Statoil to Sell Borealis Stake to Partners

POLYOLEFINS

The Norwegian state oil firm Statoil is selling its 50% holding in the European polyolefins joint venture Borealis to existing shareholders International Petroleum Investment Co. (IPIC) of Abu Dhabi and Austrian refiner OMV. The sale, valued at about $1.2 billion, is meant to accelerate Borealis' growth, particularly in the Middle East.

When it is complete, IPIC's stake in Borealis will have increased from 25% to 65%, and OMV's, from 25% to 35%. IPIC also has a 17.6% share in OMV. Statoil will receive $1.1 billion in cash from OMV and IPIC as well as a $100 million dividend from Borealis for 2005. OMV and IPIC are also reviewing an initial public offering of a significant stake in Borealis, which generated $5.75 billion in sales in 2004.

Abu Dhabi-government-owned IPIC says the purchase will strengthen Borealis' hand in the Middle East. After IPIC and OMV bought their initial stake in Borealis from Finland's Neste in 1998, Borealis and Abu Dhabi National Oil Co. built the ethylene/polyethylene joint venture Borouge in the United Arab Emirates. Borouge is now considering an expansion that will more than double its total output.

Borealis is also a major customer of OMV in Austria, processing some 85% of the petrochemicals OMV produces there. Borealis is coordinating a polyethylene expansion in Schwechat, Austria, with an OMV cracker upgrade.

Separately, Borealis says it is expanding ethylene capacity by 50,000 metric tons per year and propylene capacity by 23,000 metric tons per year in Porvoo, Finland, in a project to be completed in 2007.