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Downstream Petroleum Sector“The Growing Prominence of Asian Refining”

Mr. Fahad Al-Dihani

Deputy CEO,MAA Refinery,

Kuwait National Petroleum Company-Kuwait

2إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation2

Outline..

• Global refining trends

• Kuwait’s Position in petroleum sector

• Introduction to KPC and subsidiaries

• Role of KNPC as downstream sector

• Opportunities and Challenges

3إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation3

Expected Global economic growth up to 2020. . .

4إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation4

Refined Product Demand Growth by Region

5إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation5

Asia accounts for about half of the world’s total refined product demand growth . . .

Year-to-Year Change, Million Barrels per Day

2000 2005 2010 2015

Note: Asia region depicted in this chart includes Asia and Oceania.

GDP %

-2

-1

0

1

2

3

4

2020

-4

-2

0

2

4

6

8

Rest of the World

Total Asia

Asia GDP

6إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation6

Asia Gasoline Demand and Quality Changes

7إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation7

Asia Diesel Demand and Quality Changes

8إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation8

60% of Announced Capacity is in Asia / Middle East

9إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation9

Middle East Refined Product Demand Growth

10إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation10

OPPORTUNITIES AND CHALLANGES

11إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation11

Kuwait Position in Oil and Gas Sector• 5th Largest producer of crude oil among OPEC countries

• 10th largest producer of petroleum and other liquid products in the world in year 2015

• 70% of country economy is based on petroleum revenues

• Produces about 2.8 million barrels of crude per day, target for year 2020 is to produce about 4.0 million barrels of crude per day

• 80% crude Exports to Asia Pacific

As above, Kuwait plays a significant role in petroleum sector globally and specifically in Asia Pacific

12إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation12

Kuwait Petroleum and other liquid production

13إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation13

Kuwait Crude Oil Export Destination, Jan to Aug 2016

14إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation14

Kuwait Petroleum Products Export Destination

15إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation15

Domestic

KUAWAIT OIL COMPANY

KUWAIT GULF OIL COMPANY

KUWAIT AVIATION

FUELLING

PETROCHEMICAL

INDUSTRIES COMPANY

KUWAIT OIL TANKER

COMPANY

KUWAIT NATIONAL

PETROLEUM COMPANY

Subsidiaries of Kuwait Petroleum Co.

KUWAIT PETROLEUM

INTERNATIONAL

KUWAIT FOREIGN

PETROLEUM

EXPLORATION COMPANY

International

KPC was established in 1980, fully owned by the State of Kuwait

8 specialized Subsidiaries operate in Kuwait and across the world

16إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation16

Position of KNPC in Value Chain of Kuwait

Domestic Refining

KuwaitEnergyBalance

Gas for

Power Generation

LNG imports

Oil sector requirements(KNPC, KOC, PIC)

Feedstock supply

Crude Oil

Natural Gas & Condensate

Fuel demand

Transportation

& industrial

(domestic &

international)

Ministry of

Electricity and

Water (MEW)

Fuel Oil & Gas Oil for

Power Generation

Gas processing

Refining936,000 BPD

3 X 560 MM SCFD

Domestic : 300 - 400 M BPDExport : 500 - 600 M BPD

Most of products exported to Asian Region

Gas Sweetening

Sour Gas

Sweet Gas

KNPC is responsible for Domestic Refining & Gas Processing to satisfy the local fuel demands for Power

Generation, Transportation, Industries & supply products for International market

17إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation17

Current Integration level would be enhanced with increased operational flexibility and additional feed-stocks, to improve Refining Margin and achieve enhanced performance.

Refineries

&

Gas Plant

Oil & Gas Production

PC Exports

Polypropylene

Propylene

EthaneGas

Crude Full RangeNaphtha

Ethylene & Polyethylene

Benzene, Para-xylene &

Styrene

H2, C4,Light Naphtha

Petrochemicals

Refinery – Petrochemicals Current Integration

18إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation18

Opportunities:

Investments In Downstream Mega Projects in Kuwait to

produce Euro IV products

• Clean Fuels Project : To upgrade existing refineries to meet the

Euro IV product specifications. Enhance conversion capacity with

minimum Bunker Fuel Oil

(14 Billion USD).

• ZOR Refinery & Petrochemical : To process heavier crudes to meet

the Low Sulfur Fuel Oil demand and produce Euro IV product

specification.

(ZOR Refinery Project 12 Billion USD, Petrochemical project under

feasibility study)

19إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation19

Opportunities:

Investments in Asia to meet regional demands

• KPI / Sinopec New Refinery Project in China :

New refinery with a capacity of 260 KBPD with

an investment of 6 Billion USD ( Under

Feasibility Stage).

• KPI / Petrovietnam New Refinery Project in

Vietnam : New refinery with a capacity 200

KBPD with an investment of 9 Billion USD ( At

advanced stage of mechanical completion).

20إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation20

Opportunities: Euro IV product profile

Key Products Specifications – Post CFP

Products Current Plan

Gasoline (91, 95 & 98 UL )

Sulfur w ppm (max)

Benzene/ Aromatics/

Olefins, v% max.

500

ppm

4/- / -

10 ppm

1 /35 /18

Gas Oils

Sulfur wt% (max)

0.2% &

0.5%

500

ppm

10 ppm

MEW Fuel Oil

Sulfur, wt% (max) 4.2 % 1.0 %

21إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation21

Outlook for Downstream Refining : 2030

1. Grow Refining capacity up to 1.4 million BPD from existing

Capacity of 936 KBPD.

2. Meet local & international Fuel demand for Transportation and

Industrial sectors.

3. Maximize domestic processing of Heavy / Sour crudes –

according to upstream heavy crude availability profiles.

4. Achieve Operational Excellence through enhancing complexity.

5. Integrate with Petrochemicals to improve overall margins.

6. Provide required Gas Processing capacity according to upstream

Gas availability profiles.

22إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation22

KPC /KNPC Potential Partnership/ Opportunities in

Growing Prominence of Asian Refining Sector

• Investment in Asia to meet growing demand of petroleum

products.

• Export of petroleum products based on global product

specifications.

• Export of Kuwaiti Crude Oil.

• Sharing of Best practices in downstream sectors for

Operational Excellence.

• Partnership in R&D projects to develop refining technologies.

• Knowledge sharing forums to develop manpower assets.

23إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation23

Potential Challenges for Middle East Refiners

• Sustain Competitive Edge over refining companies in the

region

• Developing competent manpower and retain for operational

excellence

• Improvement in Energy Efficiency and other OPEX

• Safe commissioning of mega projects (CFP/NRP)

24إحدى شركات مؤسسة البترول الكويتيةA Subsidiary of Kuwait Petroleum Corporation24

Thank you