Plastics and AI instead of oil and gas

The United Arab Emirates is working on its business model for the post-fossil fuel era. This offers interesting opportunities for Austria's economy, as the OMV example demonstrates.

The scenery is somewhat reminiscent of the fantasy novel "The Lord of the Rings." Like the Eye of Sauron, the al-Maktoum solar power plant is visible from a distance of 20 kilometers as a bright, shining spot clearly above the horizon. The tower rises 263 meters high, and at its peak, sunlight is concentrated by thousands of mirrors arranged around the tower. This heats a salt solution to up to 1000 degrees Celsius, which then generates electricity. Al-Maktoum's total electrical output is 3600 megawatts. 700 megawatts of this is generated by the spectacular solar thermal energy, with photovoltaics providing the rest. The power plant is already the largest solar power plant in the world. And it's still growing. By 2030, its capacity will be expanded to 7600 megawatts. By comparison, large gas-fired power plants such as Mellach near Graz or Vienna Simmering have outputs of 800 to 1200 megawatts.

Sustainable solar power as the energy of the future. That is the vision in a country that actually has enough other energy sources at its disposal. After all, al-Maktoum is located in the United Arab Emirates (UAE) – with a daily production of 4.1 million barrels, one of the largest oil and gas producers in the world. But even in the Arabian Gulf, it is clear to everyone that the burning of fossil fuels has an expiration date. And so they are working on a concept for the time after. This is where Austria comes into play. After all, Abu Dhabi's oil company, Adnoc, is currently building the fourth-largest chemical company in the world together with OMV. Refining rather than burning is the future motto for black gold, both in the Emirates and at the domestic oil company. For this purpose, OMV and Adnoc created the chemical joint venture Borouge back in 2001. It will now be merged with the OMV chemicals subsidiary Borealis and the Canadian group Nova Chemicals in a triple merger. A new dimension. It is a "historic agreement," concluded here at the beginning of March after two years of negotiations, says Economics Minister Wolfgang Hattmannsdorfer, whose first foreign trip in his new role last week also took him to the Emirates. The deal is on a scale that OMV "could never have managed alone," says OMV CFO Reinhard Florey. Only two Chinese companies, which primarily operate in China, and the US giant Exxon are now larger in the production of plastic granulate.

For Austria, the merger will bring an economic dimension "unprecedented in this form," Florey said. The final market capitalization – after two further, firmly planned capital increases – is expected to amount to well over 40 billion euros. This would make it by far the largest share in the Austrian ATX. While the primary listing of the shares will remain in Abu Dhabi, a secondary listing is planned in Vienna. The Austrian capital will also be home to the new group's headquarters, as well as its most important research center in Linz.

This group, the Borouge Group International, will ultimately be owned by OMV and Adnoc in approximately 44 percent each, with the remainder to be free float. This is necessary for inclusion in the prestigious MSCI 50 Index. And these shareholdings can only be changed with OMV's consent, according to Florey and Öbag CEO Edith Hlawati, regarding possible concerns that OMV could be turned into a junior partner by Adnoc, its much more financially powerful partner, through capital increases. "OMV must approve every capital increase," Florey said. Furthermore, even a slight dilution of the shares would not change co-determination. "Only when the shares fall below 30 percent do we no longer have the same rights."

The contracts have already been finalized, and closing is expected for early next year due to global approval procedures by competition authorities. The company will also have a new management team at that time. Who that will be is still unclear. However, a manager who is not unknown in Austria could play a role in this matter. Former OMV CEO Rainer Seele is now working as a consultant for Adnoc and was present at the meeting between Adnoc CEO and Emirati Minister of Industry, Sultan bin Ahmed al-Jaber, and Minister Hattmannsdorfer on behalf of the Arab company.

From the Minister of Economic Affairs' perspective, however, this "milestone" should not be the end of it. Rather, it should be the prelude to even closer cooperation with the United Arab Emirates. After all, the country, which is comparable to Austria in terms of both area and population, is an attractive trading partner with growth of well over four percent this year. Hattmannsdorfer is therefore advocating for a European free trade agreement with the UAE. But cooperation opportunities – for example in the field of hydrogen – could also be interesting for other domestic companies such as Verbund, because energy is a key issue for the domestic economy. "Öbag should be a key player in the further development of the location," says Hattmannsdorfer.

Location policy is also an important issue for the UAE. And the question of what comes after oil. The Emirate of Dubai relies heavily on tourism. Abu Dhabi is taking a somewhat different path and has chosen digitalization and artificial intelligence as a field of the future. For example, in 2019, it founded its own university for artificial intelligence, where 200 researchers from 50 nations now teach almost 400 students. "Our goal is to become the Stanford of the Middle East," says Vice President Sami Haddadin, who headed the Center for Robotics and AI at the Technical University of Munich until the beginning of the year. In the global ranking of the elite US university, the UAE is already ranked as the fifth most important nation for artificial intelligence, after the USA, China, the UK, and India. To ensure a sustainable supply of energy to the necessary data centers, solar power plants are to be massively expanded. This, too, presents an opportunity for Austrian companies active in this field.

by Jakob Zirm

The press