PETROCHEMICALS QUICK FACTS 2020 OUTLOOK SECTOR ASSESSMENT SOCIOECONOMIC IMPORTANCE MARKET STRUCTURE SUCCESS STORIES

Transcription

1 PETROCHEMICALS QUICK FACTS 2020 OUTLOOK SECTOR ASSESSMENT SOCIOECONOMIC IMPORTANCE MARKET STRUCTURE SUCCESS STORIES

2 PETROCHEMICALS Petrochemical industry plays a vital role in the Egyptian economic development and growth. In recognition of the importance of petrochemicals industry in Egypt seconomy, along with the Introduction existence of successful drivers, petrochemical development strategy has settled to accelerate the implementation of such industry. The sector employs about 7,600 people. In 2010/2011 Egypt has produced 5.6 million tons of petrochemical products; 2.6 million tons of which were exported worth USD 1.7 million, according to ECHEM annual report 2010/2011

3 QUICK FACTS Petrochemical industry plays a vital role in the Egyptian economic development and growth. In recognition of the importance of petrochemicals industry in Egypt s economy, along with the Introduction existence of successful drivers, petrochemical development strategy has settled to accelerate the implementation of such industry. The local market's potential and the plentiful domestic supply of ethane still makes it an attractive place to invest in the long term. The Egyptian Petrochemicals Holding Company (ECHEM) was established in January 2002 to manage and develop the Petrochemicals industry in Egypt through new promising areas of investment. ECHEM priority is to enhance the growth of Petrochemical industry through implementing The National Petrochemicals Master Plan with the target of realizing the optimum utilization of natural gas in value added products. The Plan covers 14 complexes including 24 projects and 50 production units during the coming 20 years. TCI Sanmar Chemicals, the Egyptian venture of India-based Sanmar Group, has announced plans to invest USD150mn to expand its polyvinyl chloride (PVC) and ethylene capacity in Egypt under Phase II of its plan for the complex. The expansion project will raise PVC and ethylene production at the complex to 400,000tpa and 120,000tpa respectively. According to BMI's Petrochemicals Risk/Reward Index for the Middle East and Africa region, Egypt is in ninth place with a score of 47.7 points, up 3.0 points as a result of improved prospects for the petrochemicals industry and the country as a whole. Egypt has the largest refining sector in Africa, ahead of the nearest competitors Nigeria, South Africa, and Algeria. The country's two major refining centers are Alexandria and Suez.

4 2020 OUTLOOK Egypt needs around 500,000tpa of ethylene in order to sustain downstream production, this has hindered growth in output as well as delayed the completion of projects : Progress is being seen at the most ambitious petrochemicals complex in Egyptian history. Carbon Holdings' USD6.8bn Tahrir Petrochemical Project at Ain Sokhna will include 1.35mn tpa of polyethylene (PE) and a cracker with the capacity to produce 900,000tpa ethylene. In Q414, Carbon Holdings was in discussion with the UAE government for a possible investment of USD400mn.Work is due to be completed in TCI Sanmar Chemicals, the Egyptian venture of India-based Sanmar Group, has announced plans to invest USD150mn to expand its polyvinyl chloride (PVC) and ethylene capacity in Egypt under Phase II of its plan for the complex. The expansion project will raise PVC and ethylene production at the complex to 400,000tpa and 120,000tpa respectively. International industry experts and national industrial strategists alike believe that the country is set to become one of the region s leading players, especially with the implementation of the National Plan for Petrochemicals ( ). The government's plans to build 24 new petrochemical production facilities, producing a total of 15mn tonnes between 2002 and 2022 are unlikely to be realised. Six sites were earmarked for the new petrochemicals production facilities: Beheira, Kafr el- Sheikh, Dakahlia, Damietta, Ismailia, and Suez

5 SECTOR ASSESSMENT The petrochemical sector is one of the most dynamic in the Egyptian economy. Egypt is one of the largest markets for lubricants in Africa and is the continent s secondlargest refining center. Egypt supplies petrochemical products to about 50 countries worldwide, with Europe being the largest market for Egyptian exports. Egypt ranks 12th in liquefied natural gas exports worldwide, which has helped boost the petrochemicals industry, according to IGU World LNG Report The natural gas liquefaction plant in Damietta Free Zone is considered the largest in the world, handling 7.6 billion cubic meters of natural gas annually, The complex came onstream and the first cargo was loaded in January Egypt ranks among the top 10 countries using natural gas as car fuel worldwide, with more than 150,000 NG vehicles conversion and more than 130 fueling stations and 73 fully equipped conversion centers in addition to 11 stations under construction during year 2013, SECTOR ASSESSMENT AND SUCCESS STORIES Invest in Egypt Petrochemicals 2 Egypt was also the first nation in Africa and the Middle East to open a public CNG conversion center and fueling station.

6 SOCIOECONOMIC IMPORTANCE The petrochemical sector is one of the most dynamic in the Egyptian economy. Egypt supplies petrochemical products to about 30 countries worldwide, with European Union being the largest market for Egyptian exports as the exports to EU reaches EGP 11090mn to 2014 which represents about 45% of the total exports. Egypt has an established fertilizer industry, producing 10mn tones per annum (tpa) from eight plants, Egypt has one of the world's most competitive fertilizer industries as the government agreed to allow foreign investors to set up phosphate fertilizer facilities in the country. Fertilizers is one of top exporters sectors where as the exports reached EGP 4706 mn up to Plastic products subsector of petrochemicals is one of top exporters sectors where as the exports increased form EGP 8800mn in 2013 to EGP mn in Exports of Chemicals and fertilizers products reached 4207 Million USD up to 2014 which represents 19% of total exports

7 MARKET STRUCTURE The prime mover in petrochemicals in the country is Egyptian Petrochemicals Holding, or ECHEM, a state owned enterprise under the supervision of the Ministry of Petroleum. The company was created in 2002 to manage and develop the Petrochemicals industry in Egypt through new promising areas of investment, and has multiple mandates as an investor and participant in the sector with minority stakes in some of the country s main production facilities. It is also in charge of marketing the sector abroad and long-term planning. EChem is developing five priority projects valued at USD3bn, including a USD1.5bn petrochemicals complex with the capacity to produce 1mn tonnes per annum (tpa) of ethylene and 1mn tpa of polyethylene (PE). EChem is supporting a range of other projects in Egypt. It has a 12% stake in Egyptian Methanex Methanol (EMethanex), whose other partners are Methanex(60%), EGas(12%), Gasco (9%) and Saudi Arabia's Arab Petroleum Investment Corp (7%). The 1.26mn tpa methanol plant at Damietta started up in 2011, costing around USD1bn to build

8 MARKET STRUCTURE EChem also has a stake in an Indo-Egyptian joint venture (JV), the Egyptian-Indian Polyester Company (EIPET) (70% Dhunseri Petrochem &Tea, 23% EChem, 7% Engineering for the Petroleum & Process Industries [ENPPI]), commissioned a polyethylene terephthalate (PET) bottle resin plant in Egypt in January The new two-line PET plant in the deep sea port on the Red Sea at Ain Sokhna has combined capacity for 420,000tpa. As such, the plant's opening signified growing investor confidence in Egypt's stability. The plant is the first of its kind in North Africa and one of the largest such units in the Middle East. The facility will meet Egypt's domestic demand, which is covered by imports, and will facilitate exports of PET. Sidi Kerir Petrochemicals Co (Sidpec) is the largest petrochemicals producer in Egypt with capacities of 300,000tpa of ethylene and 225,000tpa of Polyethylene. Governmentowned National Plastics Company, established in 1945, produces plastic items for the agricultural, packaging, and household markets, as well as toys, games, bottles, jars, laminates, artificial leathers, and batteries. Oriental Petrochemicals Company (OPC), a unit of joint-stock company Oriental Group, operates Egypt's only PP unit. The 160,000tpa unit, commissioned in September 2001 and later expanded, uses Dow Chemicals' Unipol process. The plant is in the Sokhna industrial zone on Suez Gulf.

9 MARKET STRUCTURE Abu Qir Fertilizer and Chemical Industries (AFC) is Egypt's leading nitrogen fertilizer producer, accounting for about 70% of the local market. Its main products are ammonium nitrate and grilled and granular urea manufactured on the Abu Qir coast, north of Alexandria, near the gas fields. It also produces 2,462mn tones of fertilizer per year. The Egyptian Financial and Industrial Company (EFIC) controls 70% of the local phosphate fertilizer market, sourced from its two plants at Kafr-el Zayat and Asyut. As of Feb 2015, the petrochemical industry consisted of 75 companies operating inland with total investments of USD Million, and 16 companies operating in free zones areas with total investments of USD million.

10 SUCCESS STORIES Middle East Oil Refinery- MIDOR MIDOR is an Egyptian joint stock company established in 1994 under Investment Law No.230 of year 1989 and its amendments. MIDOR Refinery is classified as a deep conversion refinery using the latest scientific and technological methods to suit the fluctuating market needs, The refinery investment is almost US$1.4 Billion. MIDOR refinery occupies approximately 500 acres within Amerya Free Zone, West Alexandria City constructed on 5 terraces utilizing the topographical nature of the site. MIDOR is one of the first refineries in the Middle East that is designed to cope with the most demanding world environmental standards for effluent treatment and product specifications. Misr Fertilizers Production Company - MOPCO MOPCO, one of the petroleum sector companies, founded in July 26, 1998, inside the free zone in Damietta. This project produces Urea as a main product. Work in MOPCO project expansion is underway after obtaining a finance that is (1.050) Billion Dollars from the national and international banks although the recent economic conditions within Ouda German company as well as Petroget company to set up two units for producing Ammonia of capacity that is (2400) tons per day as well as two units for producing Urea of capacity that is (3900) tons per day. The investment cost of this huge project is about USD 1.7 Billion in order that the production capacity will be 2 million tons per year.

11 SUCCESS STORIES The Spanish Egyptian Gas Company SEGAS The Spanish Egyptian Gas Company (SEGAS) liquefied natural gas (LNG) complex in Damietta, Egypt, is situated on the Mediterranean Coast 60km west of Port Said. The complex came on-stream during the final quarter of 2004 and exports LNG to the Spanish market via a receiving terminal at Sagunto in Spain. The majority of the gas exported is used to supply the new 'cleaner' gas-fired power stations in Spain. This LNG project was the first facility of its type in Egypt and is one of the world's largest capacity single train facilities. Construction of the facility began in September The complex will initially produce 5.5 million t/yr (7.5 billion m³ per year) of LNG by air-cooled refrigeration and fractionation. The complex requires 270 personnel and production is around 600 t/hr (24 C ambient air temperature). Estimated investment for the construction of the original facility was $1.3 billion. Sidid Kerir Petrochemicals Co - Sidpec Sidpec is an Egyptian joint stock company established on 16 November Sidpec is considered the first integral step towards the petrochemicals future in Egypt. Sidpec utilizes the latest available technology and designs in order to satisfy the Egyptian environmental regulation and requirement.

12 SUCCESS STORIES Alexandria Carbon Black Located in Amreya near Alexandria in Egypt, Alexandria Carbon Black is an Indo-Egyptian joint venture of the Aditya Birla Group of India,it is the only producer of carbon black in the Middle East and North African region. Established in 1994 with an initial capacity of 20,000 tones, ACB has since grown 14 times to 285,000 tons capacity - making it one of the world's largest carbon black plants at a single location and also the fastest-growing carbon black company in the world. ACB also has the distinction of operating one of the largest production lines in the carbon black industry globally. In less than 15 years of its going on-stream, the company has set new benchmarks by maintaining high standards and taking a leadership position in the industries of Egypt, Middle East and North Africa. ACB exports 95 per cent of its production to over 30 countries across the globe including the USA, UK, France, Germany, Italy and Spain, among others. It's customer list includes global players like Michelin, Goodyear, Bridgestone/Firestone, Pirelli, Dunlop, Continental General Tires, apart from the local Alexandria Tire Company and Trenco.

13 Projects

14 PROJECTS Project: New factory for production of sodium carbonate Description: Producing sodium carbonate to utilize the excess of carbon dioxide and ammonia in Abu Qir Co for Fertilizers, as well as boosting the efficiency and feasibility of the project through the construction of a new factory to produce glass used in manufacturing glass surfaces to generate electricity from solar energy, beside any other glass products. Partner: Abu Qir Co for Fertilizers, and Rakta Co for Paper (both are affiliates of the HC for chemical industries). Location: Inside the facility of The General Co for Paper Manufacturing (RAKTA), an area of 75 feddans, in Al Tabya Alexandria. The Offer: A feasibility study will be prepared, followed by establishment of the new company which will undertake the offering of required machinery and equipment in an international bid, and the contractor will be selected.

15 PROJECTS Project: Building a factory for the production of tires (passenger cars, trucks and heavy transport). Description: A new factory with production capacity of 3 million tires semi-truck and passenger cars, and 0.3 million tires metal transport, reaching a total annual value of output estimated at US$ 185 million, with 75% of output to be exported. Location: Kafr El Dawar city, on the facility of Dyestuffs and Chemicals Company (under liquidation). Partner: A new company will be established to undertake the offering of the project in international bids and select the contractor.

16 PROJECTS Project: Prefabricated concrete buildings. Description: Production of prefab concrete at an industrial scale. Project Objective: Youth housing projects, establishing housing complexes for industrial cities, establishing new towns, solving the problem of slum areas. Location: On areas of unutilized land in Siegwart Company (at Al Maasara or Shobra) in Cairo. Partner: Ministry of Housing, New Urban Communities Authority, Holding Company for Chemical Industries (affiliate Company Siegwart), and major contracting companies.

17 PROJECTS Project Name: Formaldehyde and Derivatives Project Description: The project produces 70 KTA formaldehyde and its derivatives depending on utilizing 40 KTA of methanol produced locally by E-Methanex instead of export - for the production of value added products to satisfy local demands and export the surplus. Project Objective: The production of petrochemical products with high added value instead of import to satisfy the local market needs and export the surplus. Competitiveness: The complex has a high integration between its production units, giving it a competitive advantage over other projects, In addition to the high market demand for the project products locally and internationally. Authority responsible for the project: Egyptian Petrochemicals Holding Co.(Echem) under Ministry of Petroleum supervision.

18 PROJECTS Project Name:Bio-Ethanol from Rice Straw Project Description: The project produces 50 KTA of Bio-ethanol from rice straw and agriculture wastes with a quantity amounts 600 KTA instead of burning it. There is a new international technologies to convert agricultural wastes to bio ethanol then petrochemicals products such as ethylene and its derivatives which raise the bio ethanol added value. Project Objective: The project aims to produce Bio-ethanol then ethylene from rice straw and agriculture wastes to increase Bio-ethanol value added in addition to overcome the Egypt s black cloud. Competitiveness: A new international technology will be used to convert wastes that pollute the environment into valuable products consequently, overcoming the Egypt s seasonal black cloud. Authority responsible for the project: Egyptian Petrochemicals Holding Co. (Echem) under Ministry of Petroleum supervision.

19 PROJECTS Project Name: Petro-refinery Complex (4 th Generation). Project Description: Implementation of crude oil refinery integrated with petrochemicals complex depending on thousands barrels per day of imported crude from the Arabian Gulf countries. The crude oil will be refined to produce several petroleum products such as LPG,naphtha,kerosene, gas oil and coke. Some of these products will be utilized for the production of petrochemical products such as polyethylene, polypropylene, para xylene and benzene. Project Objective: Production of various petroleum and petrochemical products to satisfy the local demands of these products and export the surplus. Competitiveness: The complex has a high integration between its production units, giving it a competitive advantage over other projects, In addition to the high market demand for the project products locally and internationally. Authority responsible for the project: Egyptian Petrochemicals Holding Co. (Echem) under Ministry of Petroleum supervision.

20 PROJECTS Project Name: Petrochemicals Downstream Clusters Project Description: Establishment of down stream clusters for the production of final finished petrochemical products depending on utilizing the basic petrochemicals produced locally from petrochemical master plan phase one projects. The proposed clusters will include: Plastic Packaging Cluster, Construction Cluster and Automotive Cluster. Project Objective: Utilizing the basic petrochemicals produced from petrochemical master plan phase one projects to produce value added final petrochemical products. Competitiveness: The cluster has a high integration between its production units. In addition to the availing of job opportunities for small investors. The presence of high market demand for the cluster products. Authority responsible for the project: Coordination between Egyptian Petrochemicals Holding Co. (Echem), General Authority for Investment (GAFI) and concerned parties.