Post on 04-Oct-2020
Excellence in Petrochemicals
Dr. Albert Heuser President January 20, 2010
1/20/2010 INTERN 2
Agricultural Solutions
18%
14%
14%
23%8%
Functional Solutions
Performance ProductsPlastics
Chemicals
Oil & Gas
Petrochemicals €3.3 billion 8.7%
Sales to third parties Q1-Q3 2009: €37.5 billionFY 2008: €62.3 billion, thereof €7.3 billion Petrochemicals (including Acrylics)
14%
9%
Petrochemicals – part of BASF’s balanced portfolio
“Other“
1/20/2010 INTERN 3
GlycolsEthylene Glycols…
Alkylene oxides Ethylene oxides…
Cracker ProductsEthylenePropylene ButadieneRaffinateBenzene …
Industrial Gases…
Value chains of the BASF
Verbund
PlasticizersDEHPDINP, DINCHDPHP...
Alcohols &Solvents
Butanols2-EthylhexanolIsononanol2-Propylheptanol...
Acrylic acid
Acrylates
Market drivenSupply drivenBasic Petrochemicals Industrial Petrochemicals
Petrochemicals – the enabler for BASF’s value chains
1/20/2010 INTERN 4* Availability of volumes ex JV’s for BASF depending on contractual situation
AntwerpLudwigshafen
Port Arthur/ Freeport/ Geismar/ Pasadena
Nanjing
Kuantan
Capacities of Verbund sites 2009 in million Nm³/a (Industrial gases)in kt/a (all other)
Ludwigshafen• Cracker products: 1,500• EO: 350• Industrial gases: 4,200
Antwerp• Cracker products: 2,400• EO (MEG): 500• Industrial gases: -
Basic Petrochemicals
Nanjing* 2012• Cracker products: 1,200 1,600• EO (MEG): 250 350• Industrial gases: 450
Port Arthur*/Freeport/Geismar/Pasadena• Cracker products: 2,400• EO: 200• Industrial gases: 550
Kuantan*• Cracker products: -• EO: -• Industrial gases: 450
Basic Petrochemicals are the global integrator at all BASF Verbund sites
1/20/2010 INTERN 5* Availability of volumes ex JV’s for BASF depending on contractual situation
Capacities of Verbund sites 2009in kt/a
AntwerpLudwigshafen
Port Arthur/ Freeport/ Pasadena/Cornwall (CAN)
Nanjing
Kuantan
Industrial Petrochemicals
Ludwigshafen• Oxo-alcohols: 850• Plasticizers: 400• Acrylic Acid: 300
Port Arthur*/Freeport/Pasadena/Cornwall• Oxo-alcohols: 500• Plasticizers: 200• Acrylic Acid: 230
Kuantan*• Oxo-alcohols: 300• Plasticizers: 100• Acrylic Acid: 160
Nanjing* 2012• Oxo-alcohols: 300 400• Plasticizers: -• Acrylic Acid: 160
Antwerp• Oxo-alcohols: -• Plasticizers: -• Acrylic Acid: 320
Industrial Petrochemicals are close to the major customers
1/20/2010 INTERN 6
Market Position 2009 (Installed Capacity share in %)
Source: BASF, CMAI 2009
Acrylics
Cracker Products
Alkylenoxides & Glycols
Alcohols & Solvents
Plasticizers
Basic Petrochemicals
Industrial Petrochemicals
North America Europe Asia
# 13 (~3%)
# 11 (~5%)
# 4 (~18%)
# 3 (~12%)
# 3 (~18%)
# 6 (~7%)
# 2 (~25%)
# 1 (~30%)
# 2 (~22%)
# 1 (~50%)
# 23 (~2%)
# 10 (~4%)
# 1 (~13%)
# 11 (~2%)
# 3 (~13%)
BASF is a global leading player for alcohols, acrylics and plasticizers
1/20/2010 INTERN 7
0
2
4
6
8
10
12
2001 2002 2003 2004 2005 2006 2007 2008
in billion € CAGR 2001 – 2008:GDP growth: 3.1%
Chemical production growth**: 3.0%
Petrochemicals BASF: 14%***
** without Pharma
*** CAGR without Acrylics in 2008
6.98.2
9.6 9.8
5.44.94.0
Sales to third parties
Internal Sales
11.5
* 2008 including Acrylics
*
Petrochemicals grow with internal and external customers
7
1/20/2010 INTERN 8
10%
11%
59%
7%
1%
12%
Alcohols & Solvents
Alkylene Oxides& Glycols
59%
Industrial Gases
Plasticizers
2008 Sales to third parties
€ 7.3 billion
Sales to third partiesWorld scale capacities for cracker products and sales of excess volumes to third parties enable economy of scale
AcrylicsCrackerProducts
2008 Sales to third parties€ 7.3 billion
Cracker Products dominate third party sales in Petrochemicals
8
1/20/2010 INTERN 9
Chemicals
Petroleum & Coal
Plastics & Rubber
Agriculture
ConstructionMotor Vehicles & Parts
Food & Beverage
Others
by industryby region
2008 Sales to third parties€ 7.3 billion
42%
1%13%
44%
Rest of World
Europe
Asia
NAFTA 23%
4%15%
22%
6%
8%
11%11%
Petrochemicals supply a broad spectrum of industries
10
C2 Capacity Middle East [million metric tons]
0
5
10
15
20
25
30
35
40
45
Other ME
Iran
Saudi Arabia
2007 2011 20182013
Source: BASF, Tecnon, CMAI 2009
Forecast 2007
Middle East ~7,5 mio t/a new ethylene capacity 2010/2011
Some olefin projects with delays, but in the end most will come
Asia~10 mio t/a new ethylenecapacity 2010/2011
China still net importer
Middle East will massively increase its capacity – despite the current downturn
2009
10
1/20/2010 INTERN 11
020406080
100120140160180
2007
2008
2009
2010
2011
2012
2013
2014
Ethylene capacity [million t/a]
Source: CMAI
EthyleneMaximum surplus capacity in 2010 (~ 28 Mio t/a nameplate)
Capacity closures in US and Europe (~ 5 Mio t/a)
PropyleneBalance depends on
Utilization / closures of naphtha cracker
Cracker feedstock slate
Utilization of refineries
America + Europe
Asia
ME + Africa Global demand
Temporarily global ethylene overcapacities will result in margin reduction
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1/20/2010 INTERN 12
25
54
462
Source: CMAI, BASF
Middle East Derivatives [%]
Ethylene
Propylene
* planned divestiture will reduce to less than half
BASF Derivatives [%]
Acrylic acid
EO (PEO)
PE
PVC
MEG
Others Styrene
53
1
91
AcrylonitrileOthers
Alcohols
PP
28
20
31
1211
32
31
14
24
PE
Others
MEG
Acrylo- nitrile
Alcohols
2008
Styrene*
PO
BASF’s derivatives are different to Middle East olefins downstream portfolio
1/20/2010 INTERN 13
Naphtha cracker matches BASF’s broad demand for cracker products much better than an ethane-based cracker
Middle East ethyleneproduction dominatedby ethane (> 70%), only~ 15% based on naphtha
to/to Ethylene Typical cracker output
Feedstock Ethane (1.3)
Naphtha (3.0)
Ethylene 1.0 1.0
Propylene 0.02 0.55
Butadiene <0.01 0.15
Butenes <0.01 0.15
Benzene 0.01 0.25
Naphtha-based cracker provide full slate of cracker products for BASF
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1/20/2010 INTERN 14
StrengthsMeasures to mitigate challenges
Verbund synergies
World scale assets with excellent to best in class benchmark position
Strong partnerships (Asia, North America)
Strive for operational excellence
Active portfolio optimization
Accelerate innovation
Mission„Make“ to cover optimum of captive use, and
„Trade“ to balance surplus and deficit volumes
Petrochemicals ensure reliable and competitive supply for internal demand
1/20/2010 INTERN 15
0
25
50
75
100
Total manufacturing costs Unplanned production losses
Best quartile world
Average world
Cost leadership through consequent process innovation (incl. catalyst)
Enhanced technology: Increased selectivity by optimized feed gas
Best in class in specific EO yield
Significant ethylene savings
New catalysts with superior performance in pilot phase
Results of last Townsend benchmarking – BASF plants
Total manufacturing
costs
Unplanned production losses
Operational excellence is based on industry leading production know-how Example: Ethylene oxide
15
1/20/2010 INTERN 16
0
100
200
300
400
500
600
2001 2002 2003 2004 2005 2006 2007 2008
Petrochemicals [Index 2001 = 100] Petrochemicals “asset right” strategy:
Integration into Verbund
High capacity utilization
Consistent fixed cost management
Continuous improvement of state-of-the-art technologies Fixed costs*
Sales to third parties
EBITDA
* including depreciation and amortization
Operational excellence drives profitability
16
1/20/2010 INTERN 17
Capacity expansion of - ethylene oxide- propionic acid and aldehyde
New plant for- non-ionic surfactants- butylglycolether- amines- DMA3
BASF and Sinopec will jointly invest $1.4 billion to produce downstream chemicals for the Chinese market
Expansion of existing steam cracker to 740,000 tons ethylene
Development of integrated ethylene oxide value chain
Extension of acrylics value chain
Development of integrated C4 complex
New plant for- superabsorbents
Capacity expansion of - oxo-C4
New plant for- butadiene- isobutene- polyisobutene- 2-propylheptanol
Cracker expansion enables extension and development of new value chains in Nanjing
1/20/2010 INTERN 18
Oxidation Glacial Acid
Crude Acid
Propylene
AirPurification
Step 1
BASF
Competitors (NSC, R+H ...)
Oxidation Glacial-Plant Glacial Acid
Crude Acid
Propylene
AirAbsorption,Extraction
Destillation
PurificationStep 2
Glacial-Plant
⇒ Simplification of process – one step less⇒ ~20% lower production and investment costs
Petrochemicals strive for technology and cost leadership by innovation Example: Acrylic acid
1/20/2010 INTERN 19
Active portfolio optimization
Accelerate innovation
Strengthen position in growth markets
Strongly grow business with innovative products (Oxo-C5 alcohols and DINCH)
Divestiture of non-strategic businesses
Restructure outdated facilities in core businesses (plasticizers)
New technologies based on alternative raw materials
New dedicated technologies to match captive demand
Improvement of core technologies through new catalysts and processes
New applications for alcohols and plasticizers
Develop strong C4-value chain in Asia
Continuously improve operational excellence for a sustainable and competitive supply
Grow cracker profitability by increased feedstock flexibility and improved logistics(pipelines)
Strategy is built on technology leadership and active portfolio management
1/20/2010 INTERN 20
Essentials Petrochemicals
At the heart of the Verbund
Agility, flexibility and deep knowledge of markets
Continuously develop new processes and optimize existing ones
Positioned to manage upcoming capacity increases
Relentless focus on operational excellence Dedicated, creative and global team
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1/20/2010 INTERN 22
This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. BASF has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements.
Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and BASF does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.
Forward-looking statements