Borouge formally signs USD3.1 billion contracts for expansion project

At a ceremony held at Borouge's new headquarters in Abu Dhabi, UAE, contracts were signed by Mr. Harri Bucht, CEO of Borouge production company, Mr. Fabrizio Di Amato, Chairman of Tecnimont S.p.A. of Italy, Juan Ilado Arburua, Vice Chairman and CEO of Tecnicas Reunidas S.A. of Spain.

The contract with Tecnimont S.p.A., worth approximately US$1.855 billion, is for the construction of three new Borstar® technology polyolefins units and associated material handling facilities, laboratory facilities and marine works. This is the largest supplier contract Borouge has signed since its inception as a company in 1998 and is awarded on a lump sum turnkey basis.

The contract with Tecnicas Reunidas S.A., worth an estimated value of US$1.234 billion, is for the construction of the offsite and utility facilities for the expanded plant, and is awarded on a convertible lump sum turnkey basis.

Preliminary work will begin immediately and both contracts are scheduled to be completed in 2010.

Harri Bucht, Chief Executive Officer of the Borouge production company, commented:

"Today marks a major step forward in our expansion plans and signing these contracts lays down a path to tripling our production capacity by 2010. This is a major project that demonstrates the commitment and ambition not just of Borouge but of the petrochemical industry in the Gulf. We look forward to working closely with our new partners to make it a reality."

The Borouge 2 project will increase Borouge's annual production capacity to two million tonnes of polyolefins, including for the first time, polypropylene.

Harald Hammer, Chief Executive Officer of the Borouge marketing company commented: "Market acceptance of the Borstar range since Borouge's inception in 1998 has been exceptional. These contracts increase the momentum of the Borouge 2 expansion bringing additional Borstar Enhanced Polyethylene and now Borstar Enhanced Polypropylene to customers across the Middle East and Asia-Pacific.

By quadrupling the number of grades we will serve our innovative customers with complete solution concepts in high performance applications."

In January 2007, Borouge began the first stage of the construction process, when it formally signed a US$1.3 billion contract with Linde Engineering/CCC for the construction of a new ethylene cracker. The contract was awarded to Linde/CCC on a lump sum turnkey basis, with preliminary work already under way and completion scheduled for 2010.