Emergence of the Arabian Gulf as a Global Petrochemical Hub. Dr. Abdulwahab Al-Sadoun, Secretary General, GPCA

Transcription

1 Emergence of the Arabian Gulf as a Global Petrochemical Hub Dr. Abdulwahab Al-Sadoun, Secretary General, GPCA

2 Agenda Early Petrochemical Production Key Enablers Growth Trajectory Organic Growth Inorganic Growth Industry s Global Position Closing Remarks

3 Billion scf / d Early Petrochemical Production Capturing the value from the associated gas, which use to be flared due to its low economic value at the well head, was key driver behind the development of the industry in the Arabian Gulf History of Gas Utilization in Saudi Arabia ( ) Utilized Gas Flared Gas Was te Waste Value Valu e Source : Saudi Aramco

4 Early Petrochemical Production A key enabler for developing globally competitive petrochemical industry in the GCC is the abundant reserve of natural gas Country Proven Gas Reserve (Trillion scf) Global Share (%) Bahrain Qatar Saudi Arabia UAE Kuwait Oman Total GCC % Source: BP Statistical Review of World Energy, June 2016 & Public Data Type Primarily associated Non-associated 61% Associated 39% Non-associated Primarily associated Associated 88% non-associated

5 Early Petrochemical Production The industry is feedstock-driven with feedstock mix influencing volume and type of the building blocks produced and subsequently determine the products portfolio. Evolution of the Petrochemical Industry in the GCC States Phase I Phase II Phase III Associated Gas Mixed Feedstock Development phase Refinery Integration to date 2009 onwards Forward petrochemicals (C1 & C2; e.g.: MeOH, PE, MEG Ammonia/Urea,..) C3 value chain products added (e.g. PP, Acrylics) Aromatic value chain stimulate new set of products (e.g. performance polymers, engineering plastics) Increasing Value and Differentiation

6 Early Petrochemical Production Since the early 1980s, the chemical industry in had taken a consistent and exponential growth pattern Growth Trajectory of the Arabian Gulf Petrochemicals Industry ( ); Million Tons 12.6% p.a. 18.6% p.a. 8.9% p.a. 11% p.a. 5.8% p.a Source: GPCA, 2016

7 Early Petrochemical Production The Industry s product portfolio is dominated by commodities with Saudi Arabia accounting for ca. 2/3 of the product output GCC Chemicals Production Capacity By Business Segment, 2015 GCC Petrochemicals Production Capacity By Country, 2015 Polymers 17.6% Intermediates 17.9% Chemicals 1.8% Kuwait Oman 6.1% 6.4% Bahrain 0.9% million tons Fertilizer Raw Material 10.5% Mainstream Fertilizers 14.6% UAE 9.3% million tons Basic Chemicals 35.2% Source: GPCA, 2015 Specialty Chemicals 0.3% Specialty Fertilizers 0.1% Inorganic chemicals 2.0% Qatar 12.6% Saudi Arabia 64.8%

8 Agenda Early Petrochemical Production Key Enablers Growth Trajectory Organic Growth Inorganic Growth Industry s Global Position Concluding Remarks

9 Growth Trajectory Organic Organic growth, mostly from local capacity expansion, has played the major role in making the GCC a global production hub GCC Chemicals Production Capacity by Country ( ) Kuwait Bahrain UAE 9.3% Oman 6.4% Kuwait 6.1% 2015 Bahrain 0.9% 51.2 Saudi Arabia 2007 (Million Tons) 2015 (Million Tons) Qatar Oman UAE Qatar 12.6% million MT Source: GPCA Analysis, 2016 Saudi Arabia 64.8%

10 Growth Trajectory - Oragnic Between 2000 and 2015, almost 20 million tons of Ethylene Capacity have been added in the Arabian Gulf Region Ethylene Capacity Additions in the Gulf Region ( )

11 Growth Trajectory Organic The massive capacity build-up of Ethylene is translated into equivalent expansion in ethylene derivatives production capacities in the Gulf. Change in Ethylene derivatives Capacities ( ), Million tons Capacity (000 tons) Ethylene derivative Million Tons Added Capacity % Change (2015 vs. 2005) High Density Polyethylene (HDPE) % Linear Low Density Polyethylene (LLDPE) % Low Density Polyethylene (LDPE) % Ethylene Glycol (MEG) % Styrene % Polyethylene Terephthalate (PET) ,600% Ethylene dichloride (EDC) % Source: GPCA Analysis, 2016

12 Growth Trajectory Inorganic The industry s organic growth was complemented by a robust inorganic growth journey through acquisition of assets valued $ 29.0 billion over the period SABIC acquires DSM s polyolefin businesses and related process technologies 2003 SABIC acquires Scientific Design Company Inc from Linde AG 2006 SABIC acquires Huntsman Petrochemicals, UK, the European polyethylene business 2007 SABIC purchases GE s Plastics business 2009 Abu Dhabi s International Petroleum Investment Company (IPIC) acquires Nova Chemicals of Canada 2011 IPIC of Abu Dhabi acquires CEPSA of Spain 2013 Oman Oil Company (OOC) acquires OXEA, the world largest supplier off oxo- chemical products 2015 Saudi Aramco acquires 50% stake in the synthetic rubber business of LANXESS 2016 EQUATE acquires MEGlobal, a JV between Dow Chemical and PIC of Kuwait

13 Growth Trajectory Inorganic In addition, the GCC industry s globalization drive entailed developing several JVs projects in key Asian markets; notably China, Vietnam, Malaysia and S. Korea Saudi Aramco, ExxonMobil and Fujian Petrochemical Company formed joined venture to build world scale refinery and petrochemicals plant in Fujian, China 2008 Kuwait Petroleum International, Vietnam Oil and Gas, Mitsui Chemicals formed joined venture to build refinery and petrochemical complex in Nghi Son, Vietnam SABIC and SINOPEC formed joined venture to build world scale petrochemicals plant in Tianjin, China 2015 Sabic and SK formed joined venture to build a high performance PE plant in Ulsan, South Korea Saudi Aramco and Petronas formed joined venture to build refinery and petrochemical complex in Malaysia.

14 Agenda Early Petrochemical Production Key Enablers Growth Trajectory Organic Growth Inorganic Growth Industry s Global Position Concluding Remarks

15 Industry s Global Position The GCC chemical industry s capacity expansion growth rate had been the 2 nd highest after China over the past decade Global Chemicals Industry Capacity Growth Million Tons ( ) Between , the GCC production capacity almost quadrupled, growing from 38.3 to million ton. This represent a CAGR of 8.8%, the 2 nd highest on global level. Over the same period, the GCC share of global capacity have more than doubled, growing from 3% in 2000 to 7% , ROW 70 GCC Rest of Asia 274 China 80 Europe N. America GCC share of global capacity % 7% CAGR (%) GPCA 15 Leaders of Tomorrow Emergence of the Arabian Gulf as a Global Petrochemical Hub SOURCE: ICIS Supply and Demand, McKinsey analysis

16 Industry s Global Position The GCC industry s global position in key commodity petrochemicals is large and growing steadily In 2015, the top 10 commodity products (by volume) produced by GCC industry amounted to million ton, representing 70% of the total capacity The global share for the top 10 chemical produced in the GCC ranged between 5.7% for Ammonia to 22.2% for Ethylene Glycol Most notably is the GCC global share of ethylene which reached 15.5% and its derivatives which ranged between 14.9 to LLDPE to 16.6% to HDPE. Ethylene Urea Ammonia Methanol Propylene PP HDPE EG MTBE LLDPE Others Total Global share of top 10 GCC s Industry products Million Tons and % Share in 2015 SOURCE: GPCA, ICIS, 2016 Capacity Million Tons Share of global capacity (%) 15.5% 8.1% 5.7% 8.6% 10.4% 6.6% 16.6% 22.2% 17.8% 14.9% 7%

17 Global Trade Production Capacity Industry s Global Position Given its export-orientation, the GCC industry s has prominent share in global trade of key commodity polyolefins GCC producers Global Share of Polyethylene & Polypropylene (2015) Polyethylene GCC, 15% Polypropylene GCC, 10% RoW 85% RoW 90% Polyethylene Polypropylene RoW 50% GCC, 50% RoW 60% GCC, 40% Source: GPCA Analysis, 2016

18 Agenda Early Petrochemical Production Key Enablers Growth Trajectory Organic Growth Inorganic Growth Industry s Global Position Concluding Remarks

19 Closing Remarks Abundant supply of natural gas gave the Arabian Gulf the key ingredient to play a major role in the supply of commodity petrochemical to global markets The GCC Petrochemical Industry is entering into a new phase of growth, characterized by: Increasing integration with refining Diversified Products Portfolio Move down the value chain With the ongoing expansion drive, the Arabian Gulf Industry s global position will be growing markedly over the next five years Innovation is a lifeline for the sustianble growth of the Industry, building local innovation capabilities is key for success!

20 Thank you!