Reliance Industries Ltd. plans to invest $2 billion in the UAE's TA'ZIZ chemical joint venture between Abu Dhabi National Oil Co. and sovereign wealth fund ADQ, becoming the Indian company's first deal in the Gulf region.
Under the terms of a strategic agreement, Reliance and TA'ZIZ will build plants with capacity to produce 940,000 mt/year of chlor-alkali, 1.1 million mt/year of ethylene dichloride and 360,000 mt/year of polyvinyl chloride at the TA'ZIZ Industrial Chemicals Zone, ADNOC said in a June 29 statement.
The deal is worth around $2 billion, sources with knowledge of the matter told S&P Global Platts. ADNOC and ADQ said last November they expected to attract more than $5 billion of third-party investments into petrochemical projects being executed by the TA'ZIZ venture.
"Tenders for the initial design of the seven TA'ZIZ chemicals derivatives projects have been awarded and work is ongoing," ADNOC said in the statement. "Final investment decisions for the projects and awards of related EPC contracts are being targeted for 2022."
Mukesh Ambani, chairman and managing director of Reliance Industries, said in a statement the agreement will help "globalize" the company's operations. Chlor-alkali is used in water treatment and in the manufacture of textiles and metals, while ethylene dichloride is typically used to produce PVC, which has a wide range of applications across housing, infrastructure and consumer goods.
"The market for these chemicals is expected to enjoy steady growth supported by the needs of growing demand, particularly in Asia and Africa," ADNOC said.
Aramco connection. The petrochemical deal with ADNOC comes a few days after Saudi Aramco's chairman Yasir al-Rumayyan joined the board of Reliance Industries as an independent director, bolstering ties with a key crude customer and increasing the likelihood of the Saudi oil giant purchasing a stake in the Indian refiner. For its part, ADNOC wants to woo partners to build chemicals in the industrial hub of Ruwais, where TA'ZIZ is based.
ADNOC announced in 2018 plans to invest $45 billion in its downstream sector alongside partners as it seeks to develop new industries. The national oil producer is expanding its downstream industry as it embarks on a $122 billion spending spree up to 2025 that will help finance various projects, including an oil production capacity ramp-up to 5 million b/d by 2030 from 4 million b/d now.
ADNOC has over the years built its ties with India, one of the top buyers of its products, and ADNOC CEO Sultan al-Jaber recently discussed with India's oil minister Dharmendra Pradhan opportunities for collaboration in new energy sectors, including hydrogen.
The UAE was India's third-largest supplier of crude in 2020, behind Iraq and Saudi Arabia, with volumes of 21.35 million mt and an 11% market share, according to data from GAC India.
ADNOC, the only overseas producer that currently has crude stored by Indian Strategic Petroleum Reserves Limited, or ISPRL, is keen to supply more crude for storage in India, Jaber said last October. Currently, ADNOC has two agreements to supply crude to ISPRL at Padur and Mangalore in Karnataka in southern India.
ADNOC, which counts India as its second-biggest market, also invited Indian companies to invest in the UAE's downstream sector.
ADNOC has been expanding its partnership with Indian oil companies in recent years. In March 2019, Bharat Petroleum Corp. Ltd. and Indian Oil Corp. won exploration rights for an onshore block in Abu Dhabi. This followed the award in February 2018 of a 10% participating interest in Abu Dhabi's offshore Lower Zakum Concession to a consortium made up of ONGC Videsh, IOC and Bharat PetroResources.