Opportunities

in a Globalising World:

Strategies for Europe

IHS Markit WPC

Thomas Van De Velde

March 21st , 2018

Borealis at a glance

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EUR 7.6billion

sales revenuein 2017

(>EUR 9 billionwith Borouge)

Operates in over 120 countries

on 5 continents

Head officein Vienna,

Austria EUR 1.1 billion

net profitfor 2017

Production and sales of polyolefins,

base chemicalsand fertilizers

Ownership structure

Mubadala, Abu DhabiOMV, Austria

2nd largest polyolefin producer

in Europe

Borouge operates world’s largest

integrated PO site in Ruwais, UAE

6,600employees

+3,500 in Borouge

Borealis foundation for sustainable growth

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Running complex

chemical assets safely

Ability to build large

complex projects

Application focus

Access to ME & Asia +

strong brand name

Broad Technology Suite

including Borstar®

technology

Fit to Borealis

businesses

Our unique strengths

Ability to fund

In combination

Access to market

Access to advantaged

feedstock

Right technology

Our key criteria

Borealis’ portfolio of leading polyolefin technologies

4 |

Polyolefin Technologies Post-Reactor Technologies

Borstar® PEBimodal LLD, MD & HDPE

Borstar® PPMultimodal PP

Borealis SIRIUS Catalyst Technology

Borlink™Wire & Cable TechnologyPlatform

Borceed™Plastomers and Elastomers

Daploy™ HMS PPHigh melt strength PP

Fibremod™ Engineered

Fibre Compounds

Quentys™ Empowering Solar

Anteo™ Borstar BimodalTerpolymer PE

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Global ethylene capacity and production grows steadily, but with regional differences

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50

40

30

2010

10

20

20302000 2020

0

Production Total Capacity

203020102000

40

30

50

20

10

0

2020

10

2010 203020202000

40

30

20

50

0 0

2000

30

20302020

50

20

10

2010

40200

150

2000 2020

100

0

50

20302010

250

Source: IHS Markit - Chemical Supply & Demand (Spring 2017 Update); WE and CE … Western and Central Europe according to IHS

Ethylene capacity and production in million metric tons

United States WE and CE ChinaMiddle EastWorld

Ethylene growth driven by feedstock advantage –propylene is quite different

Ethylene capacity additions go where feedstock is advantaged

Propylene capacity additions go where the market is

Methanol, propane, naphtha travel well; terminals and vessels exists

Europe is not significantly disadvantaged particularly when feeding

existing downstream, especially in the propylene derivatives

Borealis considering world scale new PDH in Antwerp

Would fill the gap left by refineries and crackers moving to lighter feed

Primarily to feed own PP assets (existing and expansions) and 3rd

party monomer demand

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150

100

50

0

200

USEuropeCapacity RoWMiddle East China

50

100

150

0

200

20052000 202520202010 2015

On-purpose Conventional

Propylene production

Source: IHS Markit

Chemical Supply & Demand (Spring 2017 Update); Capacity … delta between global production and capacity, Conventional … sum of steam crackers, FCC splitters and refinery grade direct

Bring the feedstock advantage to Europe

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Key belief is that US natural gas retains its price advantage long term

Price advantage directly correlated with oil price: higher the oil

higher the benefit

Long term point-to-point commitments required for pipelines,

terminals and vessels

Factors to consider: oil and US ethane price view, value of optionality

At oil prices below 50 USD/bbl, ethane has not a great business case

rather a hedge for higher prices to come

Borealis already moving ethane from North Sea to Sweden and has

additionally added ethane from US (invested around MEUR 120)

Logistics capabilities – the key to capture global opportunities

Key to be able to source feed globally and serve customers locally

Capability to handle VLGC size vessels and large liquid cargoes

Import, export capability taking advantage of volatility and seasonality

All our coastal locations capable of handling VLGC size vessels

Largest propane and butane storage in Europe in Stenungsund with

export capability

Invested in Porvoo (Finland) a 150.000 m3 propane /butane cavern

Large propylene tank in Antwerp for trading and supply security

Contaminants management is in focus; bad past experience has

taught us

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Continuous maintenance investments a must to keep business competitive

Operability and reliability of „aged“ assets are key to profitability

Sustainable asset care increasingly important

Energy improvements: good business and authority requirement

Balance between ROCE dilutive and accretive to be watched

Borealis´ Stenungsund Cracker Furnace Revamp Programme

(MEUR 160) to bring location to the highest currently available

standards in process safety, energy efficiency and secure long

term sustainability

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We assess both the positive and

negative consequences of our activities

on People, Planet and Profit to take

responsible decisions.

Sustainability means finding the right balance between People, Planet and Profit

10 |

We will...

support profitable Business Growth

enhance the sustainability of our operations and supply chain

enhance internal capabilities, communication & stakeholder

engagement

While focused on:

Definition Our approach

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Profit Planet

People

Designed for plastic

packaging recyclingEfficient and reliable

energy transmissionValue-adding

healthcare solutions

Social license to operate demanded

Chemical industry under scrutiny from politicians and public

We need to be seen to positively contribute to:

Energy efficiency

Accident free operations

Air, water, noise pollution reduction

Education and employment

Uphill battle which we need to win with facts

European industry players working together to minimize waste,

littering and improve awareness

Borealis chairs Plastics Europe Marine Litter Solutions WG

“Stopping the Tap on Ocean Plastics” (STOP) - A joint initiative

by Borealis and Borouge to stop leakage plastics to the ocean

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Borealis TRI frequency

Own vs. Contractors 1996 – 2016

Circular economy solutions expected

Plastics have bad sustainability and circularity reputation

Yet our products are recyclable, reusable, durable, non-toxic and

light weight

Achilles heel is littering and landfill

Need to embrace circularity to remain ahead of the game

Borealis entered mechanical recycling in 2016

Creation and chairing of EU Polyolefin Circular Economy Platform

Member of the New Plastics Economy Initiative led by Ellen

MacArthur foundation – first prime plastics producer

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Borealis‘ approach to advocacy: from re-active to progressive

13 |

Advocating “what to DO” with tangible solutions

Stakeholder management

Achieved significant external recognition

Gained reputation as leader in Circular Economy

Trusted as competent dialogue & business partner

Shaped policies and regulations

Increased visibility and brand value

Kicked off development of new innovative PO

solutions

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In summary: the US is not the only game in town – Europe will continue to thrive

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Feedstock price based competitiveness particularly in absolute terms

volatile and transitional

Innovation, workforce quality and capex matters

Logistics and energy infrastructure is the backbone

High number of integrated chemical clusters and proximity to customers

Smart regulation and energy policies needed for competitiveness

The region leading in circular economy solutions

And finally we Europeans need some luck to remain relevant: low oil,

weak euro, global growth, high US ethane…to list of few for your

evening prayers

Thank you

Unless otherwise specifically stated, this presentation, any part of it, or

any information contained herein may only be copied, disclosed or used

within the Borealis group of companies. Borealis AG and its affiliates

give no warranty and make no representation as to the accuracy,

completeness or fitness for any particular use of the information

contained herein.

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