Attachments 21 Convegno della Sezione Componentistica ANIMP, 24 novembre 2015 1
SEZIONE COMPONENTISTICA D IMPIANTO ANIMP Market trends : Oil & Gas Midstream Index: LNG - Liquefaction Regasification Midstream Pipelines 2
SEZIONE COMPONENTISTICA D IMPIANTO ANIMP Market Trends : LNG - Liquefaction Outlook Global liquefaction capacity MTPA: Current: 289 Expected in 2025 : 450 MTPA Huge list of proposed projects but high % of mortality due to: LNG demand increase over the next 10 years: less than 100 MTPA Risk of over-supply vs announced capacity increase - decrease of LNG purchasing price in Far East Fall in oil & gas prices and overrun on recent megaprojects Stringent environment regulations/conflicts with local communities Financial weakness of some investors 2020 Asia Pacific (in particular Australia), Middle East and North Medium term capacity increase: mostly from Australia and US New large-scale plants in Canada and East Africa: between 2020-2025 3
Market Trends : LNG - Liquefaction SEZIONE COMPONENTISTICA D IMPIANTO ANIMP Overview by geographical area North America Largest worldwide Capex driver - expected growth (90 MTPA) between 2014 and 2025 5 major onshore liquefaction projects under construction More than 40 proposed projects (over 600 MTPA) but only 15% expected in production by 2025 due to: Reduced price differentials with oil companies announcing spending cuts Market potentially over supplied Construction cost/time for greenfield projects Heavy environment regulations and conflicts with local communities (Canada) Significant pipeline infrastructure needed (Canada) 15 % 20 % Asia - Pacific strongest CAPEX driver during the last few years Australia: Project under construction: 50 MTPA increase by 2018 High cost escalation less attractiveness of future projects-no further capacity increase Africa Significant gas resources in Mozambique/Tanzania Large scale LNG expected between 2020-2025 (Mozambique) Risks of executing large-scale projects: Undeveloped countries Lack of infrastructure Russia Significant gas resources close to Asian markets LNG export liberalization in 2013 Sanctions against Russia: Difficulties in finding partners/off takers/financing Potential escalation: risk of sanctions on LNG technology Gas pipelines development: often a better alternative July 2015 statement: Vladivostok LNG no more a priority Middle East No more the largest liquefaction capacity area after 2020 Expected 19% vs 33% of AsiaPacific and 20% of North America 4
SEZIONE COMPONENTISTICA D IMPIANTO ANIMP Market Trends : Regasification Outlook Global need for additional capacity - mainly in Asia and Europe Current capacity: over 700 MTPA - expected in 2020 : 900 MTPA By 2020: 42 countries with regasification capacity Strategic interest in those countries which: Depend on natural gas importation focus on diversification of resources For geographical position are an import hub for gas distribution in nearby countries Asia Moderate increase - almost 60% of the worldwide capacity by 2020 Europe Moderate increase: 20% of the worldwide capacity by 2020 25 exist. terminals - 5 under completion (2017) - 13 planned by 2020 Permitting: often a strong constraint Floating storage and regasification units (FSRU) Markets using FSRU: currently 42% - almost 50% by 2020 Currently 70 MTPA (10% of global capacity) Expected : 100 MTPA by 2017-130 MTPA by 2020 Main users in: Asia-Pacific (esp. Japan and korea), Europe and Latin America 76 % 50 % 5
SEZIONE COMPONENTISTICA D IMPIANTO ANIMP Market Trends : Midstreastream Pipelines Outlook Long terms: 2010-2040: global energy demand: expected 35% increase natural gas: 65% share of energy mix above trend driven by: non-oecd countries demand growth and technology advancements (e.g.in liquefied natural gas) investment in new infrastructure to support LNG and unconventional gas developments Short terms: 2015 2018: limited growth due to: significant fall in oil prices lower-than-expected economic growth in Asia - unconventional production slowdown in North America progress of planned pipeline projects often affected by environmental and geopolitical issues onshore pipeline expenditure: US$170b between 2015-2018 vs $155b between 2011-2014 - increase limited to 10% 115,000 kilometers (km) of new oil and gas pipeline to be built between 2015-2018 major investors: Gazprom, CNPC, TransCanada, Enbridge and Kinder Morgan 6
Market Trends : Midstreastream Pipelines SEZIONE COMPONENTISTICA D IMPIANTO ANIMP Overview by geographical Area EMEA: (Europe, Russia & former Soviet Union, except Turkmenistan, Kazakhstan and Uzbekistan, Middle East and Africa): longest Oil and Gas Pipeline additions: 58,981 km of new pipelines (41% of the total global planned) by 2018 in Europe: 10% new pipeline projects to provide access to natural gas from the Caspian and Central Asia driving factor: diversification of gas sources to avoid over-dependence on Russian gas supplies constraining factor: local communities negative attitude/permitting Americas (North America, South and Central America): 46,400 Km of new pipelines by 2018 ( 32% of the total global planned) In North America: driving factor: unconventional production growth constraining factor: local communities negative attitude/permitting Asia-Pacific: 39,321 km of new pipelines by 2018 (27% of the total global planned) - 87% gas pipelines most of these, gas pipelines to be constructed in India, Georgia, China (15.000km) and Australia. driving factor: need to secure energy for developing economies with rapidly 7 growing energy consumption
SEZIONE COMPONENTISTICA D IMPIANTO ANIMP 21 Convegno Annuale Sezione Componentistica d Impianto ANIMP STRATEGIE E PREVISIONI DI MERCATO PER LA FILIERA DELL IMPIANTISTICA INDUSTRIALE PACKAGES PER L IMPIANTISTICA: UN COMPARTO AD ALTO POTENZIALE Grand Hotel Villa Torretta, Sesto S.G. (Milano)
MARKET TRENDS : PETROCHEMICALS Dario Pirovano Senior Advisor Business Development World Polymer Demand Polyethylene (PE) - Global Demand Polyethylene (PE) - Additional Production / Capacity Polypropylene (PP) - Global Demand Polypropylene (PP) - Additional Production / Capacity Market Outlook 21 Convegno Sezione Componentistica ANIMP, 24 novembre 2015
2014 World Polymer Demand = 235 Mln Tons PVC, 18% PET, 9% PC, 2% HDPE, 17% LLDPE, 12% ABS, 4% PS, 4% LDPE, 9% PP, 26% PE and PP represent the 64% of the global demand Source: IHS June 2015 21 Convegno Sezione Componentistica ANIMP, 24 novembre 2015
Polyethylene (PE) Global Demand 2014 Global Demand : 84.7 mln tons 2019 Global Demand: 105.7 mln tons NORTH EAST ASIA, 33% SOUTHEAST ASIA, 8% AFRICA ME, 11% NORTH EAST ASIA, 36% SOUTHEAST ASIA, 8% AFRICA ME, 11% INDIAN SUBCON, 5% INDIAN SUBCON, 6% NAM, 18% NAM, 17% EUR, 19% SAM, 6% EUR, 16% SAM, 6% Source: IHS June 2015 Area CAGR SOUTHEAST ASIA 4.5% AFRICA ME 4.5% INDIAN SUBCON 8.4% NAM 3.3% SAM 4.5% EUR 1.0% NORTH EAST ASIA 6.4% Global Average 4.7% 21 Convegno Sezione Componentistica ANIMP, 24 novembre 2015
Polyethylene (PE) Additional Production / Capacity AME Source: IHS June 2015 Demand Change New Projects in North America driven by shale gas price advantage, China decreasing imports developing new technologies (CTO, MTO), Middle East traditional and stable market 21 Convegno Sezione Componentistica ANIMP, 24 novembre 2015
Polypropylene (PP) Global Demand 2014 Global Demand : 58.8 mln tons 2019 Global Demand: 75.1 mln tons MDE AFRICA, 10% INDIAN SUBCON, 7% China, 33% MDE AFRICA, 10% INDIAN SUBCON, 8% China, 37% EUR, 18% EUR, 15% SAM, 5% NAM, 12% SE Asia, 8% NE Asia, 7% SAM, 4% NAM, 11% SE Asia, 8% NE Asia, 7% Area CAGR China 7.45% NE Asia 5.02% SE Asia 5.02% NAM 3.20% SAM 0.43% EUR 1.25% MDE AFRICA 5.02% INDIAN SUBCON 7.86% Global Average 4.40% Source: IHS June 2015 21 Convegno Sezione Componentistica ANIMP, 24 novembre 2015
Polypropylene (PP) - Additional Production / Capacity New Projects mainly in China; CIS to growth in PP market; Middle East facing shortage of ethane Source: IHS June 2015 21 Convegno Sezione Componentistica ANIMP, 24 novembre 2015
MARKET OUTLOOK 21 Convegno Sezione Componentistica ANIMP, 24 novembre 2015 PP AND PE DEMAND EXPECTED TO GROW 4.4% AND 4.7% PER YEAR RESPECTIVELY, MUCH HIGHER THAN WORLD GDP GROWTH (3.6% IN 2016) START UP IN 2015-2017 OF NEW PLANTS IN USA, CHINA, RUSSIA AND MIDDLE EAST WILL ADD SIGNIFICANTLY INSTALLED CAPACITY ( SHALE GAS IN USA, COAL AND PDH IN CHINA, TRADITIONAL FEEDSTOCK IN ME) NEW INVESTMENTS UNCERTAIN DUE TO : TEMPORARY OVER CAPACITY TILL 2017 SLOW DOWN OF ECONOMY GROWTH IN CHINA (MAJOR CONSUMER) AND OIL PRODUCING COUNTRIES (CIS, BRAZIL, MIDDLE EAST) SUFFERING SHORTAGE OF CASH FOR LOW OIL PRICE POLITICAL INSTABILITY IN MENA EFFECT OF SANCTIONS IN RUSSIA AND IRAN IN THE SHORT/MEDIUM TERMS NEW PROJECTS IN COUNTRIES OF RELATIVELY NEW PETROCHEMICAL INDUSTRIALIZATION SUCH AS OMAN, MALAYSIA, AZERBAIJAN, KAZAKHSTAN, AND NEW EMERGING MARKETS IN SOUTH AMERICA AND AFRICA SOME OPPORTUNITIES OF NEW PROJECTS IN EUROPE AS REPLACEMENT OR MODERNIZATION OF OLD PLANTS IN MEDIUM LONG TERM SECOND WAVE OF NEW PETROCHEMICAL PROJECTS IN USA, RUSSIA AND CHINA
SEZIONE COMPONENTISTICA D IMPIANTO ANIMP 21 Convegno Annuale Sezione Componentistica d Impianto ANIMP STRATEGIE E PREVISIONI DI MERCATO PER LA FILIERA DELL IMPIANTISTICA INDUSTRIALE PACKAGES PER L IMPIANTISTICA: UN COMPARTO AD ALTO POTENZIALE Grand Hotel Villa Torretta, Sesto S.G. (Milano) 24 novembre 2015
Refining Outlook Stefano Donzelli Market Trends Total Global Refining capacity is currently around 96 MMbpd By end of decade, additional 5 6 MMbpd of new capacity will begin operations, reaching around 102 MMbpd This means over $550 B in Capex IEA forecast are that oil demand will increase from 93 MMpbd in 2014 to around 99 MMbdp in 2020 Refining industry is growing, but toward overcapacity 21 Convegno Sezione Componentistica ANIMP, 24 novembre 2015
Refining Outlook Stefano Donzelli Market Trends Political stability and objectives still drive investment plans Majority of this new capacity will go in non-oecd nations, mostly in Asia followed by Middle-East; NOC s will control many investments: Long term Client s relationships Local presence and content Difficult business environment Political influence on project development Preference for LSTK contracts A huge amount of investment is still required as clean fuels legislation sweeps across the globe. 23/11/2015 Le strategie di mercato e di procurement per la filiera dell impiantistica italiana 18
Refining Outlook Stefano Donzelli Market Trends Market Segmentation: Summary of key Themes OECD countries Refining margins bolstered by low oil price Investment focused on revamping/modernization, aimed to increase conversion capacity and enhance flexibility to process many types of crudes New technologies have emerged in the market after decades (EST, Eni) Increasingly stringent product / environmental specifications Transformation from conventional into Green Refineries ongoing in Italy and France Focus on Opex expenditures reduction IOC - asset sales/shutdowns Non-OECD countries Demand growing may surpass OECD demand by 2017 Investments slowdown / interest in new refineries, major expansions and significant upgrades Growing local demand + targeting export markets Increasing environmental focus Need for further upgrading capacity to address declining residual fuel oil markets and future demand for distillates NOCs are generally in the driving seat Joint Ventures: NOC s with crude & NOC s with growth markets 23/11/2015 Le strategie di mercato e di procurement per la filiera dell impiantistica italiana 19
Refining Outlook Stefano Donzelli Market Trends Residue Upgrading: Profitable Refining with Focused High Conversion Significant political pressure to address environmental issues Declining markets for high sulfur fuel oil Light / heavy crude spread Increased demand for distillates and clean fuels New crudes sources and extra heavy crude upgraders Residue upgrading & conversion Catalytic Residue FCC Residue Hydrocracking Non-catalytic Delayed Coking Flexicoking Visbreaking Solvent deasphalting 23/11/2015 Le strategie di mercato e di procurement per la filiera dell impiantistica italiana 20
Refining Outlook Stefano Donzelli Market Trends Environmental regulations will impact investment plans Gasoline Diesel Source: IFQC Source: IFQC 0 ppm 15-30 ppm 30-80 ppm 100-150 ppm 10 or 15 ppm 50 ppm 350 ppm 0 ppm 500 ppm 200-600 ppm Up to 2500 ppm 2000 ppm >2000 ppm All export refineries are built to the latest clean fuels specifications Existing domestic refineries react to domestic legislation 23/11/2015 Le strategie di mercato e di procurement per la filiera dell impiantistica italiana 21
Refining Outlook Stefano Donzelli Market Trends 1. Availability of Cheap Gas A couple of wildcards Cheap gas will influence not only the level of investment, but also the optimal configuration for refineries Will boost investments in petrochemical sector 2. Marine Fuel Oil Specifications - A Major Challenge for Refiners? Still a key market for lower quality/higher sulphur refinery residual fuel oil Planned legislation for ships SOx emissions will require more stringent constraints This will imply investments to treat the «bottom of the barrel» 23/11/2015 Le strategie di mercato e di procurement per la filiera dell impiantistica italiana 22
grazie per la cortese attenzione 21 Convegno Sezione Componentistica ANIMP 24 novembre 2015