clear signal that the overall situation is easing [but] it is not back to normal,” said Mr Gangl.

Supply chains in the automotive industry, a major consumer of plastics, are “working better”, he said.

Global car makers have reported record profits as demand outpaced the supply of new vehicles amid production and supply chain issues.

“They have quite a backlog … we also see that the demand in this area is improving,” said Mr Gangl.

“What we have to get used to is that disruptions [and] changes are happening more often and it is getting more volatile due to all the political topics.”

Borealis, which is majority owned by Austrian energy company OMV, reported a 2021 net profit of €1.4bn ($1.38bn).

The Vienna-based company employs about 6,900 employees and operates in over 120 countries, according to its website.

While you're here
What is the FNC?

The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning. 
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval. 
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
 

Our family matters legal consultant

Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

Mohammed bin Zayed Majlis
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Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor

Power: 727hp

Torque: 1,000Nm

Transmission: 8-speed auto

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5pm: Al Maha Stables – Maiden (PA) Dh80,000 (Turf) 1,600m; Winner: Reem Baynounah, Fernando Jara (jockey), Mohamed Daggash (trainer)

5.30pm: Wathba Stallions Cup – Maiden (PA) Dh70,000 (T) 1,600m; Winner: AF Afham, Tadhg O’Shea, Ernst Oertel

6pm: Emirates Fillies Classic – Prestige (PA) Dh100,000 (T) 1,600m; Winner: Ghallieah, Sebastien Martino, Jean-Claude Pecout

6.30pm: Emirates Colts Classic – Prestige (PA) Dh100,000 (T) 1,600m; Winner: Yas Xmnsor, Saif Al Balushi, Khalifa Al Neyadi

7pm: The President’s Cup – Group 1 (PA) Dh2,500,000 (T) 2,200m; Winner: Somoud, Adrie de Vries, Jean de Roualle

7.30pm: The President’s Cup – Listed (TB) Dh380,000 (T) 1,400m; Winner: Haqeeqy, Dane O’Neill, John Hyde.

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Power: 464hp at 5,200rpm

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Transmission: 10-speed auto

Fuel consumption: 11.7L/100km

On sale: Now

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