C R U D E O I L T O C H E M I C A L S. Sustainability and Local Content

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1 C R U D E O I L T O C H E M I C A L S Sustainability and Local Content

2 SABIC AT A GLANCE 4 TH LARGEST DIVERSIFIED CHEMICAL COMPANY 40,000 EMPLOYEES 50 COUNTRIES 5.0 BILLION US$ NET INCOME 39.5 BILLION US$ SALES 87.5 BILLION US$ ASSETS 542 New patent filings over the last 12 months 68 TOTAL SUSTAINABILITY PRODUCTS QUALIFIED 13,093 TOTAL PATENT PORTFOLIO FILINGS

3 Avg. Crude $/bbl GEO-POLITICAL CHANGES EFFECT ON OIL PRICES Geopolitical unrest + sanctions Production cuts + Arab Spring Production increase Shale Effect End of Sanctions Global Financial Crisis VOLATILE OIL PRICE AS FUNCTION OF GEOLOGICAL SCENARIOS AND SHALE EFFECT. PROJECTS TECHNO-ECONOMIC FEASIBILITIES DEPEND ON OIL PRICES

4 GCC PLAYERS OPTIONS Olefins and Benzene prices are correlated to Crude Oil $/ T for 1 $/bbl Shale effect Changes resulted in Feedstock prices volatility CMAI WA Remain Upstream focused and participate in the shale gas ventures in North America Move further downstream into performance & specialty chemicals: not sufficient to cover all available Feedstock volumes Increase Local Content and Feedstock Efficiency by building greater and more integrated Value Chain through Innovation & Technology in order to derive higher benefits and sustainability

5 CURRENT GLOBAL CRUDE OIL CONSUMPTION SCENARIO 90-95% REFINERY PRODUCTS & TRANSPORTATION FUELS END OF LIFE OIL EXTRACTION 1Barrel 5-10% PETROCHEMICALS & CHEMICAL INTERMEDIATES PLASTICS END OF LIFE SHORT, SINGLE LIFECYCLE FOR EXTRACTED CRUDE OIL HIGHLY INEFFICIENT USE OF FOSSIL C ENERGY SABIC Internal Screening Carbon-LCA.

6 PETROCHEMICALS: TO ENHANCE VALUE, SUSTAINABILITY AND LOCAL CONTENT Less than 5-10 % Of a barrel of oil is used as chemical feedstock. >90% is used as fuel Less Than 7 % of global GHG emissions coming from chemical industries Less than of global energy consumption is by chemical industries 10 % Approximately 10 %. of fresh water used by industrial processes, 82% in agriculture Saving 2, 1 x Avoids the emission of 3, 6 Gt Improved by 60 %. The amount of CO 2 emitted during production against fuel. Of CO 2 that would have been emitted in the world without the chemical industry in 2005 The Energy efficiency in the last 40 years. Chemical industry outperformed other industries performances SABIC is committed to: -Increase by 25% the chemicals efficient production by Enhance local Crude conversion to HVC from 5-10% of Barrel to + 50% TECHNOLOGY TO ENHANCE LOCAL CONTENT, SUSTAINABILITY AND PROFITABILITY ROBUSTNESS ICCA 2009 Report, IEA, CEFIC, SABIC Corporate Sustainability Report 2014

7 WHY OTC? SABIC pursues the OTC project for five combined reasons: INCREASE VALUE FROM CRUDE OIL SHIFT THE UTILIZATION OF A BARREL TOWARD MORE SUSTAINABLE PRODUCTS MEET 2030 Kingdom Vision & DELIVER on 2025 SABIC s STRATEGY OFFER FLEXIBILITY IN FEEDSTOCK UTILIZATION ENHANCE LOCAL CONTENT & OFFER HIGHER ROBUSTNESS AGAINST PRICES VOLATILITY. GOOD FOR SABIC, FOR THE NATION AND FOR THE WORLD

8 SABIC OIL-TO-CHEMICAL TECHNOLOGY AMBITION REFINERY PRODUCTS & TRANSPORTATION FUELS END OF LIFE OIL EXTRACTION <40% CO 2 /bbl IRR NPV 1Barrel 20-33% >20% >34% Against classic crude use Against standalone PetChem >60% PETROCHEMICALS & CHEMICAL INTERMEDIATES PLASTICS END OF LIFE TWO LIFECYCLES FOR EXTRACTED CRUDE OIL MORE EFFICIENT USE OF FOSSIL C PRODUCTS ENERGY, RECYCLE

9 SABIC OIL-TO-CHEMICAL TECHNOLOGY: WAVE 1 REFINERY PRODUCTS & TRANSPORTATION FUELS END OF LIFE OIL EXTRACTION 50% CO 2 /bbl IRR NPV 1Barrel 20% 31% 79% Against classic crude use Against standalone PetChem 50% PETROCHEMICALS & CHEMICAL INTERMEDIATES PLASTICS END OF LIFE TWO LIFECYCLES FOR EXTRACTED CRUDE OIL EFFICIENT USE OF FOSSIL C PRODUCTS ENERGY, RECYCLE OTC : IMPROVED ECONOMICS AGAINST STANDALONE PETROCHEMICALS AND AGAINST CONVENTIONAL INTEGRATION.

10 CRUDE OIL TO CHEMICAL (COTC) THE JOURNEY SO FAR 2017 SABIC-ARAMCO PARTNERSHIP OTC COTC 314 applications filed worldwide covering 59 patent families For OTC SABIC partnership with ARAMCO to fulfill 2030 Kingdom Vision FROM OTC TO COTC

11 ENABLER FOR FUTURE POTENTIAL FOR CIRCULAR ECONOMY SABIC, similar to other leaders in the petrochemical industry, is exploring all possible means to support the Circular Economy. (More than 10 patents filed by SABIC are related to this initiative)

12 ADDITIONAL OPPORTUNITIES WITH CIRCULAR ECONOMY REFINERY PRODUCTS & TRANSPORTATION FUELS END OF LIFE OIL EXTRACTION 1Barrel <40% CO 2 /bbl 20% 32%- 47% >60% PETROCHEMICALS & CHEMICAL INTERMEDIATES PLASTICS END OF LIFE CIRCULAR ECONOMY OFFERS MULTIPLE LIFECYCLES FOR FOSSIL C

13 DELTA IRR CONCLUSION % reduction in CO2 emission per barrel 0 Current Scenario 20 Wave Additional Potential From Circular Ambition 47 Additional Potential From Circular IRR REF 20% increase 31% increase with COTC STANDALONE PETCHEM CONVENTIONAL INTEGRATION COTC OIL TO CHEMICALS OFFERS EFFICIENT UTILIZATION OF FOSSIL C BY ENABLING LOWER-CARBON PATHWAY FULFILLS FURTHER SELF SUFFICIENCY AND ENABLES GREATER VALUE TO THE BARREL OFFERS GREATER OPPORTUNITIES FOR THE CIRCULAR ECONOMY TO OPTIMIZE THE UTILIZATION OF FOSSIL C BY LEVELING THE ENVIRONMENTAL FOOTPRINT ACROSS MULTIPLE LIFECYCLES

14 THE PILLARS FOR COTC 1 GOVERNMENT SUPPORT GAS & FEEDSTOCK & CRUDE ALLOCATIONS INFRASTRUCTURES & MARAFEQ GOVERNMENT RELATIONS 2 TECHNOLOGY TECHNOLOGIES AND COMBINATION OF TECHNOLOGIES IN-HOUSE DEVELOPED and LICENSED-IN PROCESS, PRODUCTS AND APPLICATIONS 3 PARTNERSHIP HIGH LEVEL STRATEGIC PARTNERSHIP WITH ARAMCO ENGINEERING & EPC, CONTRACTORS, TECHNOLOGY LICENSORS, TECHNOLOGY INSTITUTIONS 4 PEOPLE HIGH LEVEL STRATEGIC PLAN TO FULFIL QUALIFIED RESOURCES ENHANCE RESOURCES DEVELOPMENTS IN NUMBER AND IN QUALIFICATIONS (100, 000 DIRECT and INDIRECT employments)

15 CHEMISTRY THAT MATTERS TM