GULF PETROCHEMICALS & CHEMICALS ASSOCIATIONINSIGHT

Presented by

Following two successful previ-ous events, GPCA will present

the 3rd Annual GPCA Fertilizer Convention in Dubai on 17-19 September. The event is likely to attract a global audience of more than 300 senior fertilizer execu-tives from the production, consum-er, trading and technology sectors.

The conference, entitled “Trans-forming sustainable development into value creation”, will discuss current and future market require-ments, capacity planning and action for increasing efficiency of fertilizer use. It will focus on developing long-term strategies for further industry growth, as well as opportunities for collaboration between industry players.

His Excellency Dr Rashid Ahmed Bin Fahad, the United Arab Emirates’ (UAE) Minister of Environment and Water, will join the 3rd Annual GPCA Fertilizer Convention as guest of honour and keynote speaker and will open the conference with a look at the UAE’s progress towards environ-mental sustainability. A long-time proponent of sustainability, the minister recently formed a Nation-al Committee on Environmental Coordination to promote environ-mental policies in the UAE.

In this time of significant expan-sion and uncertainty in the Gulf Cooperation Council (GCC) ferti-

September 2012 | Issue 21

WELCOME

Dear colleagues

Once again, it is my pleasure to

welcome you to your GPCA Insight newsletter – the third of the year.

Mid-September means we are just

a few weeks away from the 7th

Annual GPCA Forum in Dubai, our

association’s major event and the

flagship petrochemicals and

chemicals conference in the

Middle East.

But before this, we have two

other important conferences – the

3rd Annual Fertilizer Convention at

the end of this month, and in

October, the second Human Capital

Convention, both in Dubai. These

GPCA events, international in

attendance but with very strong

focuses on issues facing GCC

producers, customers and supply

chain operators, reflect the growing

importance of the petrochemical

and chemical industry in the region.

Growth and success do not, of

course, proceed smoothly, and

over the coming months, these

events will look at ways to derive

the best from local talent and

manpower, to remain competitive

in global terms and to plan for

long-term strategic operation.

Further details of each are

included in this newsletter. I hope

you will support these activities.

Yours faithfully

ABDULWAHAB AL-SADOUNSecretary general, GPCA

INSIDE THIS ISSUE

GPCA Insight is online at: gpca.org.ae

Second Human Capital event in Dubai 2

UAE minister to open 7th Annual Forum 2

Report suggests ways to tackle piracy risk 3

Saudi Polymers set for Al-Jubail shipments 4

Egypt to rule on PP duties 5

Product profile – phosphate fertilizers 7

GPCA fertilizer event builds on successGPCA’s third fertilizer conference in Dubai will focus on long-term strategies for the region

By 2016, total production of

fertilizer products in the GCC region will reach nearly 32m tonnes, compared with 21m tonnes produced in 2011

His Excellency Dr Rashid Ahmed Bin Fahad, UAE Minister of Environment and Water

lizer industry, the convention will examine how sustainable devel-opment can lead to value creation in the industry, with a special focus on market demands in the Arabian Gulf, Africa, Iraq, China, Brazil, India and Iran.

Major industry organizations taking part include the Interna-tional Fertilizer Industry Associa-

tion (IFA), Ma’aden, Unilever, SABIC, GPIC, CNCIC, EtherChem (Beijing), Alliance for a Green Rev-olution in Africa (AGRA), Stami-carbon, Iraq Geological Survey and Nalco. Analysts from CRU, the event’s co-organizer, will also present in-depth market insights.

According to GPCA, by 2016 total production of fertilizer prod-ucts in the GCC region will reach nearly 32m tonnes, compared with 21m tonnes produced in 2011, showing healthy growth of 7.5%/year for the industry. Also, the GCC region is expected to account for 36% of global urea exports and 24% of world trade in phosphate fertilizers by 2016.

But the global economic down-turn and political uncertainty in both the Arab world and Europe present significant near-term chal-lenges to growth.

The convention will address these and other critical industry questions, including the role of the GCC fertilizer industry in meeting rapidly growing world food demand. The Food and Agriculture Organization says food production will need to increase by 70% by 2050 to feed an extra 2.3bn people.

This year’s event will begin with an afternoon of interactive technical sessions on 17 Septem-ber at the InterContinental, Dubai Festival City.

2 | GPCA INSIGHT | September 2012 www.gpca.org.ae

NEWS

Seven million jobs have been created in the Gulf Coopera-

tion Council (GCC) region over the past decade, but only 2m of these have gone to GCC citizens. This re-inforces the need for the region’s petrochemicals and chemicals pro-ducers to create more opportunities for the local workforce, according to Dr Abdulwahab Al-Sadoun, sec-retary general of GPCA.

More than 300 senior human resources (HR) professionals in the petrochemicals sector will debate the issue of jobs and talent man-agement at the Human Capital Convention 2012 in Dubai on

16–18 October, hosted by GPCA.Entitled “Leading change

through operational excellence”, the event follows last year’s inau-gural gathering, also in Dubai, which assembled top regional and global industry executives to study best practice on recruitment, HR development, employee retention and workforce engagement.

The GPCA Human Capital Conference is a two-day event tackling the fundamental issues affecting operational excellence from both personal and profes-sional perspectives, including cultural transformation, change

leadership, innovation culture and talent management.

Key players and senior execu-tives from leading companies such as KPC, Borouge, Shell Chemicals, SAP, RBL Group, Petroskills, Korn/Ferry International, Learnactive and PDI Ninth House will be speak-ing at the event.

A pre-conference workshop on the role of leadership in driving, managing and sustaining change for operational excellence, facili-tated by Hala Al Turki, partner and senior leadership trainer at Altaaat Leadership Development Institute, will be held on 16 October.

The United Arab Emirates’ (UAE) Minister of Energy, His

Excellency Mohamed Bin Dhaen Al-Hameli, will open the 7th Annual GPCA Forum, which takes place in Dubai on 27-29 November this year. The event is expected to attract more than 1,800 industry delegates.

The Forum will debate how best to maintain competitiveness in the petrochemicals and chemi-cals sector amid rapid change in the global economy and the industry landscape.

Among the top-level speakers confirmed are:

Cheng Siwei, former vice chair-man of the standing committee of the National People’s Congress, the People’s Republic of China

Chad Holliday, chairman of Bank of America

Mohamed Al-Mady, chairman of the GPCA and vice chairman and CEO of SABIC

Moayyed Al Qurtas, CEO of Tasnee Petrochemicals

Peter Huntsman, CEO of Hunts-man Corporation

Carlos Fadigas, CEO of Braskem

Wayne Smith, board member, BASF

Randy Woefel, CEO of Nova Chemicals

Klaus Engel, chairman of the executive board, Evonik Industries

Ashok Aram, CEO Middle East and North Africa, Deutsche Bank.

Since its inception in 2006, the

Annual GPCA Forum has attract-ed a growing number of delegates and an increasingly prestigious line-up of speakers from the region and overseas. More than 1,600 executives attended last year’s Forum in December 2011, and 45% of them came from outside the Middle East.

Technology transfer, cross- market collaboration and the active development of local talent are three critical areas for atten-tion if the Gulf Cooperation Coun-cil (GCC) petrochemicals and chemicals sector is to maintain its competitive edge. These will be the hot topics for debate at this year’s Forum.

The event will also include a pre-conference seminar, “Exploit-ing change to deliver value – insights to stay ahead of the com-petition”, presented by chemical consultancy Nexant.

The 7th Annual GPCA Forum, entitled “Sustaining competitive-ness in a rapidly changing world”, will take place at the Madinat Jumeirah, Dubai. For further de-tails go to www.gpcaforum.net/

Human Capital event will address operation excellence and leadershipGPCA’s second human resources convention in Dubai in October will address issues including talent management

Energy minister to open GPCA Forum

Mohamed Bin Dhaen Al-Hameli, Minister of Energy of the UAE

Maha Mulla Hussain of Kuwait’s PIC chairs the GPCA’s HR committee

HDPE pipe entry for Iran’s Jam

Iran’s Jam Petrochemical has re-vealed it is planning to switch

production at its two plants in Assaluyeh to high density poly-ethylene (HDPE) pipe grade and linear low density PE (LLDPE) production in October.

Its 300,000 tonne/year HDPE plant, currently producing high molecular weight blow-molding grade, will be changed to natural HDPE pipe production, the com-pany said.

“We are rather new in the pipe market. We plan to market this product to Turkey, the CIS coun-tries and domestically,” he added.

Jam’s other 300,000 tonne/year HDPE/LLDPE swing plant, currently producing HDPE injec-tion-molding grade, will be switched to LLDPE film produc-tion, the company noted.

The bimodal C4-LLDPE film is of a terpolymer type which Jam is trying to market locally into niche markets.

It is used in the film packaging sector for the production of heavy duty sacks.

September 2012 | GPCA INSIGHT | 3www.gpca.org.ae

NEWS

W ith limited alternatives to bypass dangerous waters,

Middle East supply chains are facing increased risk from piracy.

A joint GPCA/AT Kearney report, Managing Supply Chain Risk: Understanding Piracy Threat, launched at the fourth GPCA Supply Chain Conference in Dubai in May, presents three potential outcomes over the next decade: a new piracy wave, lethal force esca-lation and a permanent solution.

In the short term, Gulf petro-chemical companies and the inter-national shipping community are advised by the report to protect their investments through proper planning, adopting preventative measures and engaging with pru-dent ship-owners supporting gov-ernmental actions.

The report presents three scenarios. In the first, “the new piracy wave”, piracy attack inten-sity doubles over the next 10 years, driven by a growing void of alternative income sources in Somalia. New recruits continue to

Report suggests ways to tackle growing piracy riskA joint GPCA and AT Kearney study analyses the issue of piracy, concluding that an international approach is needed on multiple levels to solve the costly problem

pursue a career in piracy, and the circle of participating people con-tinues to widen, drawing new recruits for the trade.

In the second scenario, “con-tainment”, international counter-piracy measures, including the current ongoing efforts of over 30 nations, contain piracy at 30–50% of current intensity, predominant-ly with the use of lethal force. As a result, the successful capture of

vessels by pirates continues to de-crease, leading to decreases in the number of actual hijackings and pirate takeovers of targeted ships.

However, in parallel, respond-ing to the increased risk the pirates deploy new, more violent tactics and weaponry, resulting in con-

flict escalation and an arms race between pirates and on board armed guards manning the ships.

This potential scenario could lead to collateral damage – includ-ing inevitable deaths of sailors and innocent civilians – and eventual-ly international pressure created through wide publicity of these actions, limiting the effectiveness of lethal force solutions.

In the third scenario, the “per-manent solution”, piracy is eradi-cated in the region over the next decade through a combination of initiatives at sea and onshore with lasting, sustainable impact against the threat of piracy. This includes improved economic opportunities in Somalia to effectively stem the tide of willing piracy recruits.

“A combined international effort, including active involve-ment by Gulf Cooperation Coun-cil countries, is critical to the re-alisation of a permanent solution scenario,” explains Dr Abdulwa-hab Al-Sadoun, secretary general of GPCA.

Piracy on the high seas requires a robust response to make shipping routes safe again

“Business executives need to consider the

[piracy] situation could get worse

before it gets better”DAN STARTA

Managing director, AT Kearney

Rex

Featu

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NEW MEMBERS FOR GPCA

Fortrec Chemicals & Petroleum (international

producer)/Singapore/

www.fortrec.com

DuPont (international producer)/

United Arab Emirates/

www.dupont.com

Bayer Material Science

(service company)/Germany/

www.bayertechnology.com

Napco Group of Materials

(business partner)/Saudi

Arabia/www.napcogroup.com

RN Chemicals (business

partner)/Lebanon/

www.RNchemicals.com

China firm to bid for POM project

China National Chemical Engi-neering Co (CNCEC) will sub-

mit a bid this month for the con-tract to construct a 50,000 tonne/year polyacetal (POM) unit being built by National Methanol Co (Ibn Sina) in Saudi Arabia. Ibn Sina, a joint venture between Saudi Basic Industries Corp (SABIC) and Celanese of the US, plans to build the plant at Al- Jubail industrial estate.

SABIC owns 50% of the joint venture while Celanese and an affiliate of Duke Energy Corp each have a 25% stake. The bid has to be submitted by 24 October.

Ibn Sina had invited Asian and Spanish engineering companies to bid for the construction contract. These include Spain’s Dragados, China National Chemical Engineer-ing Co, Taiwan’s CTCI, South Korea’s Hyundai Engineering, Daelim Industrial, Hanwha Engi-neering and SK Engineering and Construction, according to infor-mation received by ICIS.

SABIC signed the agreement with Celanese in 2010 to build the POM unit at a cost of about $400m (€317m). The unit will use methanol feedstock from Ibn Sina to produce POM. POM is used in automotive, electric and electronic parts.

4 | GPCA INSIGHT | September 2012 www.gpca.org.ae

NEWS

Saudi Polymers will start ship-ments to Asia of on-spec high

density polyethylene (HDPE) film and blow molding grades from its new facilities in Al-Jubail, Saudi Arabia, this month. The company is 65%-owned by Saudi Arabia’s National Petrochemical (Petro-chem), with the remaining 35% held by Chevron Phillips Petrochemical (ACP) – a subsidi-ary of Chevron Phillips Chemical.

“We will receive the first ship-ment of HDPE film from this Sep-tember,” a southeast Asia-based processor said, adding that it received off-spec material early this month. “Saudi Polymers will be producing mainly HDPE blow molding grades first,” a buyer based in south Asia added. Saudi Poly-mers will first produce only medi-um molecular weight HDPE blow molding grade, the buyer said.

Saudi Polymers’ new facility at the site in Al- Jubail can produce

1.17m tonnes/year of ethylene. Downstream units consist of two 550,000 tonne/year HDPE lines; a 400,000 tonne/year polypropylene (PP) plant; a 200,000 tonne/year polystyrene (PS) unit, and a 100,000 tonne/year 1-hexene plant.

Off-spec PS material from Saudi

Polymers has been made available to Asia since July, sources said.

The Al-Jubail complex was ini-tially planned to come on stream in the first quarter of this year but mechanical problems at the crack-er prevented the downstream plants starting up on schedule.

German chemicals major BASF and Saudi Arabia’s

Astra Polymers have extended their cooperation for the produc-tion of plastics additives, they said recently.

Under the deal, Astra Poly-mers operates BASF-owned pro-duction lines at Dammam, Saudi Arabia, to produce customer specific blends (CSB), which are sold by BASF.

The companies did not disclose financial or capacity details, and they did not say for how long the deal has been extended.

The cooperation goes back to a deal agreed in 2003 between Astra and Ciba Specialty Chemi-cals, a Swiss company which was later acquired by BASF.

BASF said that the coopera-tion with Astra adds considera-ble value to its capacities in the Middle East.

“[Astra Polymers’] strong commitment to quality and growth supports the positioning of BASF as a market leader for CSB in the Middle East,” said Frank Fasdernes, a regional director of business manage-ment for plastic additives at BASF.

BASF will continue to cooper-ate with Astra even after the start-up later this year of a BASF CSB plant in Bahrain, Fasdernes added. BASF announced con-struction of the 16,000 tonne/year antioxidants and CSB plant in 2011.

BASF’s global production capacity for antioxidants and CSB, paired with Astra Polymers plant in Saudi Arabia, and BASF’s new facility in Bahrain, showed the company’s ongoing commitment to growing markets in the region, Fasdernes said.

Saudi Polymers set to begin Al-Jubail HDPE shipmentsOff-spec material has already been delivered from the polymer unit, which is up and running after mechanical problems at the cracker caused delays to the start-up of downstream units

Qatar Fertilizer Company (Qafco) started up its new

1.3m tonne/year Qafco VI urea plant in Doha, Qatar, in late July, two months ahead of market expectations.

The plant is operating at 50% of capacity and was expect-ed to begin commercial produc-tion by the end of August, a source said. It had initially been due to start commercial produc-tion in October.

The Qafco VI project is expect-ed to increase the company’s production capacity for urea to 5.6m tonnes from 4.3m tonnes/year at present, according

to the company. The project is estimated to have cost $610m (€504.5m) and has a total urea production capacity of 3,850 tonnes/day.

Qafco, which is majority owned by Industries Qatar, started its Qafco VI ammonia plant production in February and is currently operating it at around 70% of capacity. The 1.1m tonne/year Qafco V urea plant also started production in February.

The Qafco fertilizer complex is based at Mesaieed Industrial City in Qatar, 40km (24 miles) south of Doha.

Qafco starts up urea unit ahead of schedule

New chairman for Sadara

Sadara Chemical Co has appointed Abdulrahman

Al-Wuhaib as its new chairman, the company announced recently. Al-Wuhaib previously held the position of senior vice president for operations services at oil major Saudi Aramco.

Al-Wuhaib succeeds Abdul-latif Al Othman, who has re-signed from the Sadara board after being appointed governor of the Saudi Arabian General In-vestment Authority.

Sadara Chemical Co, a joint venture between Saudi Aramco and Dow Chemical, is building a new world-scale chemical com-plex at Jubail in Saudi Arabia.

BASF and Astra Polymers extend plastics additives cooperation

A first-quarter start-up was originally planned at Al-Jubail

September 2012 | GPCA INSIGHT | 5www.gpca.org.ae

NEWS

Egypt’s Ministry of Industry and Foreign Trade is expected

to respond in October to a report that argues against a 15% import duty imposed by the country on polypropylene (PP).

The report, submitted by a group of Gulf Cooperation Coun-cil (GCC) petrochemical produc-ers to the Egyptian government body on 3 September, is a sum-mary of arguments first presented by the GCC producers in a public hearing held on 22 August, attended by both importing and local PP producers.

According to GPCA, this safe-guard measure is not in compli-ance with WTO rules and regula-tion and is counterproductive for the Egyptian conversion indus-try which lobbied against impos-

ing such a measure. GCC PP offers into Egypt have

become unattractive to buyers after the Egyptian government imposed an import duty on PP resins for a period of 200 days from 5 June.

“We presented our final argu-ment to the body, and we are wait-ing for them to respond. They are going to reply to all interested parties [between the] beginning and the middle of October; after that they will give us a chance to re-

spond,” said one GCC PP producer. The GCC report argues the data

presented by local authorities on import figures are exaggerated, the producer said. Second, a claim that both India and China have undertaken a similar course of action against the GCC countries is incorrect and unsupported by any qualifying data.

Finally, the report argues that local production alone cannot satis-fy all the PP consumption require-ments in Egypt, the producer said. “They are going to kill all down-stream business,” the source added.

A second GCC PP producer that regularly exports to Egypt attributed the import duty to the rising cost pressures on Egyptian producers from loss of feedstock from Libya.

The New GPCA Directory 2012/13

CONNECTING THE GULF GULF PETROCHEMICALS & CHEMICALS ASSOCIATION

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Egypt to respond on PP duties

“We presented our final argument...

and we are waiting for them

to respond”

Technip wins halobutyl bid

F rance’s Technip has secured the contract to build a new

110,000 tonne/year halobutyl rub-ber facility for Saudi Arabia’s Al-Jubail Petrochemical Co (Kemya).

Technip’s operating centre in Abu Dhabi, UAE, will execute the contract, which will cover the engi-neering, procurement and con-struction aspects of the new facility in Al-Jubail that will produce high-quality synthetic rubber polymer, the company said in a statement. Financial details of the contract were not disclosed.

“This project is part of the Saudi Elastomers Program undertaken by Kemya to set up a world-scale specialty elastomers facility to serve local markets, the Middle East and Asia,” Technip said.

September 2012 | GPCA INSIGHT | 7www.gpca.org.ae

FOCUS

Phosphate is one of the three key nutrients required for

plant growth (along with nitrogen and potassium). Global phosphate fertilizer consumption continued to be firm in 2011, surpassing 40m tonnes, measured as phosphorus oxide (P2O5).

Demand for fertilizers is rela-tively inelastic, as a minimum amount of food has to be con-sumed regardless of its price, although demand has also been boosted by an increase in the volume of crops grown for fuel in recent years.

Diammonium phosphate (DAP) is the most widely used phosphate fertilizer, accounting for nearly 40% of global phosphate fertilizer consumption. Current and future DAP consumption is driven by improved GDP per capita and rising living standards in India and China.

India is the largest consumer of DAP fertilizers and in 2011 accounted for around 35% of glo-bal demand, followed by China with 25%. The global consump-tion of DAP in 2011 is estimated to be over 34m tonnes.

Global consumption of mono-ammonium phosphate (MAP) is estimated at 22m tonnes in 2011. China is the largest consumer and accounted for around 47% of glo-bal demand, followed by North America with 20%. South Ameri-ca is the third-largest consumer of MAP and accounted for 17 of global consumption in 2010, led by Brazil.

Asia is the leading region for granulated nitrogen phosphorus potassium (NPK) fertilizer demand, accounting for 50% of global consumption. Global NPK consumption was affected by the 2008 price hikes, but has recov-

ered gradually since, with an esti-mated consumption of 23m tonnes in 2011.

The global consumption of triple superphosphate (TSP) was 6.2m tonnes in 2011. South America is the largest consuming region, recording 36% of the total

consumption, followed by Asia-Pacific with 26%. The Middle East also weighs in with a significant portion, consuming 21% of global demand in 2011.

One peculiarity of phosphate fertilizer capacity is its flexibili-ty, whereby more than one type of fertilizer can be produced in the same facility; for example, slurry granulation processes are capable of producing DAP, MAP and NPK fertilizers (of varying compositions).

There are several phosphate fer-tilizer projects under develop-ment, particularly in Asia, Latin America, North Africa and the Middle East.

In both China and India, there has been a noticeable increase in production of DAP, MAP and granular NPKs. The bulk of TSP capacity addition in the near term will come from South America,

with nearly 1.3m tonnes/year of new capacity expected in Brazil alone. New phosphate fertilizer capacity is also expected in central Asia in the longer term, where vast reserves of phosphate rock and potash can be found.

In the Middle East, Ma’aden Phosphate brought on stream a 3m tonnes/year DAP plant in 2011 as part of its Phase I development. Completion of Phase II and III will see DAP capacity increase by 2m tonnes/year.

Due to the slow growth rate of TSP demand, low operating rates and migration to nitrogenous and ammonium phosphates, Nexant does not forecast any additional TSP capacity prior to 2015.

Dr Eduard Lindner is a senior consultant

at Nexant and the author of its

“Phosphate and NPK Fertilizers” PERP

report. Email: elindner@nexant.com

New capacities will serve growing global fertilizer marketsDemand for phosphate fertilizers remains firm as food and fuel needs increase and rising per capita GDP levels in China and India promote greater affluence

China has seen a noticeable increase in the production of fertilizers

PRODUCT IN FOCUS

SOURCE: Nexant

GLOBAL DAP DEMAND BY REGION, 2011

Total demand = 34m tonnes in

2011

DR EDUARD LINDNER

Rex

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H.E. Mohamed Dhaen Al–Hamely, UAE Minister for Energy

Cheng Siwei, Former Vice Chairman of 9th and 10th National People’s Congress of China , Chairman of International Financial Forum (Beijing)

Mohammed Al-Mady, Chairman, GPCA and Vice Chairman and CEO, SABIC

Dr. Moayyed Al Qurtas, Vice Chairman and Chief Executive, Tasnee Petrochemicals

Peter Huntsman, President & CEO , Huntsman Corporation

Klaus Engel, Chairman of the Executive Board, Evonik Industries AG

Bernadette Spinoy, Senior Vice President, Total Refining and Petrochemical Orient

Chad Holliday, Chairman, Bank of America

Wayne T. Smith, Member of the Board of Executive Directors, BASF SE

Anon Sirisaengtaksin, CEO, PTT Global Chemical PLC

Carlos Fadigas, CEO, Braskem S/A

Randy Woelfel, Chief Executive Officer , Nova Chemicals

Ashok Aram, CEO Middle East and North Africa Region, Deutsche Bank AG

David Seaton, Chairman & CEO , Fluor Corporation

For more information and to register visit: www.gpcaforum.net,Telephone: + 44 (0) 20 8652 3233 or Email: gpca.registrations@rbi.co.ukTo get your early booking discount please quote promo code: PACGF3 when booking your place

27-29 November 2012Madinat Jumeirah, Dubai

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Theme for 2012:

Sustaining competitiveness in a rapidly changing worldGPCA has confirmed a stellar program of leading CEOs and industry figures to discuss varying aspects of this year’s theme.

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