Abu Dhabi government-owned IPIC has signed a memorandum of understanding with Austrian subsidiary Borealis to develop a chemicals complex in the UAE.

The multi-billion dollar project to build a "chemicals industrial city" will be located in Abu Dhabi, UAE state news agency Wam reported.

Abu Dhabi is the largest emirate in the UAE and holder of 90 percent of the Gulf Arab state's oil reserves.

Abu Dhabi Investment Council has also signed the memorandum, Wam said.

The complex will include cracking and reforming units to process petrochemical feedstock naphtha. Upon completion of the first phase of the project in 2013, the complex will be the largest of its kind in the world, Wam said.

The International Petroleum Investment Co (IPIC) owns 65 percent of Borealis, while Austria's OMV owns the remaining 35 percent.

Borealis is a joint partner with state-run Abu Dhabi National Oil Company (Adnoc) in UAE based petrochemical producer Borouge.

The UAE is the world's fifth-largest oil exporter. IPIC invests in oil and gas-related assets for the government as part of a drive to diversify assets. - Reuters