Abu Dhabi National Oil Company (Adnoc) and Austrian energy company OMV have commenced formal discussions to create a new petrochemical company.

The new entity, which will reportedly be valued at more than $30bn, (108bn dh) (€26.7bn) will be created by merging Borouge and Borealis.

Headquartered in Vienna, Borealis is engaged in providing polyolefins solutions and polyolefins recycling.

OMV owns a 75% stake in Borealis and the remaining 25% is controlled by Adnoc.

Meanwhile, petrochemical company Borouge, which is listed on the Abu Dhabi Securities Exchange, is a joint venture between Adnoc (54%) and Borealis (36%).

OMV chairman of the board and CEO Alfred Stern said: “This potential transaction would have a strong and compelling industrial logic. Combining the two complementary businesses would bring together Borealis’ technological expertise, and speciality and sustainable polyolefins solutions, with Borouge’s advantageous cost position and access to attractive markets, that would create a new global polyolefin powerhouse with significant organic and inorganic growth potential.

“This would build on more than 25 years of successful partnership with Adnoc and be one of the possible catalysts to achieve OMV’s Strategy 2030. At the same time, there are a number of transaction parameters that are subject to mutual agreement during the negotiation.”

Borouge is said to have a market value of approximately $22bn.

With its stake in Borouge, Borealis may be valued at roughly $10bn by the two parties.

In a separate statement, Adnoc said: “The potential merger would mark the next transformative milestone in Adnoc’s ongoing value creation and chemicals growth strategy, with any transaction subject to customary regulatory clearances.”

Last week, it was reported that private equity firms BlackRock and KKR are close to selling their stake in Adnoc’s oil pipeline network.