INVESTMENT IN CHINA AS AN INTEGRAL PART OF CEPSA S GROWTH STRATEGY

Transcription

1 INVESTMENT IN CHINA AS AN INTEGRAL PART OF CEPSA S GROWTH STRATEGY November

2 Who is CEPSA IPIC OUR SHAREHOLDER Since August 2011, CEPSA s sole shareholder is International Petroleum Investment Company (IPIC) For CEPSA, integration in IPIC represents a great opportunity for growth and international expansion and a major business challenge. 2

3 Who is CEPSA THE COMPANY We are a global energy company with more than 85 years of history, operating at every stage of the oil value chain Spain's fourth biggest industrial group in terms of turnover. A team of over 10,800 professionals Spread over six areas of activity 3

4 CEPSA Química Today CEPSA Química AT A GLANCE 2014 KEY FIGURES Workforce: 1,108 Turnover: 3 billion EUR 3 BUSINESS LINES Surfactants (n-par/lab/labsa/ Alcohol Derivatives) Cumene / Phenol / Acetone Solvents 4

5 CEPSA Química Today GLOBAL FOOTPRINT LAB plant Bécancour, Quebec Canada 120,000 t/yr. LAB LAB plant Salvador de Bahía Brazil 220,000 t/yr. LAB 120,000 t/yr. LABSA Phenol Plant Palos de la Frontera 800,000 t/yr. Cumene 600,000 t/yr. Phenol 370,000 t/yr. Acetone 24,000 t/yr. AMS LAB plant Puente Mayorga 220,000 t/yr. LAB 80,000 t/yr. LABSA 400,000 t/yr. Paraffins Phenol Plant Shanghai (China) 360,000 t/yr. Cumene 250,000 t/yr. Phenol 150,000 t/yr. Acetone Sinarmas CEPSA Pte Ltd Singapore Fatty Alcohols (under construction) 5

6 CEPSA Química Today CEPSA QUIMICA S INTERNATIONALISATION Initial petrochemical activities in CEPSA Refineries 1970 Start-up of Puente Mayorga Plant (JV Conoco) LAB Production 1976 Start-up of Guadarranque Plant (JV Amoco) PTA/PIA Production 1980 Incorporation of CEPSA UK and CEPSA Italia Acquisition of Palos Plant Cumene/Phenol Production 1987 Acquisition of 100% Guadarranque Plant PTA/PIA Production 1984 Acquisition of 100% Puente Mayorga Plant LAB Production Construction of Becancour Plant (51% CQ) LAB Production 1999 Acquisition of 72% of DETEN, Brazil LAB Production 2001 Construction of Montreal Plant (51% CQ) PTA Production Divestment of PTA/PIA/PET Plants 2015 Acquisition of 100% Becancour Plant LAB Production 2015 Shanghai chemical plant start-up 2014 Constitution of Sinarmas CEPSA for bio alcohol plant 2008 Merger of Petrochemical activities 6

7 CEPSA Química Today STRATEGIC VISION Chemicals strategic vision To become a market leader (size and geography) in the business segments it operates, maximizing integration along the value chain and being at the technological forefront. LAB 40% #1 producer worldwide Integration 75% Paraffins >75% Benzene 40% Phenol 40% #2 producer worldwide Integration 50% Propylene 40% Benzene >50% Solvents 20% #1 Supplier Iberia, Italy & UK Integration 100% 7

8 CEPSA Quimica Strategy KEYS FOR SUCCESS Integration with Refining Activities Internationalization REFINERIES Kerosene Hydrogen Steam Fuel Gas Propane Propylene Naphtha Benzene Jet Fuel Fuel Oil Aromatics Sulphur Byproducts Steam Partnership with clients Focus on markets and products where we have a relevant position # 1 # 2 # 1 Cumene World producer Phenol & Acetone World producer LAB World producer Innovation and Technology PETROCHEMICALS 8

9 CEPSA Química Strategy INNOVATION AND TECHNOLOGY Fixed Bed Alkylation. DETAL DETAL technology launched in First unit started up in CEPSA Quimica Canada. Developed and co-licensed by CEPSA/UOP Since 2004 all new LAB units have used DETAL technology. New DETAL launched in 2010 n-olefins Benzene Solid-bed alkylation LAB 87% of new LAB capacity installed since 1995 uses CEPSA s technology. Partnership For Cepsa, research is a tool for value creation, competitiveness and sustainable growth, which contributes to improving the quality of its products and the technological capabilities of the Company9

10 Phenol Business Line PHENOL VALUE CHAIN Cepsa Química Cepsa 10

11 Phenol Business Line PHENOL & ACETONE END USES MOBILE PHONES, COMPUTERS LAPTOPS AND LED LIGHTS LIGHT AND RESISTANT PLASTICS AND RUBBER COMPOSITE MATERIALS, SCRATCH RESISTANT AND EASY- TO CLEAN FURNITURE AND MOULDING RESINS ACETYLSALICYLIC ACID AND COMPLEX VITAMINS UNIVERSAL SOLVENT. ACRYLIC POLYMERS FOR PAINTS AND COATINGS 11

12 CEPSA Chemical Shanghai WHY CHINA? The World largest economy (*) GDP growth 7.5% 1.36 Billion people World No. 1 car sales World No. 1 mobile phone sales And 250 million Chinese people will become middle class in the next 10 years 2014 Figures (*) By GDP (PPP) (**) List of references: Images courtesy of CoolDesign, Stuart Miles and Feelart at FreeDigitalPhotos.net 12

13 CEPSA Chemical Shanghai WHY CHINA? Chinese market: With the biggest phenol demand growth rate worldwide, over 3 times higher than the rest of the world Drive for self-sufficiency Chinese Phenol Trade Chinese Acetone Trade 6,4 5,5,0 2,5 Growth in downstream industry BPA new plants Sinopec Mitsui Chang Chun Jiangsu Ruisheng Shandong Lihuayi Sinopec Sabic Nan Ya Plastic Shiyou Chemical Phenol Derivatives growth ( ) 13% BPA 8% Alkylphenol 4% Phenolic Resins 13

14 CEPSA Chemical Shanghai WHY SHANGHAI? CHINA: Around 20% of Global Demand Around 25% of Chinese Demand SHANGHAI CHEMICAL INDUSTRIAL PARK (SCIP) Around 65% of Chinese Demand LUCITE CQ EVONIK COVESTRO Largest Phenol/Acetone hub in the world!! LUCITE: 70,000 MT of Acetone consumption EVONIK: 50,000 MT of Acetone consumption COVESTRO: 200,000 MT Phenol demand 14

15 CEPSA Chemical Shanghai THE PROJECT PETROCHEMICAL PLANT Production Capacity: 360,000 t/yr. of Cumene 250,000 t/yr. of Phenol 150,000 t/yr. of Acetone First CEPSA Petrochemical Plant in Asia + 75% 25% 15

16 CEPSA Chemical Shanghai LESSONS LEARNED BUSINESS CULTURE You should work with experienced locally based advisors to leverage their experience and assist with negotiations. Most Procedure and support can be imported but much work is required for adaptation and training. Understand the nature of the bureaucracy and approvals required. Developing/maintaining good relationship with authorities. Be aware that negotiations can be long and drawn-out, especially when dealing with key deal terms and pricing. You need to be flexible, patient and persistent. State Administration of Work Safety ( 国家安全生产监督管理总局 ) Ministry of Environmental Protection ( 环境保护部 ) Ministry of Public Security ( 公安部 ) Ministry of Transport ( 交通部 ) Ministry of Railways ( 铁道部 ) State Administration for Industry and Commerce ( 国家工商行政管理总局 ) General Administration of Quality ( 国家质量监督检验检疫总局 ) Inspection and Quarantine Bureau ( 检验检疫局 ) Customs ( 中国海关 ) Maritime Safety Administration ( 海事部 )

17 CEPSA Chemical Shanghai LESSONS LEARNED HUMAN RESOURCES AS A KEY FACTOR Early hiring of a local HR Mgr is mandatory. Selection and starting date of First Line Management is critical / Don t change horses in the middle of the race. Mid-level managers are young compared with Western standards while turnover is high. The talent market is very competitive. Chinese workers value career advancement opportunities. Make sure there s a clear path for career development and advancement.

18 CEPSA Chemical Shanghai THE MARKET CHALLENGE - PHENOL SUPPLY DEMAND 2015 Americas (67%) Asia (76%) EMEA (79%) ,4 5, ,0 2,5 New Plants in China 2015 (kmt) Capacity Demand Bubble size represents MMT CURRENTLY OVERCAPACITY MARKET BALANCED IN

19 CEPSA Chemical Shanghai SLOWDOWN IN CHINA A hard landing already occurred in 1H15: Electricity production (0.4% increase YTY in 2Q15). Housing stars dropped by 16% and land sales by 30% in 1H. Tax revenue slowed to 5.5% in 2Q (TR rises twice as fast as GDP) A New stimulus is in place: Boosting local Government financing. Housing Recovery to support growth already happening. Think long term 19

20 谢谢 Thank you