The vital role chemical value parks play in

creating a vibrant downstream industryJohn Page, Global Vice President, OMDC

• Background – Origin and

Emergence• Value Parks – Characteristics &

Advantages

• Role of Value Parks in Economic

Development

• Chemical Based Value Added Clusters

• Future Vision

Agenda

Background- Origin and Emergence

Concept originated in

Europe in 1990

Shifting of chemical

investments towards

Asia and North America

(Feedstock Advantage)

Value park concept

expands to Asia &

America

Survival of the Fittest

▪ Globalization

▪ Company restructuring

▪ Industry restructuring

and consolidation

▪ Cost and risk sharing

▪ Today Germany is

home to approx. 60

chemical parks

▪ Maturing of European

chemical industry

▪ High energy cost in

Europe

▪ Shale gas boom in

North America

▪ High demand and

CAPEX advantage in

Asia

▪ China has more than

100 major chemical

parks

▪ Major chemical parks

in China include

Zhangjiagang, Zhuhai,

Nanjing Chemical

Industry Park etc.

▪ Jurong Island

(Singapore) and Map

Ta Phut (Thailand)

justify themselves as

perfect example of a

value park structure

▪ Focus on environmental

protection

▪ Investor friendly policies

▪ Improved service quality

and decreased costs

▪ Foster healthy environment

for innovation and new

technologies

▪ Promote growth for SME’s

• Background – Origin and Emergence

• Value Parks Characteristics

& Advantages• Role of Value Parks in Economic Development

• Chemical Based Value Added Clusters

• Future Vision

Agenda

Value Parks- Characteristics

Shared Services

Warehousing

Energies/Utilities

Logistics/Distribution

Network

Roads/Railways/Pipelines

Hazardous goods

handling

Housing/Schools/

Recreation Centres

Maintenance & Workshop

Effluent Treatment

Basic & advanced training

Core Activities

Research &

Development

Raw Material

Sourcing

Production

Marketing

Sales

Management Activities

Land Allocation

Administrative Processes *

Financial Management

ESH Management

Human Resource

Site Security

Mostly provided by third parties with experience in specific servicesValue Park Management Investor Companies

Certifications

* - to provide assistance to investors in document processing, approvals, building permits, building registrations, issuance of licenses and

environmental compliance

Chemical parks allow the investor companies to focus on their core business (R&D, production, marketing, and

sales of chemicals), offering broad range of services that are vital for efficient operation

Value Parks- Advantages

Value Parks should offer a conducive and investor friendly environment coupled with all necessary infrastructure

and ease of doing business enablers

Supply Chain Enhancement

(Bonded Warehouse, Access to

customer/sourcing market)

Incentives

(Financial/Feedstock)

SME’s and Downstream

Industry Development*

Skill & Resource Development Innovation – R&D, Industry

CollaborationTime & Cost Benefits

(Shared Services)

Basic Infrastructure

(Roads, Railways, Ports,

Housing etc. )

Marketing &

Communication

* - Capital aid support (via cash aid payment) to key strategic and hi-tech industries which leads to national skill development and

environmental benefits in the longer term

Critical Elements of “World Class” Value Park

• Raw Material

(Availability and

Cost)

• Investor Friendly

Payment Terms

• Comprehensive

Product Portfolio

• One Stop Shop

Offering

• Shared Services

(utilities, ETP,

Roads/Railways/Pipe

lines etc.)

• Low land cost

• Good connectivity to

deep sea ports

• Ease of access to

local and export

markets

• Geo-Political Stability

Geographical Operational Financial Regulatory Social

• Tax incentives (tax

holiday)

• Exemption of import

duties

• Bonded warehouses to

ease port clearances

and save custom

duties

• Local low-cost skilled

labor

• IP acquisition/licensing

fees for

commercializing new

technology

• Clean and corruption

free business practices

• Transparency in policy

making and an efficient

legal system

• Relaxation of

government regulations

(particularly for SME’s)

to reduce costs and

improve ease of doing

business

• Rapid grievance

mechanism and issue

resolution process

• Housing Facility

• Recreation Centres

• Close partnership with

research institutes and

universities

• Excellent research and

development environment

• Work permits and visa

facilitation

• Background – Origin and Emergence

• Value Parks Characteristics & Advantages

• Role of Value Parks in

Economic Development• Chemical Based Value Added Clusters

• Future Vision

Agenda

Chemical Value Parks Promote Economic

DevelopmentGlobally, chemical industry is estimated to add $5.5-6 trillion to world GDP each year via direct, indirect and induced effects. China represents around 25% of this followed by Europe at 22% and North America at 15%

HighMediumLow

Lead to Industrial Development Increasing

Socio-Economic Revenue

Increase in FDI

Increased demand for petrochemical industry

output

Secondary & Ancillary Industry development

(support industries)

Downstream industries (e.g. plastics, packaging,

automotive, construction, aerospace etc.)

Impact on Economy

Human Capital Development/Employment

Generation

Chemical Value Parks

Indirect Effects

Impact on domestic supply chain supporting the

Chemical industry (e.g., distribution and logistics)

Direct Effects

First-order responses in economy to changes in

the demand of petrochemical industry output

only

Induced Effects

Impact on downstream industries dependent on

petrochemicals (e.g., automotive, construction,

aerospace) and purchases induced by wages of

those in and supporting the industry

Additional GDP Additional Employees

4.1x Employees2.1x GDP

Recreation Industry (Shopping Malls, Healthcare,

etc.)

• Background – Origin and Emergence

• Value Parks Characteristics & Advantages

• Role of Value Parks in Economic

Development

• Chemical Based Value

Added Clusters • Future Vision

Agenda

Basic Chemicals to Value Added Clusters

Basic Chemicals (Building

Blocks)

Intermediates, Commodity

Products, Specialty

Products, Performance

Materials

Downstream Converter

Industry

End Use Sector Specific

Applications

• Ethylene

• Propylene

• Butadiene

• Crude C4s

• Benzene

• Paraxylene

• Methanol

• Ammonia

• Polyethylene

• EVA

• EO/MEG/Ethoxylates

• EDC/VCM/PVC

• Polypropylene

• Propylene Oxide

• Polyols

• SAP

• Oxo Alcohols/Butanols

• Styrene/PS

• SBR/PBR

• PTA/PET

• MTBE

• Urea

• PE Films

• PE Blow model products

(bottles, caps etc.)

• PE/PVC pipes

• BOPP Films

• Non-woven PP

• Woven PP

• Garden Furniture (molded

products)

• Compounding

• PET sheets

• PET bottles

• Automotive sector

applications

• Food and Beverage Industry

• Textile Industry

• Computers/Electronics sector

• Defence/Aerospace sectors

• Furniture/Fixtures

• Medical Equipment &

Supplies

• Pharma sector applications

• Construction sector

applications

Oxo Chemicals Complex

The ethylene-based oxo chemicals value chain can be extended downstream into animal feed formulation. Other products such as trimethylolethane, n-propanol and derivatives can serve applications within the coatings sector

Air/Oxygen

Steam

Ethylene

1:1 Synthesis GasOxidation

Natural

Gas

Air/Oxygen

Reforming

Propionic Acid

Reduction n-PropanolHydrogen

Cannizzaro

/Reduction

Formaldehyde

Trimethylolethane

Amines

Coatings

Inks

Solvents

Animal Feed

Formulators

Food Industry

Pharmaceuticals

Cellulosic Polymers

F&F, etc.

Saturated Polyesters

Alkyd Resins

Urethanes/Epoxies

n-Propyl AcetateAcetic

Acid

PropionaldehydeHydroformylation

LDPE Producers

Fine ChemicalsDirect Sales

Neutralization Propionate Salts

Caustic Soda

Slaked Lime

Esterification

Wider Oxo

Chemicals

Complex

Propionic

Acid Chain

Wider Set of Oxo ChemicalsSame complex can be extended to produce wider set of oxo chemicals business utilizing competitive raw materials, including direct sales of propionaldehyde to a substantial local market and growth opportunities like formic acid, NPG, and TMP

Air/Oxygen

Steam

Ethylene

1:1 Synthesis Gas

Oxidation

Natural

Gas

Air/Oxygen

POx/Reforming

Propionic Acid

• Animal Feed

Formulators

• Food Industry

• Pharmaceuticals

• Cellulosic Polymers

• F&F, etc.

PropionaldehydeHydroformylation

• LDPE Producers

• Fine ChemicalsDirect Sales

Neutralization Propionate Salts

Caustic Soda

Slaked Lime

Hydroformylation

Propylene

IBAL

(Isobutyraldehyde)

Cannizzaro NPG

• Unsaturated

Polyester Resins

• Coating Resins

Formaldehyde

TMP

• Multifunctional

Acrylates/

Methacrylates

• Lubricants and oilsHydrogen

NBAL

(n-Butyraldehyde)

Cannizzaro

Hydrogen

Formaldehyde

CarbonylationCarbon Monoxide

MethanolHydrolysis &

Separation

Formic

Acid

• Silage Preservative

/Animal feed

additive

• Leather and tanning

• Pharmaceuticals

• Background – Origin and Emergence

• Value Parks Characteristics & Advantages

• Role of Value Parks in Economic

Development

• Chemical Based Value Added Clusters

• Future Vision

Agenda

Future VisionRoad ahead for the chemical value parks is to move towards sustainable production and increase focus on renewables and circular economy

Energy Integration &

Optimization (Within Process and

Community)

Utilization of excess heat/energy

within the process or by other

companies

Circular Economy led Initiatives

Increasing resource efficiency and

reduction in resource consumption

through redesign, reuse, recycle,

and biological degradation

Renewables integrated into traditional

value chains

Increase in use of renewable raw

materials (production processes

through biotechnology) and use of

renewable energy sources

By-Product Synergies & Waste

Utilization

Use of a previously disposed

waste (as solid, liquid, gas) from one

facility by another facility to provide a

valuable by-product.

Promote Innovation

Research funds and other financial

incentives for start-ups and private-public

partnerships promoting innovation in green

chemistry and circular economy

Vision AheadAdvanced Supply Chain

Integration

Usage of advanced analytics in

supply chain management to

ensure integrated operation from

customers to suppliers

Thank youwww.gpca.org.ae