emergence of the arabian gulf as a global...

Emergence of the

Arabian Gulf as a

Global

Petrochemical Hub

Dr. Abdulwahab Al-Sadoun,Secretary General, GPCA

Agenda• Early Petrochemical Production

– Key Enablers

• Growth Trajectory• Organic Growth• Inorganic Growth

• Industry’s Global Position

• Closing Remarks

GPCA Leaders of Tomorrow | Emergence of the Arabian Gulf as a Global Petrochemical Hub

Early Petrochemical Production

Capturing the value from the associated gas, which use to be flared due to its low economic value at the well head, was key driver behind the development of the industry in the Arabian Gulf

Was

te

Valu

e

History of Gas Utilization in Saudi Arabia ( 1945 – 2000 )

0

1

2

3

4

5

6

Flared Gas

45 50 55 60 65 70 75 80 85 90 95 00

Utilized Gas

Waste Value

Bill

ion

scf

/ d

Source : Saudi Aramco


TypeGlobal Share(%)

Proven Gas Reserve(Trillion scf)

Country

Primarily associated 0.16.1Bahrain

Non-associated13.1866.2Qatar

61% Associated39% Non-associated

4.5294.0Saudi Arabia

Primarily associated 3.3215.1UAE

Associated1.063Kuwait

88% non-associated0.424.3Oman

22.25%1468.7Total GCCSource: BP Statistical Review of World Energy, June 2016 & Public Data

A key enabler for developing globally competitive petrochemical industry in the GCC is the abundant reserve of natural gas




Evolution of the Petrochemical Industry in the GCC States

1981-1994 1994 – to date 2009 onwards

Development phase

The industry is “feedstock-driven” with feedstock mix influencing volume and type of the building blocks produced and subsequently determine the products portfolio.

Phase I Phase II Phase III

Forward petrochemicals (C1 & C2; e.g.: MeOH, PE, MEG Ammonia/Urea, ..)

C3 value chain products added (e.g. PP, Acrylics)

Aromatic value chain stimulate new set of products (e.g. performance polymers, engineering plastics)

Associated Gas

Refinery Integration

Mixed Feedstock

Increasing Value and Differentiation


Growth Trajectory of the Arabian Gulf Petrochemicals Industry (1970 – 2015); Million Tons


Since the early 1980s, the chemical industry in had taken a consistent and exponential growth pattern

0.9 3.0 3.012.1 16.3

23.838.3

62.1

109.2

144.6

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

12.6% p.a. 18.6% p.a. 8.9% p.a. 11% p.a. 5.8% p.a.

Source: GPCA, 2016



GCC Chemicals Production Capacity

By Business Segment, 2015

144.6 million tons

GCC Petrochemicals Production Capacity

By Country, 2015

Source: GPCA, 2015

The Industry’s product portfolio is dominated by commodities with Saudi Arabia accounting for ca. 2/3 of the product output

Saudi Arabia64.8%

Qatar12.6%

UAE9.3%

Oman6.4%

Kuwait6.1%

Bahrain0.9%

Basic Chemicals

35.2%

Polymers17.6%

Intermediates17.9% Chemicals

1.8%

Fertilizer Raw Material10.5%

Mainstream Fertilizers

14.6%

Inorganic chemicals

2.0%Specialty Fertilizers

0.1%

Specialty Chemicals

0.3%

144.6 million tons

Agenda• Early Petrochemical

Production – Key Enablers



• Concluding Remarks


Growth Trajectory – Organic

Organic growth, mostly from local capacity expansion, has played the major role in making the GCC a global production hub

51.2

93.7

Saudi Arabia

2007 (Million Tons)2015 (Million Tons)

4.38.8

Kuwait

1.3 1.4

Bahrain

10.018.2

Qatar

GCC Chemicals Production Capacity – by Country (2007-2015)

Source: GPCA Analysis, 2016

3.6 9.3

Oman

5.6 13.4

UAE

Saudi Arabia64.8%

Qatar12.6%

UAE9.3%

Oman6.4%

Kuwait6.1%

Bahrain0.9%

2015

144.6 million MT


2000 2005 2010 2015

Growth Trajectory - Oragnic

Between 2000 and 2015, almost 20 million tons of Ethylene Capacity have been added in the Arabian Gulf Region

Ethylene Capacity Additions in the Gulf Region (2005-2015)

0

5

10

15

20

25

4.8

9.4

19.8

4.6

10.4

4.8

24.6

2015


Growth Trajectory – Organic

Source: GPCA Analysis, 2016

The massive capacity build-up of Ethylene is translated into equivalent expansion inethylene derivatives production capacities in the Gulf.

Change in Ethylene derivatives Capacities (2005-2015), Million tons

Capacity (000 tons) Added Capacity

Ethylene derivative 2005 2015 MillionTons

% Change (2015 vs. 2005)

High Density Polyethylene (HDPE) 2.4 7.4 5.0 208%

Linear Low Density Polyethylene (LLDPE) 3.0 5.1 2.1 70%

Low Density Polyethylene (LDPE) 0.9 2.2 1.3 144%

Ethylene Glycol (MEG) 3.0 6.7 3.7 123%

Styrene 1.1 3.0 1.9 172%

Polyethylene Terephthalate (PET) 0.1 1.7 1.6 1,600%

Ethylene dichloride (EDC) 1.0 1.4 0.4 40%


2002SABIC acquires DSM’spolyolefin businesses and related process technologies

2003SABIC acquires ScientificDesign Company Incfrom Linde AG

2006SABIC acquires HuntsmanPetrochemicals, UK, the European polyethylene business

2007SABIC purchases GE’sPlastics business

2009Abu Dhabi’s International Petroleum Investment Company (IPIC) acquires Nova Chemicals of Canada

2011IPIC of Abu Dhabi acquires CEPSA of Spain

2015Saudi Aramco acquires 50% stake in the synthetic rubber business of LANXESS

2013Oman Oil Company (OOC) acquires OXEA, the world largest supplier off oxo- chemical products

The industry’s organic growth was complemented by a robust inorganic growth journey through acquisition of assets valued $ 29.0 billion over the period 2002-2016

2016EQUATE acquires MEGlobal, a JV between Dow Chemical and PIC of Kuwait

Growth Trajectory – Inorganic


2009SABIC and SINOPEC formed joined venture to build world scale petrochemicals plant in Tianjin, China

2007Saudi Aramco, ExxonMobil and Fujian Petrochemical Company formed joined venture to build world scale refinery and petrochemicals plant in Fujian, China

2008Kuwait Petroleum International, Vietnam Oil and Gas, Mitsui Chemicals formed joined venture to build refinery and petrochemical complex in Nghi Son, Vietnam.

2015Sabic and SK formed joined venture to build a high performance PE plant in Ulsan, South Korea.

2016Saudi Aramco and Petronasformed joined venture to build refinery and petrochemical complex in Malaysia.

Growth Trajectory – Inorganic

In addition, the GCC industry’s globalization drive entailed developing several JVs projects in key Asian markets; notably China, Vietnam, Malaysia and S. Korea.


Industry’s Global Position

CAGR (%)

272 267

215 220

80

632274

148.4

70

337

Europe

N. America

ChinaRest of Asia

ROW

2016

221

GCC 38.3

949

1,825

2000

3% 7%

GCC share of global capacity

2.0

-1.3

0.1

-0.1

13.8

8.8

The GCC chemical industry’s capacity expansion growth rate had been the 2nd

highest after China over the past decade

15SOURCE: ICIS Supply and Demand, McKinsey analysis

• Between 2000-2016, the GCC production capacity almost quadrupled, growing from 38.3 to 148.4 million ton. This represent a CAGR of 8.8%, the 2nd highest on global level.

• Over the same period, the GCC share of global capacity have more than doubled, growing from 3% in 2000 to 7% 2016

Global Chemicals Industry Capacity GrowthMillion Tons (2000 – 2016)


24.6

16.8

12.1

11.1

7.4

7.4

7.4

6.7

5.2

5.1

40.8

136.8

EG

Propylene

MTBE

Total

LLDPE

Others

Ammonia

HDPE

Methanol

Urea

Ethylene

PP

Share of global capacity (%)

15.5%

17.8%

22.2%

6.6%

10.4%

8.6%

5.7%

8.1%

7%

16.6%

Global share of top 10 GCC’s Industry productsMillion Tons and % Share in 2015

CapacityMillion Tons

The GCC industry’s global position in key commodity petrochemicals is large and growing steadily

14.9%

SOURCE: GPCA, ICIS, 2016

• In 2015, the top 10 commodity products (by volume) produced by GCC industry amounted to 103.8 million ton, representing 70% of the total capacity

• The global share for the top 10 chemical produced in the GCC ranged between 5.7% for Ammonia to 22.2% for Ethylene Glycol

• Most notably is the GCC global share of ethylene which reached 15.5% and its derivatives which ranged between 14.9 to LLDPE to 16.6% to HDPE.


GPCA Leaders of Tomorrow | Emergence of the Arabian Gulf as a Global Petrochemical Hub Source: GPCA Analysis, 2016

GCC producers’ Global Share of Polyethylene & Polypropylene (2015)

Polyethylene Polypropylene

Pro

du

ctio

n C

apac

ity

Glo

bal

Tra

de

GCC, 15%

RoW85%

GCC, 50%

RoW50%

Polyethylene Polypropylene

GCC, 10%

RoW90%

GCC, 40%

RoW60%


Given its export-orientation, the GCC industry’s has prominent share in global trade of key commodity polyolefins


Closing Remarks

With the ongoing expansion drive, the Arabian Gulf Industry’s global position will be growing markedly over the next five years

Abundant supply of natural gas gave the Arabian Gulf the key ingredient to play a major role in the supply of commodity petrochemical to global markets

The GCC Petrochemical Industry is entering into a new phase of growth, characterized by:

• Increasing integration with refining• Diversified Products Portfolio• Move down the value chain

Innovation is a lifeline for the sustianble growth of the Industry, building local innovation capabilities is key for success!

Thank you!www.gpca.org.ae

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