ISO tank demand ramps up in Middle East

Transcription

1 Article written for Interntionl Tnk Continer Orgnistion by Leslie McCune, Mnging Director, Chemicl Mngement Resources Limited Chemicl Mngement Resources Limited August (0) lm@chemiclmngement.co.uk (shows PROJECT exmples) ISO tnk demnd rmps up in Middle Est Middle Est petrochemicl cpcity is booming..... With more petrochemicl cpcity coming on-strem, the Middle Est is strengthening its position s the pivotl plyer in the globl petrochemicl sector. Independent reserch by Leslie McCune t Chemicl Mngement Resources Limited, UK-bsed petrochemicl nd petrochemicl supply chin expert focused on the Middle Est, shows cpcity growth for the top 18 petrochemicl products of 57 million tonnes from in the GCC* lone. This is n increse of over 80% on 2009 cpcities nd excludes further twenty products tht will be produced in the GCC for the first time. These plnts re being built nd will dd further 12 million tonnes of nnul cpcity. Source: Chemicl Mngement Resources Limited Chemicl Mngement Resources Limited Short-term expertise for Middle Est petrochemicl nd petrochemicl Supply Chin projects 1

2 As production increses drmticlly, so too does the need for imports of specilist, liquid feedstocks from Asi nd Europe. Mny of these products require ISO tnks, creting hed-hul or bck-hul movements with strong profitbility resulting from minimum repo costs nd will mintin its globl competitiveness The Middle Est (or more ccurtely, the GCC nd Irn) is set to mintin its globl petrochemicl competitiveness in commodity petrochemicls. This is despite low-cost US shle gs, return to ethylene competitiveness for Europen crckers (driven by co-product credits) nd incresing feedstock prices in the Middle Est one of the originl motivtions for the current $0.75/million Btu crcker feedstock gs price in Sudi ws to gurntee ttrctive Returns On Investment for the interntionl prtners tht were necessry to provide worldcompetitive process technologies nd rpid mrket ccess for Sudi producers. Middle Est petrochemicl producers re enjoying record volumes nd profits but nxieties remin on the sustinbility of demnd by Chin s it becomes more self-sufficient nd ddresses infltionry pressures. Regionl Petrochemicl Profitbility - Csh Mrgin compred to 1995 Source: Nexnt.... but will produce lrge volumes of specilty chemicls requiring ISO tnks The GCC hs until recently been primrily commodity polymer nd lrge volume liquids ply in terms of supply chin logistics. The most significnt recent chnge is the move to hzrdous, specilty chemicl production. For polymers, mnging volume is the key chllenge; for liquids, mnging hzrd is the key chllenge. The move to downstrem liquid production hs been driven by hevier crcker feedstocks, the desire to retin more dded-vlue in the region, Chemicl Mngement Resources Limited Short-term expertise for Middle Est petrochemicl nd petrochemicl Supply Chin projects 2

3 the medium-term thret of over-supply in the criticl Chin mrket nd the strtegic priority of economic diversifiction (nd with it, job cretion). Oil-producing countries in the Middle Est nd North Africn continue to rely on producing nd selling oil nd gs to fund 90% of their fiscl budgets. These countries hve produced pproximtely 250 billion brrels of crude oil to dte, leving only 500 billion brrels of oil reserves vilble for future production this is equivlent to only 6 yers of globl demnd. As importntly, the hydrocrbon sector is not lbour intensive nd will not provide enough jobs to meet the higher spirtions of the next genertion (in Sudi Arbi, the medin ge is 24 while unemployment mong yer olds is 39%). Irn petrochemicl exports increse Irn continues to be no-go re for mny ISO tnk opertors but hs the region s second lrgest petrochemicl cpcity, which is pproximtely 60% tht of Sudi s nd third of the GCC s cpcity. The EU, US nd UN snctions re intensifying nd cusing difficulties but Irnin trding inventiveness nd willing trding prtners in Chin, Russi, South Kore nd Mlysi ensure tht lrge volumes re exported. Petrochemicl exports were over 13 million tonnes in the 10 months to 20 Jn 2011 (up 67% compred with the sme period yer go). But most exports re bulk liquids requiring bulk product tnkers or chemicl prcel tnkers so ISO tnk demnd is reltively limited nd some opertors hve been left with strnded tnks in Irn. Middle Est supply chin costs re highly visible..... Middle Est petrochemicl plnts typiclly cost 20% more to build thn those built in the US Gulf Cost, the principl interntionl benchmrk loction. As result, the logistics costs of Middle Est petrochemicl production fcility will, over its lifetime, exceed the plnts construction costs. Most Middle Est petrochemicl plnts hve very low vrible costs. As consequence, supply chin costs re much higher percentge of totl vrible costs thn is usul in the rest of the world. This focuses bord-level ttention on the supply chin rchitecture nd cost structure. As result, mny Middle Est producers promote their most tlented stff into supply chin functions.... nd tody s supply chin infrstructure cnnot meet future growth Mssive supply chin infrstructure investments re being mde in the region to serve the petrochemicl exports ssocited with this rmp-up in cpcity. These were highlighted in recent 500-pge study by Leslie McCune which identified the petrochemicl cpcities, exports nd supply chin infrstructure in the GCC nd Irn from In the short term, most of the ports in the region re being privtised nd expnded there hve been recent mjor expnsions in the key ports of Jeddh nd Jebel Ali. Jubil is being trnsformed nd will be one of only 14 ports tht cn hndle the new 17,500 TEUs continer vessels (the A380 s of the ses ). Chemicl Mngement Resources Limited Short-term expertise for Middle Est petrochemicl nd petrochemicl Supply Chin projects 3

4 Terminls re one of the most ttrctive investment opportunities in the region, 3PLs re expnding nd prtnering with others who provide complementry logistics services (e.g. trnsporttion, hndling, clening, storge), ISO tnks re in short supply with ll export tnks leving full, nd liquid storge nd drumming fcilities re being expnded. Clening fcilities in key loctions re t full cpcity, resulting in lower service levels. Positioning ISO tnk continers in the right plce, t the right time, is still chllenge nd key to success. Compnies with longer-term perspectives (such s well-estblished, fmily compnies with leding mrket positions) re busy positioning for the intermodl opportunities of the Sudi Lnd Bridge, the ril link between the Arbin Gulf nd Jeddh in the Red Se from 2009 to 2014, the increse in polymer exports to Europe from the GCC is forecst to be greter thn the increse in polymer sles to Chin. Pircy is mjor concern.... At the petchem business level, the Arb Spring hs hd miniml impct on the petrochemicl sector. Sudi nd Dubi hve benefited from re-directed money flows; border closures hve occsionlly cut supply links (such s in Syri) cusing Middle Est producers to redirect mteril into other mrkets. At the geo-politicl level, wht most concerns GCC producers is Somlibsed pircy. SABIC, for exmple, hs 16 ships. With verge rnsoms reported to be over $5 million nd over 800 hostges in Somli wters there re understndble humn nd finncil concerns. This topic will be covered in future Middle Est updtes Annul Increse In Attck Ares ( ) Source: Chemicl Mngement Resources Limited/Ntionl Geosptil Intelligence Agency Potentil Middle Est prtners of ISO tnk opertors look for opertionl excellence nd high sfety mngement cpbilities Chemicl Mngement Resources Limited Short-term expertise for Middle Est petrochemicl nd petrochemicl Supply Chin projects 4

5 The region is chroniclly under-resourced in terms of supply chin expertise nd ssets nd with petrochemicl production fcilities under construction, demnd growth for supply chin service providers is gurnteed. In recent ISO Tnk Globl Mrket study conducted by Leslie McCune, Europen opertors were viewed by Middle Est producers nd investors s hving world-leding expertise in ISO tnks. Opertionl excellence nd Europen/US-level sfety mngement cpbilities re the two most desired ttributes sought by potentil Middle Est prtners. The high-growth Middle Est ISO tnk mrket is still in formtive stge. Severl globl ISO tnk plyers re reviewing their forml nd informl reltionships in the region - others re refining their mrket entry strtegies. *GCC member sttes = Sudi Arbi, Kuwit, Bhrin, UAE, Qtr, Omn شكرا Leslie McCune is n independent petrochemicl nd petrochemicl supply chin expert, focused on the booming Middle Est. He produced globl mrket review of the ISO tnks sector in An cknowledged expert on the Middle Est s supply chin infrstructure, he works on projectspecific bsis for supply chin providers, petrochemicl producers nd business dvisory firms. Clients include ITCO, the Gulf Petrochemicls nd Chemicls Assocition (GPCA), the Royl Commission for Jubil nd Ynbu, Petro-Rbigh, Qtr Petroleum nd severl leding ISO tnk continer opertors nd lesing compnies. Unusully, he combines n intimte knowledge of the Middle Est with in-depth petrochemicl nd supply chin expertise. Projects include Middle Est mrket entry, mrket fesibility, M&A, competitive intelligence, prtner selection, strtegic supply chin options to/from the Middle Est nd downstrem product portfolio selection. For Project exmples, see In 2010, Leslie produced the seminl study on the GCC/Irn supply chin infrstructure, ssessing its bility to meet the huge growth in petrochemicl cpcity nd exports from The study ws commissioned by the highly-respected GPCA, whose members represent 90% of ll Gulf petrochemicl cpcity. Chemicl Mngement Resources Limited Short-term expertise for Middle Est petrochemicl nd petrochemicl Supply Chin projects 5