1 investment opportunities in the petrochemical sector in qatar by: hamad rashid al mohannadi vice...
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Investment Opportunities in the Petrochemical Sector in Qatar
By: Hamad Rashid Al MohannadiVice Chairman of QAPCO Board of Directors
& General Manager of QAPCO
Qatar Economic Forum17-18 April 2006
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Presentation Outline• The Global Petrochemical Evolution1. Global Ethylene and Polyethylene supply demand2. Global Polyethylene evolution and per capita consumption
3. Regional petrochemical equivalent trade • The Middle East Petrochemical Scenario1. Regional Ethylene cost curve2. Factors for Middle East Cost Advantage
• Qatar’s Petrochemical Sector1. Background and introduction2. Qatar’s hydrocarbon resources strategy3. Advantages of investing in Qatar4. Qatar’s economic evolution5. Evolution of Qatar’s petrochemical industry6. Conclusion
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Petrochemical EvolutionPetrochemical Evolutionthe global Scenariothe global Scenario
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Global Ethylene Capacity GrowthGlobal Ethylene Capacity Growth
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 100
20
40
60
80
100
120
140
160Millions of tons - World
120
145
80
Source : CMAI
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North America Middle East Total Asia
West Europe Others Annual Demand Increase
World Regional Ethylene World Regional Ethylene Capacity AdditionsCapacity Additions
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Million Tons
Annual change in demand
Source : CMAI
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Polyethylene Evolution
0
20000
40000
60000
80000
100000
120000
140000
1990 1995 2000 2005 2010 2015 2020
PE - World
Capacity - 85% Demand
0
20000
40000
60000
80000
1990 1995 2000 2005 2010 2015 2020
LLDPE
0
20000
40000
60000
80000
1990 1995 2000 2005 2010 2015 2020
LDPE
0
20000
40000
60000
80000
1990 1995 2000 2005 2010 2015 2020
HDPE
In ‘000 ton/ Year
7 to 8%
8 to 9%
2 to 3%
Source : CMAI
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ChinaChinaEthylene Net Equivalent TradeEthylene Net Equivalent Trade
-14000
-12000
-10000
-8000
-6000
-4000
-2000
0
2000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Thousand Tons
Ethylene Vinyls Styrene Polyethylene Glycol Others
Net Imports
Source : CMAI
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Indian SubcontinentIndian SubcontinentEthylene Net Equivalent TradeEthylene Net Equivalent Trade
-2500
-2000
-1500
-1000
-500
0
500
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Thousand Tons
Ethylene Vinyls Styrene Polyethylene Glycol Others
Net Exports
Net Imports
Source : CMAI
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Middle EastMiddle EastEthylene Net Equivalent TradeEthylene Net Equivalent Trade
-2000
0
2000
4000
6000
8000
10000
12000
14000
16000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Thousand Tons
Ethylene Vinyls Styrene Polyethylene Glycol Others
Net Exports
Net Imports
Source : CMAI
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Middle East: The World’s Future
Petrochemicals Production Hub
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Cumulative Capacity (Million Tons)
0
100
200
300
400
500
600
0 20 40 60 80 100 120 140
Brent Crude = $25/bblUS Nat. Gas = $3.30/MMBtu
World (274)
World (274)
Middle East (132)
Middle East (132)
Southeast Asia (266)
Southeast Asia (266)
West Europe (301)West Europe (301)
North America (294)
North America (294)
Northeast Asia (308)
Northeast Asia (308)
Source : CMAI
Global Ethylene Cost Curve Positions of Key Regions versus Asia
World Ethylene Cost Curve (Dollars per Ton)
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Returns for new Middle East investments in the polyolefins chain are substantially higher than in Europe
Integrated chain returns for cracker plus LLDPE plant * ROCE, percent
*Brownfield site; ethylene transferred at cash cost Source: Chem Systems, McKinsey analysis
Middle East, ethane
1100 kt cracker
300 kt LLDPE
NW Europe, naphtha
700 kt cracker
300 kt LLDPE
15.6
7.7
Factors of Middle East cost advantage:
• Cheap gas• Lower capital
cost for ethane crackers
• Scale benefits
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QATARQATARTaking off to become a global
leader in petrochemicals
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BACKGROUND1.Qatar was the first country in the Middle East to
establish a Petrochemical Plant (QAPCO) in 1974.
2.Diversification of the economy started with Phase one of North Field gas project starting in 1987.
3.North Field is the world’s largest natural gas resource with reserves estimated over 25 trillion cubic meters.
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1. Based on these gas reserves, major fertilizer and petrochemical
complexes have been built and more are being created;
2. World scale size plants for Ethylene, Polyethylene and other petrochemical
products are being built;
3. “Qatar will be the GTL capital of the world” and the largest supplier of
LNG by the end of this decade.
INTRODUCTION
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1. To Utilize available large natural gas reserves
2. To establish World Scale projects with sizable Investments
3. To Develop new downstream value added industry
4. To capitalize on Qatar's world scale experience in producing and marketing derivatives
Qatar's Hydrocarbon Resources’ Vision & Strategy
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1.1. The Low Cost of Feed Gas StockThe Low Cost of Feed Gas Stock
2.2. Low cost Utilities and GasLow cost Utilities and Gas
3.3. Well Developed Infrastructure and SupportWell Developed Infrastructure and Support
4.4. Fiscal Incentives, Exemptions Fiscal Incentives, Exemptions
5.5. Government Support Through Policies and LegislationGovernment Support Through Policies and Legislation
6.6. Political and Social StabilityPolitical and Social Stability
7.7. Geographic Advantageous Positioning in targeting Geographic Advantageous Positioning in targeting
Asian, African and European MarketsAsian, African and European Markets
Qatar : A Petrochemical Investment Haven
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Oil, Gas, Utilities &
Hydrocarbons
Oil, Gas, Utilities &
Hydrocarbons
Industrial/ Commercial/
Transportation Infrastructure
Industrial/ Commercial/
Transportation Infrastructure
Tourism, Sports &
Recreational Facilities
Tourism, Sports &
Recreational Facilities
Education, Health & Training Facilities
Education, Health & Training Facilities
Over $120 Billion to be invested in Qatar over
the next few years
Qatar is in the process of transforming into a leading regional economy through a prudent
investment strategy in four key sectors
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Due to the tremendous investments and growth opportunities in the petrochemical sector, Qatar
needs to have several next generation services
Over $15 Billion to be invested in Qatar’s petrochemical sector by 2012
Over $15 Billion to be invested in Qatar’s petrochemical sector by 2012
Development of Human Resources
Increasing need of supply chain partners & logistics providers to transport increasing volume of petrochemicals globally
Strong commitment to build Small to Medium Enterprises (SMEs) to diversify our manufacturing industry
Increasing need to build next generation services to serve the core petrochemical sectors (e.g. Outsourcing, Information Technology)
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Oil & Gas Production Profile
0500
100015002000
25003000350040004500
1990 1995 2000 2005 2010
000
BOE/
day
Oil Production Gas Prdn TotalSource : Contax
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POLYETHYLENE - PRODUCTIONC
apac
ity
K/T
0
1000
2000
3000
4000
5000
2004 2008 2012
Qatar
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ETHYLENE - PRODUCTIONC
apac
ity
K/T
0
1000
2000
3000
4000
5000
6000
7000
2004 2008 2012
Qatar
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Cap
acit
y -
KT
0
1000
2000
3000
4000
5000
6000
7000E
TH
YL
EN
E
PO
LY
ET
HY
LE
NE
PO
YP
RO
PY
LE
NE
PO
LY
STY
RE
NE
ED
C
VC
M
CA
UST
IC S
OD
A
UR
EA
AM
MO
NIA
ME
TH
AN
OL
MT
BE
BE
NZ
EN
E
STY
RE
NE
GL
YC
OL
LA
B
PA
RA
FF
IN
2004 2012
CAPACITY - QATAR
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Cap
acit
y
0
5000
10000
15000
20000
25000
30000
2004 2005 2006 2007 2008 2009 2010 2011 2012
CAPACITY FOR MAIN PETROCHEMICALS IN QATAR
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ConclusionQatar’s Petrochemical industry is poised to
leverage its abundant gas reserves and is positioned to rapid expansion: establishing
itself as one of the world leaders in the Petrochemical production, where Qatar’s
petrochemical production capacity in 2012 will reach over 27 million MT per year with diversified product portfolio of covering 16
different products.
Such giant petrochemical development plans, will necessitate the creation and
development of associated and supporting services and industries required to serve
these projects, hence establishing additional tremendous horizon of small
and medium size investment opportunities for years to come.
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