Reliance Industries (RIL) and the Abu Dhabi Chemicals Derivatives Company RSC (TA’ZIZ) on Tuesday signed a shareholder agreement for a chemical project in Ruwais, Abu Dhabi.
The development acquires significance as it will focus on chlor-alkali, ethylene dichloride (EDC) and polyvinyl chloride (PVC) production, which is used in a wide range of industrial applications. This is expected to unlock new revenue streams for RIL as well as the Abu Dhabi National Oil Company (ADNOC) and ADQ, an Abu Dhabi-based investment and holding company, who are strategic partners in TA’ZIZ, a joint venture company.
For the uninitiated, RIL derives over 60 per cent of its revenue and nearly 55 per cent of its operating profit from its oil-to-chemicals (O2C) business. This includes refining, petrochemicals and fuel retail. Retail and telecom, on the other hand, contribute 29 per cent and 17 per cent each to revenue, respectively, said analysts tracking RIL.
The investment in the TA’ZIZ chemical project is estimated at over $2 billion, though RIL clarified that the final investment decision was expected later this year and was subject to regulatory approvals.
Chlor-alkali enables the production of caustic soda, crucial to the alumina refining process. While EDC is used in the production of PVC, which is used to manufacture a wide range of products including pipes, windows fittings, cables, films and flooring.
RIL said that a formal shareholder agreement was signed by senior executives during a visit of Ambani, who is chairman and managing director (MD) of RIL, to the ADNOC headquarters.
The company said that Sultan Al Jaber, Minister of Industry and Advanced Technology and ADNOC MD and Group CEO exchanged a signed framework agreement with RIL for the exploration, development and production of conventional and unconventional resources in Abu Dhabi as well as in decarbonisation of operations.
Experts said that the TA’ZIZ project would benefit from the free trade agreement between India and the United Arab Emirates (UAE), which was signed in February this year. Chemicals was a priority sector for the UAE, with RIL considering investing in more such projects.
“This joint venture is a testimony to the strong and growing ties between India and the UAE and will be a benchmark for more such projects built on the strengths of the two nations. I am looking forward to implementation of the project at an accelerated pace, taking a step further in enhancing the lives of our people in the region,” Ambani said.