The Abu Dhabi National Oil Company (ADNOC) and Austria’s OMV have agreed to merge their polyolefin businesses, forming a $60 billion chemicals powerhouse named Borouge Group International. This strategic move is poised to reshape the global petrochemical scene. This merger signifies a pivotal step in both companies’ strategies to expand their global footprint in the chemicals sector and adapt to the evolving energy landscape.
Companies Involved
ADNOC, established in 1971, is the state-owned oil company of the United Arab Emirates (UAE). Over the decades, it has evolved into one of the world’s leading energy producers, operating across the entire hydrocarbon value chain—from exploration and production to refining and distribution. ADNOC’s strategic initiatives have been instrumental in driving the UAE’s economic growth and diversifying its energy portfolio.
OMV, founded in 1956, is an Austrian multinational integrated oil, gas, and petrochemical company headquartered in Vienna. The company engages in oil and gas exploration, refining, and marketing, and has established a significant presence in the petrochemical sector through its subsidiary, Borealis. OMV’s operations span Europe, the Middle East, and other regions, reflecting its commitment to innovation and sustainability in the energy sector.
Merger Details
The merger combines Borealis—jointly owned by OMV (75%) and ADNOC (25%)—and Borouge, a joint venture between ADNOC (54%) and Borealis (36%). This consolidation creates one of the world’s largest polyolefin producers, positioning Borouge Group International as a formidable competitor in the global market.
A notable aspect of this merger is Borouge Group International’s agreement to acquire Canada’s Nova Chemicals Corp for $13.4 billion from Mubadala Investment Company. This acquisition aims to strengthen the new entity’s presence in the North American market, aligning with its global expansion strategy.
The merger, which required nearly two years of negotiations, is subject to regulatory approvals and is expected to conclude in the first quarter of 2026. As part of the agreement, OMV will invest €1.6 billion to equalize shares, resulting in both ADNOC and OMV holding approximately 47% stakes in the newly formed entity. The remaining shares will be available as free float. The company will be headquartered in Austria and listed on both the Abu Dhabi and Vienna stock exchanges, reflecting its dual heritage and global ambitions.
Strategic Implications
This merger aligns with broader industry trends where traditional oil and gas companies are diversifying into petrochemicals and advanced materials. As the global energy landscape shifts towards sustainability and reduced carbon emissions, the demand for petrochemical products, particularly polyolefins used in various applications, is expected to remain robust. By consolidating their polyolefin assets, ADNOC and OMV aim to capitalize on this demand, ensuring long-term growth and resilience.
The creation of Borouge Group International is anticipated to yield significant synergies, including an estimated $500 million in annual cost savings. These efficiencies are expected to enhance the company’s competitiveness and profitability in a challenging market environment. Additionally, the merger supports OMV’s transition into a sustainable chemicals, fuels, and energy company, aligning with global sustainability goals.
Future Outlook
Looking ahead, Borouge Group International has ambitious plans to expand its operations and market presence. The company is set to benefit from Borouge 4, an expansion project with an estimated investment of $7.5 billion, aimed at increasing production capacity and meeting growing global demand. Furthermore, the new entity plans to raise $4 billion in 2026 to join the MSCI index, enhancing its visibility and attractiveness to global investors.
The merger also reflects ADNOC’s broader strategy to diversify its portfolio and invest in growth sectors beyond traditional oil and gas. The establishment of XRG, a new investment company valued at over $80 billion, focusing on lower-carbon energy and chemicals, underscores ADNOC’s commitment to adapting to the energy transition and capitalizing on emerging opportunities.
The merger between ADNOC and OMV to form Borouge Group International represents a significant milestone in the petrochemical industry. It not only creates a global leader in polyolefins but also exemplifies strategic adaptation to the evolving energy landscape, positioning both companies for sustained growth and success in the years to come.