What ADNOC and OMV’s Merger Means for the Energy Industry

Energy mergers are transforming how companies collaborate and secure resources.

One of the latest amalgamations involves The Abu Dhabi National Oil Company (ADNOC) and Austrian multinational integrated oil, gas and petrochemical giant OMV, who are merging to form a US$60bn global chemicals behemoth.

The deal has taken almost two years to come to fruition and combines OMV’s Borealis with ADNOC’s Borouge — as well as the acquisition of Nova Chemicals from Mubadala for US$13.4bn.

His Excellency Dr Sultan Ahmed Al Jaber, ADNOC Managing Director and Group CEO, says: “These transformative transactions mark a pivotal milestone in ADNOC’s global chemicals strategy as we deliver on our international growth mandate. 

“Building on our 25-year strategic partnership with OMV, we will create a new industry powerhouse with a portfolio of premium products, cutting-edge technologies and worldwide market access.”

The impact of this ADNOC OMV partnership

The ADNOC leader adds: “The visionary combination of Borouge and Borealis and acquisition of Nova Chemicals further future-proofs ADNOC and solidifies Abu Dhabi’s status as a leader in the chemicals sector, as we seek to meet the growing global demand for chemicals and associated products, while driving value creation and growth opportunities for our shareholders.”

By merging polyolefins businesses, ADNOC and OMV are creating Borouge Group International — the world’s fourth-largest polyolefins producer.

Not only this, the collaboration continues ADNOC’s goal of strengthening its global chemicals strategy, as well as positioning Borouge in North America.

Could this be a strategic shift in the energy sector towards petrochemicals as a means of future-proofing against the energy transition?

The International Energy Agency (IEA) projects that petrochemicals will make up more than a third of oil demand growth by the end of the decade.

This is primarily driven by rising consumption in developing economies.

However, petrochemicals are a sore talking point and challenge when it comes to the energy transition as it is a major driver of continued fossil fuel demand.

But ADNOC says this agreement is allowing the UAE’s state-owned oil company to “future-proof” itself and “solidify Abu Dhabi’s status as a leader in the chemicals sector” — a calculated move to secure revenue streams in petrochemicals as the demand for traditional fossil fuels could potentially decline.

Alfred Stern, Chairman of the Executive Board and CEO of OMV, adds: “These landmark transactions represent a momentous step for OMV.

“They will accelerate our growth strategy in chemicals and support OMV’s transformation into an integrated sustainable chemicals, fuels and energy company. 

“Together with ADNOC, our strategic partner of 25 years, we are creating a global polyolefins leader, exceptionally positioned for value creation by accessing the largest and most cost advantaged markets. 

“We aim to significantly increase the sales volumes of innovative polyolefin premium products and be at the forefront of renewable and circular economy solutions. 

“Together, OMV and ADNOC will build on a versatile and future-proof product portfolio and pursue significant organic growth opportunities. Most importantly, today’s agreement secures material synergies and long-term sustainable value creation for OMV’s shareholders.

“ADNOC and OMV have already proven that we are stronger together. We are convinced that we will unlock superior shareholder value on our joint path forward.”

ADNOC’s commitment to the energy transition

Outside of the agreement, ADNOC has made pledges to sustainability and the energy transition.

“As a responsible energy provider, we are committed to creating long-term value for our people, business and society,” ADNOC says.

“We have a long legacy as a responsible provider of energy to the world and a key catalyst for the UAE’s economic growth and diversification. 

“In this, we follow the vision established by the late Sheikh Zayed bin Sultan Al Nahyan, the UAE’s Founding Father, to balance economic development with environmental responsibility.”

ADNOC’s sustainability targets include achieving the following by 2030:

• Near zero methane emissions
• 10 million mangroves planted
• 25% female representation in technical positions

The company adds: “Across our operations we aim to reach net zero by 2045 — and our 2030 Sustainability Strategy is a key roadmap to achieving this goal. 

“We are continuously implementing sustainable practices to maintain our leading role in the energy transition and safeguard the communities and environments in which we operate.”

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