petrochem overview

8/6/2019 Petrochem Overview

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Houston London Singapore

Saudi Arabian International Gas ConferenceSaudi Arabian International Gas Conference Dubai

The Global Petrochemical Industry..The Global Petrochemical Industry..The Global Petrochemical Industry..

Pat Rooney

Managing Director CMAI Middle East

May, 2004prooney @ cmaiglobal.com

971-4-391-2930 (Office)

Pat RooneyPat RooneyManaging DirectorManaging Director CMAI Middle East CMAI Middle East

May, 2004May, 2004prooney @prooney @ cmaiglobal.comcmaiglobal.com

971971--44--391391--29302930 (Office)(Office)

First Saudi Arabian International

Gas Conference

First Saudi Arabian International

Gas Conference

and the Impact of New Saudi

Hydrocarbon Supplies

and the Impact of New Saudi

Hydrocarbon Supplies


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Use This Presentation to Help Frame Your Answers To These QuestionsUse This Presentation to Help Frame Your Answers To These Questions

How is the global petrochemical industry doing?

What is the status of the industry in SaudiArabia and the GCC?

What will new gas supplies mean to the Saudipetrochemical industry?

How could the Saudi industry further evolve to

add more value to the Saudi economy?

How is the global petrochemical industry doing?

What is the status of the industry in SaudiArabia and the GCC?

What will new gas supplies mean to the Saudipetrochemical industry?

How could the Saudi industry further evolve to

add more value to the Saudi economy?


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What are the Current ConditionsWhat are the Current ConditionsAs we entered 2004, global

petchem markets were stillyielding inadequate returns

The rate of new capacityadditions remains measured

Economic recovery gainingmomentum esp. Asia & USU.S. gas and crude oil pricesare high and are definingglobal competitionProducers protecting andleveraging their low totalcost role in servicing andmaintaining their markets

As we entered 2004, global

petchem markets were stillyielding inadequate returns

The rate of new capacityadditions remains measured

Economic recovery gainingmomentum esp. Asia & USU.S. gas and crude oil pricesare high and are definingglobal competitionProducers protecting andleveraging their low totalcost role in servicing andmaintaining their markets


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Pricing Strength and Profits remain atthe poles The Wellhead and Wal-Mart

EnergyEnergy Base ChemicalsBase Chemicals PlasticsPlastics

DurablesDurablesand Nonand Non --

DurablesDurablesConsumersConsumers


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Petrochemicals Markets Will RecoverPetrochemicals Markets Will Recover

Seven years of unattractiveearnings

Industry consolidation andcautious approach to newcapacity investment

Strong global consumptiongrowth year-after-year

Seven years of unattractiveearnings

Industry consolidation andcautious approach to newcapacity investment

Strong global consumptiongrowth year-after-year

a.k.a. How to turn around a soft commodity petrochemicals market

a.k.a. How to turn around a soft commodity petrochemicals market


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Saudi Arabian Ethane AdvantageFeedstock Costs - $/Ton

Saudi Arabian Ethane AdvantageFeedstock Costs - $/Ton

0

50

100

150

200

250

300

350

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Feedstock price ($/ton)

USGC Ethane

SE AsianNaphtha

KSA Ethane


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World Ethylene Cash Costs - Regional AveragesWorld Ethylene Cash Costs - Regional AveragesDollars per TonDollars per Ton 20032003

5050

150150

250250

350350

450450

550550

650650

00 2020 4040 6060 8080 100100 120120Cumulative Capacity (Million Tons)Cumulative Capacity (Million Tons)

Average US Feedstock BasisAverage US Feedstock Basis

North AmericaNorth AmericaWt'd Avg = $420/tonWt'd Avg = $420/ton

West EuropeWest EuropeWt'd Avg = $315/tonWt'd Avg = $315/ton

Northeast AsiaNortheast AsiaWt'd Avg = $310/tonWt'd Avg = $310/ton

Southeast AsiaSoutheast AsiaWt'd Avg = $270/tonWt'd Avg = $270/ton

Middle EastMiddle EastWt'd Avg = $140/tonWt'd Avg = $140/ton

USGC Natural Gas = $5.45/MM BtuUSGC Natural Gas = $5.45/MM BtuBrent Crude = $28.75 /BblBrent Crude = $28.75 /Bbl


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Low Ethylene Cash Costs Translate to Low DeliveredPE Costs to China (2007 Estimate)(Dollars Per Ton)

-

100

200

300

400

500

600

700

800

Net Feedstock Cost Variable Cost Fixed Cost Packaging & Logistics Duty

SingNaphtha

CanadaEthane

USEthane

USNaphtha

ChinaNaphtha

Saudi E/P

USGC Natural Gas = $4.50 / MM BtuUSGC Natural Gas = $4.50 / MM BtuBrent Crude = $25.00 /BblBrent Crude = $25.00 /Bbl


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Advantaged Feedstock Prices Significantly Impact Earnings Advantaged Feedstock Prices Significantly Impact Earnings

Millions of Dollars

(500)

0

500

1,000

1,500

2,000

Dow ExxonMobil Lyondell ChevronPhillips

Nova SABIC

2002 Earnings ex. Unusual Items 2003 Earnings

SABICs petrochemical asset base is

significantly smaller than either Dow or ExxonMobil.

Lyondell and Nova have no Middle East based production

SABICs petrochemical asset base is significantly smaller than either Dow or ExxonMobil.

Lyondell and Nova have no Middle East based production


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Saudi Arabia is a key producer for many chemicalstoday

Saudi Arabia is a key producer for many chemicalstoday

MTBE butane based MTBE butane based

Methanol and Urea/Ammonia methane based Methanol and Urea/Ammonia methane based

Ethylene and Derivatives ethane and LPG based Ethylene and Derivatives ethane and LPG based

..and Saudi Arabia will be a larger producerof chemicals tomorrow

..and Saudi Arabia will be a larger producerof chemicals tomorrow


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Saudi Arabian Petrochemical Projects

(-000- Metric Tons)

Saudi Arabian Petrochemical Projects

(-000- Metric Tons)PROJECT LOCATION CAPACITY TIMING COMMENTS

METHANOLSIPC Al-Jubail 1,000 2006 Acetic Acid

ETHYLENE / DERIVATIVESJubail United Petrochemical Al Jubail 1,200 2005 Ethane/PropaneJubail Chevron Phillips Al Jubail 300 2007 Naphtha/Gas Oil SABIC Yanbu 1,300 2008 Ethane/PropaneSHARQ Al Jubail 1,200 2008 Ethane/PropaneSaudi Aramco / Sumitomo Rabigh 1,250 2008 E/P + FCC Gas

BENZENE / DERIVATIVESJubail ChevronPhillips Al-Jubail 700 2007 StyreneSABIC Al-Jubail 500 2007 Styrene

PROPYLENE / DERIVATIVESNPIC (Saudi Polyolefins) Al Jubail 450 2004 Propane DH / PP

SABIC Yanbu 350 2008 Co-ProductSaudi Aramco / Sumitomo Rabigh 900 2008 Co-Product

Al-ujain Yanbu 300 2008 Propane DH / PPNPPC Al Jubail 450 2006 Propane DH / PP

OTHERSSAFCO Ammonia / Urea Al-ujain - Isooctane GACIC Butanediol / MAN


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Africa & Middle EastBasic Chemicals & Plastics Capacity

Africa & Middle EastBasic Chemicals & Plastics Capacity

00

1010

2020

3030

4040

5050

6060

7070

8080

8585 8686 8787 8888 8989 9090 9191 9292 9393 9494 9595 9696 9797 9898 9999 0000 0101 0202 0303 0404 0505 0606 0707 0808

PlasticsPlastics

MethanolMethanol

Chlor-alkaliChlor-alkali

AromaticsAromatics

OlefinsOlefins

Percent of WorldPercent of World

Million Metric TonsMillion Metric Tons

Represents Just Over10% of World

Capacity in 2008

Represents Just Over10% of World

Capacity in 2008

0%0%

5%5%

10%10%

15%15%

20%20%

25%25%

30%30%

35%35%

40%40%Percent of World TotalPercent of World Total


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Saudi Arabian Industry Status

Strong base chemical production growth utilizingmethane, ethane, and gas liquid feedstock Best in class cost performance

Profitable industry generating re-investment qualityearnings year over year

Underpinned by bountiful hydrocarbon supplies

Well established economic clusters in Jubail andYanbu Highly skilled technical and crafts personnel

Attracting new participants / growing the industry SABIC success story being emulated


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KSA Industry Transformation

Competition Not just based on product prices

Expansion into Tertiary Products / Industries Not just producing primary base chemicals (ethylene) or

secondary products (polyethylene)

Diversification of the industry Not just petrochemicals, but other chemicals that use energy

Overcoming barriers to development Case by case: No magic pill that will cure everything

Understand the industry structure and opportunities Collaborative relationships with all participants


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We See a Robust Future in the KSA and GCC,Underpinned by Hydrocarbon Developments

We See a Robust Future in the KSA and GCC,Underpinned by Hydrocarbon Developments

Exploitation of the Energy Advantage Not justmethanol and ethylene, but energy intensivechemicals (Chlorine)

Exploitation of the Energy Advantage Not justmethanol and ethylene, but energy intensivechemicals (Chlorine)

Industry Built on Advantaged Feedstock which willsupport future petrochemical expansion

Industry Built on Advantaged Feedstock which willsupport future petrochemical expansion

Development of Plastic / Chemical Conversion Industries Why ship KSA materials to China forconversion ? Serve the finished and semi-finishedplastic goods markets directly from the KSA

Development of Plastic / Chemical Conversion Industries Why ship KSA materials to China forconversion ? Serve the finished and semi-finishedplastic goods markets directly from the KSA

Understand the industry and the incentives thosewho are modern and cost competitive will prosper .the rest will be challenged to survive.

Understand the industry and the incentives thosewho are modern and cost competitive will prosper .the rest will be challenged to survive.

petrochem overview

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