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Transcript of Insights into GCC Petrochemical Industry - Platts plant commenced operations. ... o better profit...
Asian Petrochemicals Markets Conference 2017
Insights into GCC Petrochemical Industry
April 19, 2017
Samir Al-Jishi General Manager, Strategy & Business Development Sipchem
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Contents
Introduction to Sipchem
Overview of Petrochemical Industry in GCC
Adopted strategies by GCC government and
Petrochemical companies
Where GCC companies are looking at
What is the relation with Asia
3
Contents
Introduction to Sipchem
Overview of Petrochemical Industry in GCC
Adopted strategies by GCC government and
Petrochemical companies
Where GCC companies are looking at
What is the relation with Asia
4
• Established in 1999, in Saudi Arabia. • Produces 2.7 million tons of basic,
intermediate and polymers. • Sells products globally through its
offices in Saudi Arabia, Switzerland and Singapore
• Strategic partnership with reputable international companies as equity partner, licensor or off-taker.
• State of art R&D facilities. • Employs 1000+ people from various
nationalities.
Saudi International Petrochemical Company
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Wire & Cable, EVA/LDPE, EVA film, PBT, and TMF plant commenced operations.
2012
Established marketing unit in Singapore
Acquired Aectra, (Marketing in Europe)
Achieved Responsible Care Certification
1999 Incorporated as a
closed joint stock company
2005
Methanol plant commenced operations
2006 Went public
through a successful IPO
2007 Established
Sipchem Marketing Company
2010 CO, Acetic Acid,
and VAM plants commenced operations
2011 2013 EA / BA plants
commenced operations
Sipchem Overview Our Journey and growth
2014
BDO plant commenced operations
2004
2015 MANAR
inauguration
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Sipchem Overview Locations in Saudi Arabia
Khobar
Jubail
Dhahran Jubail ● Dammam ●
Riyadh
Jeddah ● Mecca ●
Medina ● Yanbu ●
Doha ●
Dubai ●
Dhahran ● Khobar
Sipchem
Technology and
Innovation
Center
(MANAR)
Headquarter
World-scale
integrated
manufacturing
complex
Riyadh
Ha'il
Tools and
Manufacturing
Facilities
Ha'il EVA films
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Contents
Introduction to Sipchem
Overview of Petrochemical Industry in GCC
Adopted strategies by GCC government and
Petrochemical companies
Where GCC companies are looking at
What is the relation with Asia
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• Continuing uncertainty in the global petrochemical Industry…
• Despite challenging economic conditions
and low commodity prices, the chemical and petrochemical industry in the GCC grow significantly….
• GCC petrochemical capacity reached 150
million tons in 2016, an average increase of 8.6% per annum during 2006-2016.
• Capacity utilization was more than 90%.
• Target 175 million tons by 2020
GCC Petrochemical Industry…..Capacities
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GCC Petrochemical Industry….. Global share
Source: GPCA
Global share of top 10 GCC’s Petrochemical products in 2015
Products Capacity
(million tons) Share of global capacity
Ethylene 24.6 15.5% Urea 16.8 8.1% Ammonia 12.1 5.7% Methanol 11.1 8.6% PP 7.4 10.4% Propylene 7.4 6.6% HDPE 7.4 16.6% EG 6.7 22.2% MTBE 5.2 17.8% LLDPE 5.1 14.9%
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GCC Petrochemical Industry…..Investment
• More petrochemical complexes are being established • New Projects worth US$ 13 billion were announced in 2016 in the
region, coming online between 2020-2024. • Taking steps to diversify the product lines beyond basic gas-based
chemicals to overcome the diminishing feedstock advantage.
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GCC Petrochemical Industry….. Key Assumptions for Future Investments…
• Global crude oil price scenarios.
• Global economic growth outlook.
• North American energy market.
• China structural changes.
• Iran sanctions.
• India’s economic growth.
• Non-conventional technology.
• Sustainability.
• Level of integration.
• Functional excellence.
• Geopolitical considerations.
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GCC Petrochemical Industry…..Competitive advantages
• Feedstock drives the industry: o flexibility; mixed feedstock o Reliability of supply o Cost advantage
• Energy advantage; o one-third of the oil and one-fourth of the world’s natural gas reserves
are found in the region. o Low cost of energy….
• Ongoing expansion of value chain… • Business friendly tax regime… • Relaxed terms on Financing from government institutions
• Well developed infrastructure & ideally located close to the major markets.
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Contents
Introduction to Sipchem
Overview of Petrochemical Industry in GCC
Total Production
Total Investment
Competitive Advantages
Adopted strategies by GCC government and Petrochemical companies
Where GCC companies are looking at
What is the relation with Asia
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GCC Petrochemical Industry…..adopted strategies
• Consolidation and privatization to counter weak product prices, optimize cost and introduce new efficiencies o Creating synergies and optimizing current
assets
• Companies look for growth through acquisitions……………
• Encouraging more local production of consumer and business goods for both domestic and export markets……
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GCC Petrochemical Industry…..adopted strategies
• Greater functional excellence; o Commercial; strengthen sales and marketing capabilities by reducing
reliance on off takers and traders/agents, avoid 3-5% of their product value to middlemen.
o Operational; improve plant reliability, drive down fixed and variable costs.
o Innovation excellence; going farther downstream and increasing specialization of products
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New strategy to respond…..
A new strategy to respond to the
competitive threats
Explore new gas targets Expand into
performance and specialty value added
products
Invest in petrochemical
projects in driven by Shale Gas
A bio-based alternative to conventional polyethylene
Diversify business model
Merger & Acquisition of basic chemical
producers
Competitive feedstock
supply from upstream to downstream
Invest in the right
technology
R&D Center
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Contents
Introduction to Sipchem
Overview of Petrochemical Industry in GCC
Total Production
Total Investment
Competitive Advantages
Adopted strategies by GCC government and Petrochemical companies
Where GCC companies are looking at What is the relation with Asia
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Where GCC companies are looking at …..
• Expanding downstream sector (specialty chemicals): o better profit margin o develop domestic market
• GCC have been looking for new markets in Asia to substitute the decreasing export to other region, particularly in Europe (as Iran gears up to re-enter markets).
• New frontier markets including in Africa:
o Egypt and Nigeria are seen as the next frontier for future growth. o need to compete against relatively less disadvantaged competitors.
Develop domestic markets & maintain access to the international market is crucial…
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Where GCC companies are looking at …..
• Chinese overseas investment is active; Saudi Arabia to link Chinese investments in Saudi Arabia to the facilitation of more Saudi downstream investments in China..
• Saudi Arabia’s move to invest USD 13 billion in new projects in Malaysia
and Indonesia will play an important part in the Kingdom’s plan:
o to diversity its economy and reduce its dependence on oil revenue,
o ensuring that it will maintain its market share in the region
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Contents
Introduction to Sipchem
Overview of Petrochemical Industry in GCC
Total Production
Total Investment
Competitive Advantages
Adopted strategies by GCC government and Petrochemical companies
Where GCC companies are looking at
What is the relation with Asia
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What is the relation with Asia ..
• China has a high cost of ethylene due to the long production chain: o Coal gasification o Methanol synthesis o MTO
• Increasing consumer spending will continue to drive consumption of basic chemicals and plastics. o > 75% of Chinese plastics demand is
in consumer non-durable.
• Asia has become the GCC’s most important trading partner, accounting for importing around 70% of its oil exports.
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In Brief…..
• The chemical and petrochemical industry in the GCC grows significantly.
• Capacity utilization is very high.
• Feedstock drives the industry.
• Diversify the product lines beyond basic gas-based chemicals.
• Maximum utilization of energy advantage.
• Creating synergies and optimizing current assets.
• Develop domestic markets
• Turning to new frontier markets including in Africa.
GCC protects its leadership position in the global Petrochemicals & Chemicals industry