Abu Dhabi: Rystad Energy, a leading independent energy research and business intelligence company headquartered in Oslo, Norway, has released a report noting that ADNOC's plan to acquire German polymer materials expert Covestro is "a strategic move that will allow the company to diversify and future-proof its business amid growing global demand for petrochemicals, while also addressing pressing sustainability challenges".
In its report titled "ADNOC leans into energy diversity and sustainability with Covestro bid", Rystad Energy noted that 'regionally, the Middle East – with ADNOC at the forefront – is set to become one of the leaders in sustainable petrochemicals, leveraging its strategic position as a major oil producer while aligning with global decarbonisation trends."
Rystad Energy highlighted that "with discussions spanning more than a year, ADNOC has now offered to acquire Covestro for an enterprise value of about €14.7 billion ($16.4 billion) in cash.
"The acquisition marks a step forward in ADNOC's international expansion efforts and is a move that will position the company as one of the top five chemicals players globally."
Covestro operates across 48 production sites and 13 research and development facilities, spanning Europe, the Middle East, Africa, Latin America, North America, and Asia Pacific.
Meanwhile, ADNOC has aggressively pursued its low-carbon goals, including recent acquisitions and investments in the gas and liquefied natural gas (LNG) sectors. These include separate acquisitions of an 11.7 per cent stake in the Rio Grande LNG project in the US; a 24.9 per cent stake in Austrian energy and chemicals company OMV; and a 10 per cent stake in the Area 4 concession in Mozambique, home to the Coral South floating LNG project.
ADNOC also forged a gas-focused joint venture in Egypt in partnership with BP. Over the last two years, the company has broadened its upstream portfolio across more than 10 countries, including Azerbaijan, Mozambique and the US.
Covestro has inked renewable energy agreements with major providers like Engie, Orsted and BP for operations across Belgium, Germany, Spain, the US and China.
Covestro's collaborations with Masdar — a renewable energy company co-owned by ADNOC — could lead to fruitful partnerships. Masdar, with its global portfolio of 83 renewable energy projects and a goal to reach 100 gigawatts (GW) of renewable capacity by 2030, could help ADNOC and Covestro jointly pursue innovative solutions.
The report noted that this acquisition reflects a "broader industry trend whereby traditional oil and gas producers diversify revenue streams as oil demand growth slows, particularly in transport."
With the rise of global electrification and renewable energy, petrochemicals present a vital outlet for crude streams.
ADNOC's latest acquisition exemplifies how oil players position themselves to remain relevant by leveraging existing infrastructure to capture value in the expanding petrochemical sector, which is anticipated to continue growing despite a broader slowdown in oil consumption.
The report concluded that the planned acquisition of Covestro represents a "significant milestone for ADNOC as it accelerates its transformation into a global player in chemicals and advanced materials."
The petrochemicals industry is undergoing a significant transformation, with rising demand not only for oil but also for sustainable and high-performance materials, which is reshaping production processes and product offerings.
By integrating Covestro's expertise in high-performance materials and sustainable solutions, ADNOC is positioning itself to drive long-term growth while reinforcing its commitment to economic diversification and environmental responsibility.
