2017 Water Treatment
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Introduction Membranes Sludge thickeners Filters PAM Coagulants Table of Contents
Introduction Membranes Sludge thickeners Filters PAM Coagulants Table of Contents
Rationale Opportunity Key opportunities for localization RO Membranes Input raw materials Manufacturing Assembly & integration, operations, and maintenance Establish local production of key input materials 1 e.g. Chlorophenylsulfone and polysulfone Establish local manufacturing plants of RO membranes through partnerships with international players Provide aftersales services i.e., replacement membranes, troubleshooting, upgrades, etc. No local production of these raw materials in KSA Diverse applications of membranes beyond just oil & gas (e.g. waste water treatment, desalination) Additional demand of ~$550 MM in KSA and ~$914 MM in GCC by 2025 Limited local production of RO membranes to service KSA and GCC demand Limited local aftersales services offered in KSA to improve customer experience 1. Composition and demand to be determined after discussion with leading players Source: Saudi Aramco analysis
Demand for RO membranes is expected to grow to by a CAGR of 7% to reach ~$550 MM by 2025 KSA RO membrane market size evolution KSA local demand for RO membranes justifies ~2-3 manufacturing facilities in KSA as they add new desalination and waste water plants Value (MM USD) Was tewater Des alination Oil & gas 315 92 347 98 118 141 383 104 168 425 110 7% 447 117 201 213 226 239 254 269 105 108 111 114 118 121 125 129 132 471 124 495 131 521 139 549 147 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Saudi Aramco analysis, GWI
Opportunity for localization exists across all value chain domains Value Chain for membranes Building blocks and intermediates Raw materials Manufacturing Finished goods Ethelene Sulfur Ammonia Benzine Chlorine Polyethylene Polypropylene Polyamide PVC Polystyrene Nylon Transport Manufacturing membrane parts and components: Extrusion Injection molding Assembly & integration RO membranes Transport After Sales support End customer Blow molding Chlorophenylsulfone Polysulfone Casting Largely localized Opportunity for localization Source: Saudi Aramco analysis
SMEs can invest in key components and equipment required to manufacture membranes Localization potential Components and equipment Key equipment Module making facility comprising: Membrane spiral making machine Membrane cutting device Membrane rolling machine Spiral element trimming machine Product tube making machine End caps molding machine Outer hard wrapping machines Sonic welding machine Permeate and feed spacer automatic cutting machine Spiral element test benches Water filters Chemical dosing Circulating & high pressure pumps Source: Saudi Aramco analysis, Nexant report
Key messages and next steps Key messages Consumption of membranes in KSA is expected to increase to ~$550 MM in 2025, driven by various applications in oil & gas, desalination, and waste water treatment Building blocks for raw materials are available in abundance (e.g. i.e., chlorine, sulfur, ammonia, benzene) Building blocks can be leveraged to manufacture several raw materials essential to membrane manufacturing e.g. Polysulfone (with Chlorophenylsulfone) Limited presence of RO membrane manufacturers in KSA presents an opportunity for local players to localize manufacturing processes In case you are interested in discussing this opportunity further, please contact Salem Mohammed Alghamdi Local Business Development Saudi Aramco Salem.alghamdi.7@aramco.com Ahmed Al Ebdah IKTVA Support Unit Saudi Aramco Ahmed.Ebdah@aramco.com Source: Saudi Aramco analysis
Introduction Membranes Sludge thickeners Filters PAM Coagulants Table of Contents
Rationale Opportunity Key opportunities for localization Sludge Thickeners Sludge thickening chemicals Component manufacturing and assembly Installation and after sales Establish local production of key chemicals used in sludge thickening equipment 1 e.g. iron chloride, iron chloro-sulfate Manufacture sludge thickening equipment components Offer assembling services on-site for OEMs Localize installation and after sales services e.g. maintenance, installation, delivery, customer service, capability development, and consulting No local production of these chemicals in KSA Availability of raw materials in KSA (i.e., iron, sulfur, chlorine) Diverse applications beyond sludge thickening (e.g. flocculants, coagulants) Demand expected to grow at ~6% CAGR and is expected to reach ~$380 MM by 2020 Components such as routers, motors, casings, drains, etc. have a high potential for localization Limited players offering aftersales services especially in the water industry 1. Composition and demand to be determined after discussion with leading players Source: Saudi Aramco analysis
Demand for sludge thickeners is expected to grow at a CAGR of 6% to reach ~$378 MM in the M. East by 2020 ME sludge treatment market size evolution ~50 new desalination and water treatment plants are expected to come online in KSA in the next 15 years- each plant will require additional sludge thickeners Value (MM USD) KSA 220 39 44 Rest of ME 223 243 52 181 179 191 270 52 289 55 218 234 6% 263 69 283 75 194 209 318 80 238 347 87 260 378 95 284 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Saudi Aramco analysis, GWI
Building blocks are available - opportunity for localization exists across all other value chain domains Value Chain for sludge thickeners Largely localized/limited potential Opportunity for localization Design Building blocks Components and modules Manufacturing and assembly Carbon Done as part of a global R&D center Iron Distribution & transport Manufacture components such as screws, Assembly & integration Sludge thickener equipment drains, belts, Steel Chlorine sieves, etc. Chemicals Transport After Sales support End customer Iron Blending Coagulants Flocculants Iron Chloride Iron Chloro- Sulfate Sulfur Source: Saudi Aramco analysis
There are 3 main technologies used for sludge thickening, each having localization potential Three main sludge thickening operations equipment Centrifuge Gravity belt Drum Component Localization potential Component Localization potential Component Localization potential Router High Ramp High Drum High LV Motor Medium Fence High Ramp High Seal Low Belt High Sieve High Drain line Low Casing Medium Screw Low Casing Medium Casing Medium Total CapEx $6.2 MM Total CapEx $3.4 MM Total CapEx $3.9 MM Total OpEx $4.4 MM Total OpEx $4.8 MM Total OpEx $4.9 MM Source: Saudi Aramco analysis
Key messages and next steps Key messages Basic raw material (iron, carbon, steel) are available in abundance KSA market size for sludge thickeners is expected to grow at a rapid pace of 10% to ~$95 MM by 2020 Opportunity exists to leverage raw materials to localize key components such as seals, screws, ramps, etc. Availability of such components will stimulate final manufacturing and assembly of sludge thickeners In addition to equipment, several chemicals essential to sludge thickeners can be localized in KSA e.g. iron-chlorosulfate, iron chloride, coagulants, and flocculants Local players can also offer assembly and integration services to install sludge thickener equipment at OEMs In case you are interested in discussing this opportunity further, please contact Salem Mohammed Alghamdi Local Business Development Saudi Aramco Salem.alghamdi.7@aramco.com Ahmed Al Ebdah IKTVA Support Unit Saudi Aramco Ahmed.Ebdah@aramco.com Source: Saudi Aramco analysis
Introduction Membranes Sludge thickeners Filters PAM Coagulants Table of Contents
Rationale Opportunity Key opportunities for localization Filters Component manufacturing Assembly Testing & inspection Establish local filter manufacturing facilities for the three main types of filters: air, water, and oil & gas Offer assembly of filters at the manufacturing facility Offer installation on-site at the asset location Provide aftersales services i.e., replacement membranes, troubleshooting, upgrades, etc. Limited presence of manufacturing facilities in KSA Presence of machining parts in KSA such as seals, rolls, etc. Limited assembly and installation services offered in KSA Limited local aftersales services offered in KSA to improve customer experience 1. Composition and demand to be determined after discussion with leading players Source: Saudi Aramco analysis
Demand for filters is expected to grow to by a CAGR of 5% to 64 ktpa in 2030 KSA filter market size evolution KSA local demand for filters justifies ~1-2 manufacturing facilities in KSA as they add new desalination and waste water plants Volume (KTPA) Value ($ MM) Liquid filters Gas & air filters Filter parts 1 3% 64 54 9 42 45 45 48 7 39 38 40 6 6 6 21 5 6 6 5 18 12 13 14 15 15 16 17 15 20 22 23 24 24 26 29 34 2014 2015 2016 2017 2018 2019 2020 2025 2030 75 78 99 114 98 101 104 107 110 111 186 231 235 161 166 171 176 181 8 12 11 16 23 24 26 27 29 1: filter parts are for both gas and liquids Source: Saudi Aramco analysis, GWI, UN Comtrade
Opportunity for localization exists across all value chain domains Value Chain for filters Building blocks and intermediates Manufacturing components Finished products Polypropylene Aluminum Iron Steel Transport Manufacturing filter parts and components: Rolls Seals Gauges Fiberglass Assembly & integration Filters Transport After Sales support + Inspection + Testing End customer Frame Film die Largely localized Opportunity for localization Source: Saudi Aramco analysis
Local players exist in KSA and can potentially make customized components for filter manufacturing Manufacturing of filter machine parts Parts Manufacturing process Localization potential Rolls Extrusion, injection molding Seals Elastomer conversion Gage Blow molding, casting Fiberglass Melting, forming, sizing, winding, twisting, drying Frame / plate Extrusion Film die Blow molding Source: Saudi Aramco analysis, public company profiles Low High
Key messages and next steps Key messages Consumption of filters in KSA and GCC is expected to increase to ~$459 MM by 2030, driven by various applications in oil & gas, desalination, and waste water treatment Building blocks for raw materials are available in abundance (e.g. i.e., aluminum, polypropylene) Limited presence of filter manufacturers in KSA presents an opportunity for local players to localize manufacturing processes Gap in local aftersales market presents an opportunity for KSA to localize assembly, maintenance, and operations service offerings In case you are interested in discussing this opportunity further, please contact Salem Mohammed Alghamdi Local Business Development Saudi Aramco Salem.alghamdi.7@aramco.com Ahmed Al Ebdah IKTVA Support Unit Saudi Aramco Ahmed.Ebdah@aramco.com Source: Saudi Aramco analysis
Introduction Membranes Sludge thickeners Filters PAM Coagulants Table of Contents
Additional Primary PAM is an important chemical, with 50% of total production being used for water treatment Global PAM market by application (2017-2021E) Not Exhaustive Industries Applications & Market Opportunities ($ mn) Polyacrylamides (PAM) ~3500 KT 47% 23% 18% Water mgmt. Oil recovery Pulp & paper Flocculant agent Treatment of raw water, urban sewage, and industrial wastewater Component of polymer -augmented flood systems Enhance the flow rate Maximize the output of oil from an existing well Fiber retention control Drainage agent Pigment settling agent Dry-strength additive 2,525 +7% 2017 +7% 1,252 3,349 2021 1,646 2017 2021 +7% 1,006 2017 1,304 2021 XX% Share of global consumption 12% 1: Misc. applications, i.e., mining, coating, dying, and printing Source: Technavio, A.T. Kearney Others 1 In mining: flocculants for either sedimentation or centrifugation Other: consumed in the sugar processing, superabsorbent resins, adhesives, and leather retanning sectors 2 3
Rationale Opportunity Key opportunities for localization PAM Input chemicals and materials Blending and formulation Logistics and supply chain Establish local production of key input materials 1 e.g. Acrylonitrile and Acrylamide Establish blending facilities in KSA Provide handling services e.g. drums and iso containers Provide transportation and loading e.g. flatbed trailers and manifold trailers No local production of these raw materials in KSA Presence of building blocks in sufficient volumes in KSA Diverse applications of PAM beyond oil & gas, i.e., water treatment, mining, pulp and paper Additional demand of ~46 ktpa in KSA by 2020 Diverse applications of blending and formulation beyond just PAM Demand for 20-30 additional iso tanks and drums by 2025 Demand for ~1 additional flatbed and manifold trailers by 2025 1. Composition and demand to be determined after discussion with leading players Source: Saudi Aramco analysis
KSA is expected to grow in line with global growth- 100% of PAM is imported presenting a clear opportunity KSA PAM imports ( 000 MT) Volume 000 MT 38 43 +6.5% 46 46 Key demand drivers for PAM include Use of Chemical EOR in Saudi Aramco Increased use of drilling and completion chemicals Increasing population and industrial activity in KSA 2017E 2018E 2019E 2020E There limited to no manufactures of PAM in the domestic market; significant potential exists to localize the supply Source: : RCJY report, SRI reports, Technacvo, A.T. Kearney analysis
Building blocks are available - opportunity for localization exists across all other value chain domains Value Chain for PAM Building blocks Intermediates & raw materials System houses Finished goods Propylene Transport Ammonia Acrylonitrile Hydration of acrylonitrile Transport Polymerization of acrylamide PAM End After Sales customer support to to synthesize synthesize Polyacrylamide Acrylamide (PAM) Largely localized Opportunity for localization Source: Saudi Aramco analysis
Key messages and next steps Key messages In case you are interested in discussing this opportunity further, please contact Consumption of PAM in KSA is expected to increase to ~46 ktpa in 2020, driving opportunities for raw material manufacturing, such as acrylonitrile due to presence of propelyne and ammonia in KSA Local players can also establish local blending facilities to synthesize chemicals across the value chain, i.e., acrylamide and polyacrylamide Khazisyed Ahmedjeelani Industrial Development Department Saudi Aramco Khazisyed.ahmedjeelani@aramco.com Source: Saudi Aramco analysis
Introduction Membranes Sludge thickeners Filters PAM Coagulants Table of Contents
Rationale Opportunity Key opportunities for localization Coagulants Input chemicals and materials Blending and formulation Logistics and supply chain Establish local production of both organic and inorganic input materials and chemicals 1 e.g. aluminum hydroxide and melamine Establish local blending facilities in KSA for final formulations Provide handling services e.g. drums and iso-containers Provide inspection and testing services for OEMs No local production of several key chemicals in KSA Diverse applications of melamine and melamine formaldehyde beyond coagulants (e.g., paints, varnishes and laminates) Demand expected to grow by 8% to reach ~120 ktpa in KSA by 2018 Limited presence of coagulant formulation services and laboratories Demand for 20-30 additional iso containers to meet demand for coagulants Limited presence of inspection and testing services for water treatment chemicals in KSA 1. Composition and demand to be determined after discussion with leading players Source: Saudi Aramco analysis
Demand for coagulants is expected to grow at 8% CAGR, achieving a market value of ~$205 MM in 2025 KSA coagulant market ($million) Total Value $ mn 87 94 101 Represents ~40-50ktpa demand in 2018 110 119 129 +8% 139 150 162 175 189 205 Key demand drivers for coagulants include Increasing population and industrial activity in KSA driving increased water consumption and hence treatment 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: : GWI, A.T. Kearney Analysis
Building blocks are available - opportunity for localization exists across all other value chain domains Value Chain for coagulants Building blocks and intermediates Intermediates & raw materials Blending Finished goods Aluminum hydroxide Aluminum sulfate, PACl Sulfuric acid Inorganic Iron Ferric sulfate, ferrous sulfate Coagulant Transport formulation services Coagulants Transport After Sales support End customer Chlorine Ferric chloride and laboratories Aluminum Aluminum chloride, ACH Organic Urea Methanol Melamine Melamine Formaldehyde Largely localized Opportunity for localization Source: Saudi Aramco analysis
Key messages and next steps Key messages Building blocks, i.e., sulfuric acid, urea, and methanol, are available in KSA in sufficient volumes Consumption of coagulants in KSA is expected to increase to ~$205 mm in 2025, driving opportunities for additional raw material manufacturing, i.e., aluminum formaldehyde, melamine and melamine formaldehyde Limited presence of local blenders presents additional opportunities for local players to invest in blending facilities for final formulations In case you are interested in discussing this opportunity further, please contact Khazisyed Ahmedjeelani Industrial Development Department Saudi Aramco Khazisyed.ahmedjeelani@aramco.com Potential also exists to offer additional value added logistics and aftersales services, i.e., transportation, inspection, testing, etc. Source: Saudi Aramco analysis