Emerging Investment Opportunities in Primary Upstream ...
Emerging Investment Opportunities in Primary Upstream ...
Emerging Investment Opportunities in Primary Upstream ...
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<strong>Emerg<strong>in</strong>g</strong> <strong>Investment</strong> <strong>Opportunities</strong> <strong>in</strong><br />
<strong>Primary</strong> <strong>Upstream</strong> Petrochemical<br />
Projects<br />
Saudi Arabian International Gas Conference<br />
May 17, 2004
Beg<strong>in</strong>n<strong>in</strong>gs of the Petrochemical<br />
Industry<br />
1. Feedstocks from Master Gas System (MGS)<br />
1.<br />
• Gather & process associated gas<br />
• Provided methane, ethane & NGL feeds<br />
2. Government policies to attract <strong>in</strong>vestment<br />
2.<br />
• Royal Commission for Jubail & Yanbu<br />
• Incentives to “jump start” the <strong>in</strong>dustry<br />
3. Established Saudi Basic Industries Corporation<br />
(SABIC) to build/operate <strong>in</strong>dustrial facilities<br />
• Government and private fund<strong>in</strong>g<br />
• Independent and jo<strong>in</strong>t ventures
Saudi Arabia’s<br />
Petrochemical Growth History<br />
• Exponential growth fostered by advantaged<br />
feedstock<br />
◆ 25 Chemical plants <strong>in</strong> ’70s, US $0.5 Billion<br />
◆ 300 plants <strong>in</strong> 2000, about US $20 Billion <strong>in</strong>vestment<br />
◆ Forecast more than 500 <strong>in</strong> 2005<br />
• Requirements for expanded feedstock<br />
◆ Associated gas <strong>in</strong>adequate to meet needs<br />
◆ Saudi Aramco developed non-associated gas to supplement<br />
• More than 50 Petrochemical Products:<br />
◆ Approximately $10 Billion <strong>in</strong> annual sales<br />
◆ Sold <strong>in</strong> nearly 100 countries
Saudi <strong>Primary</strong> Petrochemicals<br />
% of World Supply<br />
• 18 Petrochemical<br />
Complexes<br />
Methanol<br />
3.8 mmtpa<br />
15%<br />
Styrene<br />
1.1 mmtpa<br />
6%<br />
• 15 International jo<strong>in</strong>t<br />
ventures<br />
MTBE<br />
2.9 mmtpa<br />
10%<br />
• 14,000 Employees<br />
Ethylene<br />
6.0 mmtpa<br />
6%<br />
• About 60% of Saudi<br />
non-crude export revenues<br />
2003 Total: 40 MM<br />
Tons<br />
2010 Total: 60 MM<br />
Tons<br />
Polypropylene<br />
1.2 mmtpa<br />
Polyethylene<br />
2.8 mmtpa<br />
5%<br />
Ethylene<br />
Glycol<br />
2.3 mmtpa<br />
11%
Saudi Arabia’s<br />
Feedstock Supply Sources<br />
• Gas-based<br />
– Near Term<br />
◆ 235 trillion cubic feet of proven reserves:<br />
✦ Associated with oil = 60%<br />
✦ Non-associated<br />
= 40% -- historical growth @ 5 TCF per<br />
year<br />
◆ Ethane and NGL <strong>in</strong>crement to feed next wave of projects<br />
• <strong>Upstream</strong> gas deals & future Saudi Aramco<br />
discoveries – Longer Term<br />
• Petrochemicals from ref<strong>in</strong>ery <strong>in</strong>tegration (e.g.<br />
Aromatics & FCC)
Supply of sales gas is steadily<br />
<strong>in</strong>creas<strong>in</strong>g…<br />
8<br />
Sales Gas (i.e. Methane) Production<br />
Billion Standard Cubic Feet Per Day<br />
6<br />
4<br />
2<br />
0<br />
1981 1984 1987 1990 1993 1996 1999 2002 2005 2008
New Increments of Ethane Supply<br />
1,000<br />
Ethane<br />
Hawiyah<br />
Ethane & NGL<br />
Project<br />
Million Standard Cubic Feet Per Day<br />
800<br />
600<br />
400<br />
200<br />
0<br />
1981<br />
Berri Ethane<br />
Project<br />
1984 1987 1990 1993 1996 1999 2002 2005 2008
NGL production is steadily<br />
<strong>in</strong>creas<strong>in</strong>g, more m<br />
volumes are be<strong>in</strong>g<br />
directed to the domestic market<br />
MBD<br />
1000<br />
900<br />
800<br />
700<br />
600<br />
500<br />
400<br />
300<br />
200<br />
100<br />
0<br />
Domestic Consumption<br />
Exported NGL<br />
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Summary of Near Term Gas-Based<br />
Developments<br />
• $3 billion + Saudi Aramco <strong>in</strong>vestment for new ethane & NGL<br />
capacity<br />
• 400 MMSFD ethane 250 MBD NGL and 500 MMSFD methane<br />
allocated to new mega petrochemical projects.<br />
◆<br />
◆<br />
Ethylene production will more than double<br />
✦ 6 million tons end of 2003 to +13 million tons by 2008<br />
Other large NGL and methane projects allocated feed<br />
• Rabigh Project – <strong>in</strong>tegrates ethane crack<strong>in</strong>g with high olef<strong>in</strong>s<br />
cat crack<strong>in</strong>g - $4.3 billion <strong>in</strong>vestment by Sumitomo<br />
Chemical/Saudi Aramco<br />
• New supplies will drive $20 billion <strong>in</strong> downstream <strong>in</strong>vestment<br />
creat<strong>in</strong>g more than 12,000 new direct jobs and add<strong>in</strong>g<br />
$billions to K<strong>in</strong>gdom’s s GDP
Next Wave of Projects<br />
Company<br />
Jubail United Petrochemical Co.<br />
(100 % Sabic)<br />
Jubail Chevron Phillips –Phase 2<br />
(CPC & Saudi Ind. Invest. Group)<br />
NPIC-Al<br />
Al-Zamil @ Jubail<br />
SABIC @ Yanbu<br />
Cracker Projects<br />
Feedstock<br />
Allocated<br />
Ethane-Propane<br />
Natural Gasol<strong>in</strong>e<br />
Ethane-Propane<br />
Ethane-Propane<br />
Products<br />
Polyolef<strong>in</strong>s-EG<br />
Styrene<br />
Polyolef<strong>in</strong>s / VAM<br />
Polyolef<strong>in</strong>s, EG<br />
Expecte<br />
d Start-<br />
up<br />
4Q 2004<br />
1Q 2007<br />
1Q 2007<br />
2Q 2007<br />
SHARQ (50%Sabic 50% Mitsubishi<br />
& others) @ Jubail<br />
Ethane-Propane<br />
PE & EG<br />
1Q 2008<br />
Jubail Chevron Phillips - Phase-3<br />
@ Jubail<br />
Ethane-Propane<br />
Propane-<br />
Natural Gasol<strong>in</strong>e<br />
Polyolef<strong>in</strong>s, Alpha Olef<strong>in</strong>s,<br />
Styrene, K-res<strong>in</strong>sK<br />
4Q 2008<br />
Project Management &<br />
Development Co. @ Jubail<br />
Rabigh Project @ Rabigh Ref<strong>in</strong>ery<br />
Sumitomo Chemical/Saudi<br />
Aramco<br />
Ethane-Butanes<br />
Ethane-V. Gas Oil<br />
Polyolef<strong>in</strong>s, BPA, Am<strong>in</strong>es<br />
Gasol<strong>in</strong>e, Polyolef<strong>in</strong>s,<br />
Propylene Oxide, Ethylene<br />
Glycol, Alpha Olef<strong>in</strong>s,<br />
Acrylics<br />
2Q 2008<br />
3Q 2008
Next Wave of Projects (Contd)<br />
Propane Dehydrogenation to Propylene & Derivatives<br />
Al-Zamil Group @ Jubail<br />
Aluja<strong>in</strong> Company @ Yanbu<br />
Project<br />
National Petrochemicals Industrialization Co (NPIC) @ Jubail<br />
National Polypropylene Company (NPPC) @ Jubail<br />
Gulf Advanced Chemicals Industries (Sipchem(<br />
Affiliate)<br />
(Butanediol<br />
/ MAN) @ Jubail<br />
Aluja<strong>in</strong> Company (Iso-octane octane Project) @Jubail<br />
Butane-Based Based Projects<br />
Methane-Based Projects<br />
SAFCO-4 4 (SABIC Affiliate) (ammonia / urea) @ Jubail<br />
Expected<br />
Start-up<br />
Under start<br />
up<br />
1Q 2006<br />
3Q 2007<br />
1Q 2008<br />
1Q 2006<br />
1Q 2008<br />
4Q 2005<br />
Saudi International Petrochemicals Company (Sipchem(<br />
Sipchem)<br />
(methanol / acetic acid) @ Jubail<br />
National Petrochemicals Industrialization Company (NPIC)<br />
(methanol / acetic acid) @ Jubail<br />
1Q 2006<br />
1Q 2007
Growth <strong>in</strong> Middle East Ethylene<br />
Capacity<br />
MM Tons<br />
8<br />
7<br />
6<br />
5<br />
4<br />
3<br />
2<br />
1<br />
0<br />
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003<br />
Saudi Arabia Iran Qatar Other Middle East<br />
Source: CMAI
Growth <strong>in</strong> Middle East Propylene<br />
Capacity<br />
1.5<br />
1.0<br />
MM tons<br />
0.5<br />
0.0<br />
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003<br />
Saudi Arabia Iran Kuwait Turkey Other MDE
Growth <strong>in</strong> Middle East Styrene<br />
Capacity<br />
1.2<br />
1<br />
0.8<br />
MM Tons<br />
0.6<br />
0.4<br />
0.2<br />
0<br />
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003<br />
Saudi Arabia Iran other ME
Long Term Vision<br />
• Leverage advantaged cost position by add<strong>in</strong>g value though<br />
the cha<strong>in</strong><br />
• Diversify the <strong>in</strong>dustry<br />
• Capitalize upon <strong>in</strong>dustry cluster synergies<br />
K<strong>in</strong>gdom needs added jobs and <strong>in</strong>vestments from the <strong>in</strong>dustry<br />
Value/TON Produced<br />
Jobs Added<br />
Value Added<br />
(Gas-based feed)<br />
NGL Ethylene Polyethylene Plastic Bags<br />
Value Cha<strong>in</strong><br />
Feedstock<br />
Base<br />
Chemicals<br />
Chemical<br />
Derivatives<br />
F<strong>in</strong>ished<br />
Goods<br />
(Oil-based Feed)<br />
Ref<strong>in</strong>ery Naphtha Para Xylene Polyester Res<strong>in</strong> PET bottles, textiles
Thank You
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