The Middle East Tube & Pipe Industry in 2014

Transcription

1 The Middle East Tube & Pipe Industry in 2014 James Ley Principal Consultant 8 th September 2014

2 INTERNATIONAL TUBE CONFERENCE ABU DHABI 2014 Contents MBR who we are Middle East OCTG market GCC/Iraq large-diameter linepipe market Questions

3 INTERNATIONAL TUBE CONFERENCE ABU DHABI 2014 Contents MBR who we are Middle East OCTG market GCC/Iraq large-diameter linepipe market Questions

4 Americas: Kim Leppold Tel: Europe/MENA/Asia: James Ley James.ley@metalbulletinresearch.com Tel: CIS: Roman Filimonov Roman.filimonov@metalbulletinresearch.com Tel: Metal Bulletin Research, Nestor House, Playhouse Yard, London, EC4V 5EX UK

5 MBR S TUBE AND PIPE GROUP Three newly developed trackers Welded and Seamless both now have a dedicated Middle East focus within the trackers I have read your trackers, this is really good stuff. - Industry association I totally love these publications. Good job! Very good luck and I can't wait for the next issues. - Leading trading company

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7 INTERNATIONAL TUBE CONFERENCE ABU DHABI 2014 Contents MBR who we are Middle East OCTG market GCC/Iraq large-diameter linepipe market Questions

8 ME OCTG MARKET Jan-08 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13 Nov-13 Jan-08 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13 Nov-13 Active rig numbers have roared past 400 in ME Iraq now has the highest rig count in the region Middle East rig counts by oil and gas and leading country ( ) Oil Gas Note: does not include Iran. Iraq numbers added in 2012 Saudi Algeria Kuwait Oman Iraq UAE Source: Baker Hughes and MBR

9 ME OCTG MARKET The Middle East OCTG market has roared back from the low-point that it witnessed in was an exceptional year, driven by strong Saudi growth 1600 Total ME OCTG (seamless and ERW) demand* by country (kt) 1.49Mt pre-financial crisis peak ~ 1.1Mt CAGR = 23% kt Saudi Arabia UAE Oman Kuwait Qatar Bahrain Iran Iraq Others Note: others include Syria, Jordan, Yemen etc. Source: ISSB and MBR

10 ME OCTG MARKET 700kt 133kt 128kt 170kt 145kt 124kt NIOC s dominate OCTG consumption in the Middle East Saudi Aramco accounted for 47% of the regions total consumption in 2013 Two major seamless mills in Saudi now JESCO and Arcelor Mittal Iraq only ME market where OCTG purchasing dominated by IOC s Source: MBR

11 ME OCTG MARKET Has Saudi Arabia over-stocked OCTG moving into H2 2013/Q1 2014? Apparent consumption of seamless OCTG in Saudi Arabia (kt) Seamless OCTG imports by country to Saudi Arabia (kt) Saudi apparent consumption in 2013 was some 200kt above previous best years It has been France, Japan and Mexico that have benefited from the increased OCTG import requirements in Imports Production Exports Apparent consumption Argentina Austria Brazil China France Germany India Indonesia Italy Japan Mexico Russia USA Source: ISSB and MBR

12 ME OCTG MARKET MBR has expanded it s price coverage of the ME Seamless OCTG price market since Dec 2013 the premium connection market has come under pressure this year Middle East OCTG prices Jebel Ali ($/tonne) 2500 Combination of increasing Chinese premium connection material being offered to the ME market and cheap offers out of Brazil has placed pressure on the premium connection market China dominates in the supply of J/K 55 through to Jebel Ali 0 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 OCTG casing J/K 55 (btc connection) OCTG casing L80 (btc connection) OCTG casing L80 (premium connection) Source; MBR

13 ME OCTG MARKET There are major new tenders set to be awarded in the UAE and Kuwait which helps to underpin OCTG demand in the region ADNOC ADCO: First quarter of this year issued a 170kt tender for its OCTG requirements primarily in 2015/end of 2014 ADNOC ADMA: May/June for the first time ADMA issued a joint tender for ADCO, ZADCO and ADMA Whopping 500kt order 140kt non-premium connection API material 2/3rds will be L80/T95/P110 all with premium connections Also include 13% Cr and CRA grades For 2016/7 drilling program Could UAE annual requirements for OCTG hit around 250kt over 2016/7? KOC: Had a tender out since Apr/May for ~ 150kt of OCTG The bulk of the order is expected to be API grades Chinese mills are likely to be successful in wining a large share of the order Source: MBR

14 THE FUTURE? GAS AND SHALE DRILLING PICK-UP? Saudi is actively developing its gas reserves and in 2012 discovered sustainable tight gas reserves leading to future potential shale drilling Saudi Aramco is also actively developing the country s gas production In 2012 the company produced 10.7bncf per day of gas The company drilled 100 exploration and development well (around 1/3 of all wells drilled in the country) Aramco discovered two new gas fields: Sha ur and Umm Ramil The company has been busy developing new gas reserves in recent years and these include the Karan Gas Program Saudi s first non associated offshore gas field which was completed in 2012 and will deliver 1.8 billion scfd of gas and the Wasit gas program Saudi is also investigating developing shale gas reserves In 2012, Saudi proved that sustainable shale and tight gas deposits existed in the country Following on from this, Saudi has been exploring and appraising programs in three prospective areas: Northwest, South Ghawar and the conensate-rich shale gas in the Rub al-khali or the Empty Quarter Source: Saudi Aramco and MBR

15 INTERNATIONAL TUBE CONFERENCE ABU DHABI 2014 Contents MBR who we are Middle East OCTG market GCC/Iraq large-diameter linepipe market Questions

16 GCC/IRAQ LARGE DIAMETER LINEPIPE MARKET Six new LSAW and HSAW mills have arrived in the GCC since 2008 Qatar: Hyo Jong (pre 2008), Qatar HSAW 150kt Dammam: LSAW and HSAW mills in the GCC Kuwait: Jubail: KPIOS. (pre -2008) HSAW 150kt cap Arabian Pipe Co. (2007) LSAW 300kt cap Global Pipe Co. (2013) LSAW 300kt cap Group 5. (pre- 2008) HSAW 300kt cap NPC. (2002) LSAW 180kt cap. HSAW 240kt cap Welspun ME (2008) HSAW 340kt cap PCK (2014) LSAW 300kt cap JPIOS. (2010) LSAW 320kt cap PSL. (2010) HSAW 75kt cap SeAH Steel Pipe Co LSAW 150kt Cap Sharjah Steel Pipe Co (pre-2008) HSAW ~ 60kt Source: MBR

17 GCC/IRAQ LARGE DIAMETER LINEPIPE MARKET This has resulted in a rapid increase in LSAW capacity in the GCC markets since 2008 GCC and Iraq LSAW/HSAW capacity 2008 and 2014 Pre 2008 (kt) 2014 (kt) Change in capacity (%) LSAW 480 1, HSAW 900 1, Source: MBR

18 GCC/IRAQ LARGE DIAMETER LINEPIPE MARKET GCC and Iraq LSAW consumption has increased since 2009 with a CAGR of 6.8% - in 2013 there was theoretically enough local capacity to meet demand GCC and Iraq LSAW consumption (kt) CAGR 6.8% 1Mt kt % % 38% % Saudi Arabia Iraq UAE Oman Qatar Kuwait Theoretical capacity utilisation rates that could be achieved with local mills Source: ISSB and MBR Demand exceeded capacity by some 60% 98%

19 GCC/IRAQ LARGE DIAMETER LINEPIPE MARKET however, imports have pretty much matched demand growth (6.13% vs 6.8%) suggesting international mills have met the demand increase and local LSAW mills have struggled LSAW imports into GCC and Iraq (kt) CAGR = 6.13% India, China, Japan and South Korea now dominate imports Why have international mills been winning the orders that new local LSAW mills are not? Higher level of vertical integration with internationals own plate mills/steelmaking etc. cost competitive Question of scale? Much larger operations potentially better operating efficiency? Strong established network of sales agents in the region Korean EPC contractors? India China Japan South Korea France Germany Italy Others (HSAW imports typically much smaller ~ 50ktpy) Source: ISSB and MBR Some local mills perhaps lack technical experience of international mills and have struggled with quality

20 GCC/IRAQ LARGE DIAMETER LINEPIPE MARKET Saudi Arabia dominates HSAW consumption within the GCC and Iraq, in 2013 it accounted for ~ 80% of local market demand 1200 GCC and Iraq HSAW consumption (kt) 1000 CAGR = 3.11% kt 719kt % 48% 35% 48% Saudi Arabia Iraq UAE Oman Qatar Kuwait Source: ISSB and MBR

21 GCC/IRAQ LARGE DIAMETER LINEPIPE MARKET There have been a number of major water pipeline projects which have kept HSAW mills busy in Saudi Arabia and increasingly now oil and gas linepipe projects are being awarded to HSAW mills Project name Length (km) Diameters of pipes used (inch) Shuqaiq Water Transmission System 2 Ras Alkhair Riyadh Water Transmission System Overview of recent water pipelines built in Saudi Arabia Ras Alkhair Hafer Albaten Water Transmission System Altaif Albaha water transmission system Alleyth Beneficary Water transmission system Yanbu Al Madina Water Transmission system Diameters are now often pushing above the LSAW range Source: SWCC and MBR

22 GCC/IRAQ LARGE-DIAMETER LINEPIPE MARKET The major large-diameter pipeline project through 2014/5 in Saudi Arabia is the Master Gas System Expansion Pipeline Phase 1 which HSAW forms the bulk of one of the largest orders The MGS is the worlds largest single hydrocarbon network built in the mid 1970 s The total project will cost some $1.65billion as well as building a pipeline system there will be two gas compressor stations, Linepipe for this project will be manufactured from the beginning of 2014 will be completed at the end of 2015 The project itself will be completed at the end of 2017 The project will require 683km of 56 LSAW and HSAW linepipe of which 182km is LSAW and the bulk of the project is HSAW The total LSAW tonnage required for the project is 161kt, with the total HSAW required for the project 273kt HSAW has now broken into being used for onshore GAS pipelines in Saudi Arabia a few years back this was not accepted for this application Source: MBR

23 GCC/IRAQ LARGE DIAMETER LINEPIPE MARKET As in the seamless OCTG market, since the start of the year MBR has also expanded its coverage of welded linepipe prices in the Middle East region 1200 Middle East Welded Linepipe prices ($/tonne) 1150 India tends to offer amongst the most competitive LSAW prices the region, demand is improving though supporting prices a little China is aggressive in HSAW pipe price offers in the region Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 LSAW linepipe API 5L X65 HSAW linepipe X65 ERW linepipe X65 Source: MBR

24 GCC/IRAQ LARGE DIAMETER LINEPIPE MARKET The Iraq large-diameter market is still moving, although this is primarily for projects to the south around Basra where IOC s continue to operate Overview of current LSAW linepipe projects being delivered to Iraq in 2014 Jindal SAW has just won an order in Iraq with Statoil/Lukoil for the West Qurna-2 export pipeline This is for a pipeline of 48 OD LSAW The pipeline costs around $169m and the legth of the pipeline is 103km The total tonnage delivery for the project for Jindal SAW is for 72,000 tonnes Source: Jindal SAW, MBR

25 GCC/IRAQ LARGE DIAMETER LINEPIPE MARKET Iraq has a MEGA pipeline project proposed, but this is likely to run into delays due to the current political conflict Iraq is proposing to build a MEGA pipeline project from Basra to Haditha (phase 1) then from Haidth to Aquaba on the Jordanian coastline Phase 1 would comprise of two pipelines: 56 oil pipeline at 680km in length, running parallel to this 32 associated gas fuel line: Total LSAW tonnage: 400kt Phase 2 would also comprise of two pipelines: 42 oil pipeline at 1,000km in length, running parallel 24 associated gas fuel line: Total LSAW tonnage: 650kt For this second pipeline to progress, Inter Government Agreement is needed between Jordan and Iraq. SNC Lavalin is involved in negotiating this. Iraq will provide Jordan with preferential oil prices as the pipeline travels through the Kingdom. In mid-february 2014, Jordan and Iraq began a coordinated meeting with international companies interested in constructing the pipeline. However, Haditha is now under ISIS militant control, suggesting this pipeline is likely to face serious delays until the current Iraq conflict has been resolved Iraq to Jordan pipeline Source: MBR

26 INTERNATIONAL TUBE CONFERENCE ABU DHABI 2014 Contents MBR who we are Middle East OCTG market GCC/Iraq large-diameter linepipe market New report from MBR Questions

27 MBR S TUBE AND PIPE GROUP The Five Year Strategic Outlook for the Global OCTG Market NEW FOR SEPT 2014 Demand for OCTG by-country, region and product group Medium-term forecast for price out to 2022 Seamless and welded OCTG material global, regional and country supply and demand balance Details of production for welded and seamless OCTG bycountry NEW: Extensive analysis of the proprietary grade global market (CRA, 13% CR etc.) Expanded analysis of the premium connection market Analysis of the offshore/onshore market by region More extensive and detailed analysis of key OCTG markets

28 INTERNATIONAL TUBE CONFERENCE ABU DHABI 2014 Contents MBR who we are Middle East OCTG market Middle East large-diameter linepipe market Questions and thank you for your time!

29 MBR S TUBE AND PIPE GROUP Strategic Prospects for the Global Transmission Linepipe Market by Type, Size Range and Grade Strategic view of how, where and when the world's energy demands will change Demand for linepipe over a 22 year forecast A proprietary database of how linepipe demand will develop by country/region An evaluation of how the world's transmission pipeline network has developed by country Identifying where significant growth has occurred and which countries have ageing networks Extensive analysis on the structure of the linepipe sector by country Detailed database of existing pipeline network Unique model that uses 8 different categories of fluid type, onshore and offshore, making 16 combinations in all to cover all possible options ORDER ONLINE TODAY at or contact us on +44 (0) or marketing@metalbulletinresearch.com if you have any questions and require more information on this study.