Reliance signs pact with ADNOC for chemical facility

Reliance Industries and Abu Dhabi National Oil Company (ADNOC) on Tuesday signed an agreement to explore setting up of a facility in UAE to produce ethylene dichloride, which goes into the making of PVC that is commonly used in pipes, tubes and cable.

"Under the terms of the agreement, ADNOC and RIL will evaluate the potential creation of a facility that manufactures ethylene dichloride or EDC adjacent to ADNOC's integrated refining and petrochemical site in Ruwais, Abu Dhabi and strengthen the companies' existing relationship supporting future collaboration in petrochemicals," the companies said in a statement.

The signing of the agreement in Abu Dhabi was witnessed by UAE Minister and ADNOC Group CEO Sultan Ahmed Al Jaber and RIL Chairman and Managing Director Mukesh D Ambani.

The agreement was signed by Abdulaziz Alhajri, Executive Director of ADNOC's Downstream Directorate, and Nikhil R Meswani, RIL Executive Director.

Ethylene dichloride (EDC) is used primarily for the production of vinyl chloride monomer (VCM), which is used mainly in the polymerization manufacture of polyvinyl chloride (PVC).

PVC is commonly used in pipes, fittings, profiles, tubes, windows, doors, sidings, wire, cable, film, sheet, and flooring.

The vinyl industries include construction and infrastructure, agriculture, electrical products and healthcare. EDC is also used as an intermediate in the manufacture of chlorinated solvents and ethyleneamines, and as a solvent in the textile, metal cleaning, and adhesive industries.

The US is the largest producer and consumer of EDC in the world, accounting for approximately 30 per cent of global capacity, production, and consumption in 2018. The US is also the largest EDC exporter, representing about 43 per cent of global exports, as a result of advantaged production economics and healthy demand for caustic soda.

The Indian subcontinent is expected to be the fastest-growing region for EDC demand, with a projected increase of about 17 per cent per year.

"ADNOC would supply ethylene to the potential joint venture and provide access to world-class infrastructure at Ruwais, while RIL will deliver operational expertise and entry to the large and growing Indian vinyl market, in which it is a key participant," the statement said.

Meswani said: "This is a significant step towards Reliance's commitment to pursue backward integration and will pave the way for enhancing PVC capacity in India to cater to the fast-growing domestic market. This co-operation ideally combines advantaged feedstock and energy from the UAE with Reliance’s execution capabilities and the growing Indian market."

Alhajri said: "The agreement with Reliance Industries Limited is a product of our strong relationship, spanning over two decades, and a testament to ADNOC's continued ability to cultivate smart and mutually beneficial international partnerships. We look forward to working closely with RIL to identify opportunities to capitalize on the strengths of the Ruwais ecosystem while delivering a compelling new commercial platform for satisfying the large Indian PVC market, as well as demand for other fast-growing segments in the region."