indigenization of spare parts and consumables used in the petrochemical industries present by:...
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Indigenization of Spare Parts and Consumables used in the Petrochemical Industries
Present by: Rajeev ChowdhryManaging Partner – Alpha International Management Consultants
28th December 2009
PETROCHEMICAL INDUSTRY - SAUDI ARABIA
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An overview of the Oil and Gas and Petrochemicals Industry
Products – Classified into various Categories
Process Flows for Oil & Gas
Capital Equipment and their types
Spares and Consumables
Observation and Inferences
Petrochemical Industry in Saudi Arabia: A Snapshot
Hydrocarbons are the backbone of the Saudi economy The single largest sector of Saudi Arabia’s economy is the extraction of crude oil and natural gas (hydrocarbons), which accounted for 27 percent of real GDP in 2008. Petrochemicals provided 9 percent of GDP last year, up from 7 percent a decade ago.
The dominance of the hydrocarbons sector extends well beyond its direct contribution to economic output: hydrocarbons account for around 90 percent of export earnings, and thereby provides the main source of revenue for the public sector.
The petrochemicals sector offers one of the most promising long term investment opportunities towards economic diversification in Saudi Arabia.
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Petrochemical Industry in Saudi Arabia: A Snapshot
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Petrochemical Industry in Saudi Arabia: A Snapshot
The Product Chain
Raw Material and Feedstock
Crude Oil, Natural Gas, Methane, Ethane, Propane, Butane, Naphtha
Basic Petrochemicals
Ethylene, Propylene, Butadiene, Benzene, Toluene, Xylene, Amonia
Intermediates & Derivatives
MTBE, Methanol, Vinyl Chloride Monomer, Mono Ethylene Glycol, Polyethylene, Polypropylene etc
End Products
Plastics, Coolants, Cosmetics, Pharmaceuticals, Fertilizers, Packaging, Fibers, Paper, Textiles, Lubricants…
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Petrochemical Industry in Saudi Arabia: A Snapshot
Basic flow Chart for Oil Production
Refineries can range from simple topping plants with only a crude oil distillation tower to the more complex refinery shown in the flow sheet.
CD – Crude Distillation Tower, REF – Reforming, FCC – Catalytic cracking, COK – Coking, HYT – Hydrotreating, HR – Hydrodesulfurization. 6
Petrochemical Industry in Saudi Arabia: A Snapshot
Basic flow Chart for Gas Processing
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Petrochemical Industry in Saudi Arabia: A Snapshot
What do the Petrochemical Companies produce
Feedstock and Petrochemical products produced
Methane Ethylene PropyleneButenes and Butadienes
Benzene Toluene Xylenes
Hydrogen Polyethylene PolypropyleneStyrene-
Butadiene rubber(SBR)
Styrene Benzoic acidPhthalic
anhydride
Ammonia Ethanol IsopropanolMethyl tert-Butyl Ether
(MTBE)Polystyrene
Toluene diisocyanate
Polyesters
MethanolEthylene
glycolPropylene
glycolPolybutadiene Phenol Polyurethanes
Dmethyl terephthalate
Methyl chloride
Vinyl acetate Alkyl chlorideAcrylonitrile-Butadiene-
Styrene (ABS)Cumene Caprolactam
Terephthalate acid
Carbon blackPerchloroEthylene
Acrylonitrile Polybutenes Aniline NylonsPolyethylene terephthalate
AcetylenePolyvinyl acetate
Acrylic acidMethyl ethyl ketone(MEK)
Adipic acid PolyureasDioctyl
Phthalate
Formaldehyde Glycol ethers Epoxy resins Tert-butanol Nylons 8
Acrobat Distiller 6.0 ME.lnk
Petrochemical Industry in Saudi Arabia: A Snapshot
What are the main Capital Equipment – Petrochemical Industry
The Oil and Petrochemical Industry have a huge array of equipment that it needs for processing the feedstock into various end products. We give below a list of main equipment that each of the stages need.
Oil Exploration and Pre processing
Drilling Rigs, Platforms, Well Head Equipment like Christmas Tree, Oil Pumping equipment, Gas Oil Separation Plants.
Refining & Petrochemical Processing
De-salter units, Distillation Columns, Hydrotreater, Catalytic Reformers. Fluid Catalytic Cracker. Hydrocracker, Visbreaking, Merox unit, Coking units, Alkylation, Dimerization unit, Isomerization unit, Steam reforming unit, Gas treaters, Solvent refining units, Solvent dewaxing units
ALL these are high end complex Plant and Equipment designed by the Process Patent Holders and Technology Providers (OEM’s).
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Petrochemical Industry in Saudi Arabia: A Snapshot
What are the main Capital Equipment – Petrochemical Industry
Specialized Equipment and Systems
Apart from the capital equipment, this Industry needs a lot of highly technical equipment and systems which are designed for the specific highly critical application by highly specialized manufacturers. We list the most important ones below:
Heat Exchangers
Electrical systems including Rotary Drives,
Automation systems incl. Process Controllers
Instrumentation Systems including Gauges
Hydraulic and Pneumatic Systems – both prime movers and control systems
Utility systems like Compressed Air
IT based control and monitoring systems
Safety equipment & systems
Packaging, Shipment and Delivery systems incl. Automatic loading for liquids and batch
loading for solids
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Petrochemical Industry in Saudi Arabia: A Snapshot
What are the main Capital Equipment – Petrochemical Industry
Generic Equipment and Systems
Generic equipment that is used in this Industry, usually produced by local manufacturers and some of them are actually built on site.
Utility units such as Cooling towers, boiler plants and Water treatment Plants
Buildings and shelters for the process equipment
Technology Structural Steel Works both in Stainless Steel and Mild Steel
Flare Stacks and Chimneys
Liquid Product Storage units like Tanks, Spheres and Bullets,
Solid Storage areas like silos
Material Handling Equipment like Cranes, Stackers, Reclaimer etc.
A variety of piping works including cross country piping for product transportation
Lighting systems for the plant
Fire Detection and Fire Fighting systems (for the plant)
Security Systems11
Petrochemical Industry in Saudi Arabia: A Snapshot
Accessories and Spares Parts
The Petrochemical Industry needs a number of equipment and spares on a regular basis. The total list is huge and so we have tried to group the most important ones as listed below:
Drives and Rotary equipment like compressors, pumps, motors (both Electrical and
Hydraulic), Gear Boxes, actuators etc.
Heat exchangers
Valves – safety valves, control valves etc.
Instrumentation like gauges, sensors, switches etc.
Electronics and Automation spares
Transformers, Circuit breakers and other Power Electrical Items
Piping and lining material
Cables of all kinds
Paints, Solvents, Rust Inhibitors etc.
Spare Parts for Generic Equipment
Lights and other Illumination items
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Petrochemical Industry in Saudi Arabia: A Snapshot
Consumables
Apart from the Mechanical and Electrical equipment there are a number of consumables that are used in this industry… once again, we try and identify a few important ones
Drilling Mud, Cement and a host of other non metallic solids
Catalyst – both new and processed
Tubing, Linings and Refractory
Chemical additives like Agitators
Packaging Material
Lubricants for various applications
Column Internals like Sieves and Trays
Tubing for boilers
Most of these items are supplied by trading companies who represent International manufacturers in KSA
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunities
The list of possible equipment and spare parts that can be produced locally is very big and we highlight the following 10 equipment, consumables and services. These items actually find use across a broad spectrum of Industry.
Fabricated Steel Products
Valves
Rotary equipment like pumps
Gear Reducers
Catalyst and Chemical additives
Drives like Electric and Hydraulic Motors
Standard Instrumentation parts
Refractory and lining material
Heat Exchangers
Alloy Steel Castings and Forgings
Hydraulic and Pneumatic Systems
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We shortlisted 3 out of these 10 items for a brief study
Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunities
The rational for selection of these 3 items was based on the highest demand from Saudi Aramco’s estimate on expenditure it would make for various items between 2007 to 2012
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunity No. 1 : Fabricated Steel Products
This is one of most promising industries in the Support Sector in Saudi Arabia and there is absolutely no doubt about the need for a Quality fabrication shop. Local production capacities exist on the lower quality segment and the demand and supply scenario changes drastically from year to year depending on the projects released simultaneously.
The number of projects planned for 2010 – 2013, the industry will face a supply squeeze unless new quality fabrication facilities are not set up.
Saudi Aramco averages nearly US $ 1.5 billion worth fabricated structures a year and estimating that this value would be approx 40% of the total demand, the market size for Structural Steel Fabricated structures would work out to almost US $ 3.7 billion
In terms of tonnage, this would amount to approx 1.5 – 1.7 Million Tons / annum
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunity No. 2 : Valves
Valves are devices that are used to either control, regulate or contain the flow of liquids, gases, slurries, semi-solids or any other flowing material.
Valves can be broadly classified as follows:
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Based on Application Actuation Construction No. of Ports
Control Valves Hydraulic Control There are more than 50 types of
construction like Ball type, Needle Valves,
Butterfly Valves, Bibcock Valves, Leaf
Type etc.
Single Port
Pressure Valves Pneumatic Control Double Port
Solenoid Control Three Port – multi Direction
Manual Levered Four Port – multi Direction
Electric Motor Control
Spring Loaded
Thermostatic Type
Petrochemical Industry in Saudi Arabia: A Snapshot
Each of these valves have specific applications and OEM companies specialize in different ranges of these valves. Considering the local market, we recommend the setting up of a plant for the manufacture of Pressure Valves as a first step.
Pressure Valves
The factory should produce Pressure Relief Valves for a variety of liquids and Gases and should be designed and tested as per reputed international standards like ASME
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Low Pressure Safety Relief Valve
High Pressure Safety Relief Valve
Pilot ActuatedSafety Relief Valve
Investment Opportunity No. 2 : Valves
Petrochemical Industry in Saudi Arabia: A Snapshot
Manufacturing Facility
A comprehensive manufacturing facility would include a Steel and Alloy Steel foundry, a Spring Manufacturing unit, a medium sized machine shop, a valve assembly plant, necessary testing facilities and a painting area.
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MachiningCentre
AssemblyShop
PaintingBooth
Testing Centre
PlantOverview
Investment Opportunity No. 2 : Valves
Petrochemical Industry in Saudi Arabia: A Snapshot
With only Saudi Aramco planning to buy over US1 billion worth of valves each year, the market for valves is huge and diverse.
Recommended way forward for Saudi SME Investors is to form a Joint Venture with any of the worlds leading OEM’s in this field, with an assured off-take by the OEM.
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Investment Opportunity No. 2 : Valves
Petrochemical Industry in Saudi Arabia: A Snapshot
Pumps are devices used to move liquids, slurries and gases from one place to other.
Pumps essentially have the following components:
A Casing or Body, within which the fluid is moved. A drive or prime mover with or without a gear reducer. A connecting shaft with coupling that connects the pump and the
drive An impellor or ram which actually moves the fluid from the input port
to the discharge port Seals and Bearing that ensure the whole assembly stays together
and operates smoothly without leaks And finally the instrumentation and control panels
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Investment Opportunity No. 3 : Pumps
Petrochemical Industry in Saudi Arabia: A Snapshot
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Types of Standard Pumps for common industrial uses
Impellor type single stage centrifugal pump
Multiple stage – Diffuser type centrifugal pump
Reciprocating pump
Reciprocating pump Vane type rotary pump
Diaphragm type axial pump
Investment Opportunity No. 3 : Pumps
Petrochemical Industry in Saudi Arabia: A Snapshot
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Typical Production Facility
Electric Arc Furnace / Induction Furnace facility for casting the valve bodiesMould Shop for making mouldsFettling and Cleaning facilities for castingsMachine Shops for machining of various parts like impellor shafts Heat treatment facility for various itemsAssembly shop for mechanical assembly Electrical workshop for assembly of motors and drives Shot Blasting and painting facilities Testing facility Maintenance workshops
Investment Opportunity No. 3 : Pumps
Petrochemical Industry in Saudi Arabia: A Snapshot
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Typical Production Facility
Machine Shop Assembly Shop Valve Testing Shop
Investment Opportunity No. 3 : Pumps
Petrochemical Industry in Saudi Arabia: A Snapshot
We anticipate the market for valves to be over USD 1 billion/year, given the fact that Saudi Aramco by themselves procure an average of US $ 680 million worth of pumps each year. SABIC companies are equally big users of pumps and if you add to that the other big users like SWCC, SEC and other Ministry of Water, the market size exists for a major investment in this field.
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Investment Opportunity No. 3 : Pumps
Petrochemical Industry in Saudi Arabia: A Snapshot
Inferences
Oil and Petrochemical Industry spends billions of Saudi riyal each year for procurement of Spares and Consumables and there exists a very big opportunity for local investors to Locally Manufacture some of this demand.
The way forward recommended is to set up manufacturing plants in Technology partnerships and Joint Ventures with reputed OEM’s, with clear understanding on Technology Transfers and Training of local manpower, then develop core engineering competence within a planned time frame
The Major Players in Oil and Gas Industry on its part “must” support any new ventures by not only providing necessary technical assistance but also getting into suitable “Take Off Agreements” with new Start – Up companies, which will provide the necessary comfort to the local investor.
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Thank You!
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