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Outlook for Petrochemical

Anshuman AgrawalManager, Downstreamaagrawal@stratasadvisors.comsadownstream@stratasadvisors.comM +91 989 194 4883T +65 635 361 27

www.stratasadvisors.com

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Supply, Demand and Flows

Key Takeaways

CAPEX Requirements

Main Themes

Supply, Demand and Flows

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Ethylene – Demand

Global (2018-2040)

Demand

• Demand to grow by 127 MMTPA

Source: Stratas Advisors

Units | MMTPA

0

50

100

150

200

250

300

350

2018 2020 2025 2030 2040

Demand

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Propylene – Demand

Global (2018-2040)

Demand

• Demand to grow by 17 MMTPA

Source: Stratas Advisors

Units | MMTPA

75

80

85

90

95

100

105

2018 2020 2025 2030 2040

Demand

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Olefin – Supply, Demand

Regional (2018-2040) • Asia supply increases by 61 MMTPA, demand increases 61 MMTPA

Middle East

• Long term Supply increases 32 MMTPA, demand increases 22MMTPA

• Short term S/D +9/+9.4 MMTPA

Source: Stratas Advisors

Units | MMTPA

050

100150200250300350400450

2018 2020 2025 2030 2040

Africa Asia EuropeLatin America Middle East North AmericaRussia & CIS

Dem

and

Supp

ly

© Stratas Advisors. All rights reserved. 7

0

10

20

30

40

50

60

70

2018 2020 2025 2030 2040

Supply Demand

Olefin – Supply, Demand

Middle East (2018-2040) Demand

• Demand to grow by 22 MMTPA

Supply

• Supply to grow by 32 MMTPA

Source: Stratas Advisors

Units | MMTPAD

eman

d

Supp

ly

© Stratas Advisors. All rights reserved. 8

Ethylene – Trade Flow

Middle East to North America :

0

Middle East to Latin America :

0

Middle East to Africa :

0

Middle East to Europe:

0Middle East to Russia & CIS:

0.5, 0.5, 0.3, 0.7, 0.4

Total Export from Middle East: 3, 2, 2.9, 7.5, 12.4

Middle East to Asia: -2.5, 1.5, 2.6, 6.8, 12

Units | MMTPAFrom Middle East (2018, 2020, 2025, 2030, 2040)

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Propylene – Trade Flow

Middle East to North America :

0

Middle East to Latin America :

0

Middle East to Africa :

0

Middle East to Europe :

0Middle East to Russia & CIS :

0.4, 0.3, 0.3, 0.3, 0.5

Total Export from Middle East: 2.7, 2.6, 2.5, 2.8, 3

Middle East to Asia : 2.3, 2.3, 2.2, 2.5, 2.5

Units | MMTPAFrom Middle East (2018, 2020, 2025, 2030, 2040)

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Aromatics – Demand

Global (2018-2040) • Total Demand to grow by 43 MMTPA

• Xylene demand growing 1.4% than others aromatics growing 1.2% annually

Source: Stratas Advisors

Units | MMTPA

020406080

100120140160180200

2018 2020 2025 2030 2040

Benzene Xylene Toluene

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Aromatics – Supply, Demand

Regional (2018-2040) • Asia supply increases by 36 MMTPA, demand increases 58 MMTPA

• Europe supply increases by 5 MMTPA, Middle East by 3 MMTPA, North America by 2 MMTPA

Source: Stratas Advisors

Units | MMTPA

0

50

100

150

200

250

2018 2020 2025 2030 2040Africa Asia EuropeLatin America Middle East North America

Dem

and

Supp

ly

© Stratas Advisors. All rights reserved. 12

Aromatics – Supply, Demand

Middle East (2018-2040)

Source: Stratas Advisors

Units | MMTPA

Dem

and

Supp

lyXylene

• Demand to grow by 3 MMTPA, Supply to grow by 1.6 MMTPA

Benzene

• Demand to grow by 2.1 MMTPA , Supply to grow by 1.2 MMTPA

0.0

5.0

10.0

15.0

20.0

25.0

2018 2020 2025 2030 2040

Benzene Xylene Toluene

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Aromatics – Trade Flow

North America to Middle East :

0

Latin America to Middle East :

0

Africa to Middle East :

0

Europe to Middle East : 0.2, 0.5, 1.5, 3,

0.3Russia & CIS

to Middle East: 0

Total Import to Middle East: 6.1, 6.8, 8.5, 8.7, 9.3

Asia to Middle East : 5.9, 6.3, 7, 5.7, 9

Units | MMTPATo Middle East (2018, 2020, 2025, 2030, 2040)

CAPEX Requirements

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Major Petrochemical Projects- Middle East

Source: Stratas Advisors

S. No.Country Company Location Facility Expected Completion

1 Saudi Arabia Saudi Aramco (Total SATORP) Jubail Petrochemical Plant 2022

2 Saudi Arabia SABIC Jubail Ethylene Oxide, Butadiene 2020

3 Saudi Arabia Midchem Riyadh Chloro Alkali 20214 Saudi Arabia Dow Chemical Jubail Polymer5 Saudi Arabia IMC Jubail Methanol 20196 Saudi Arabia Saudi Aramco (Ras Tanura Refinery) Ras Tanura Aromatics 2019

7 Saudi Arabia Petro Raibagh Refinery & Petrochemical complex Rabigh Aromatics 2019

8 Saudi Arabia Farabi Petrochemical Company Yanbu LAB 2021

9 Saudi Arabia Advance Petrochemical Company Jubail Pyoil & Pygas plant 2021

10 Saudi Arabia Yansab Yanbu Ethylene Glycol 201911 Saudi Arabia Saudi Kayan Jubail Jubail Ethylene Oxide 2019

12 Saudi Arabia Saudi Aramco (Jizan Refinery) Jizan Peroleum Refinery 2019

© Stratas Advisors. All rights reserved. 16

Petrochemical Projects- Middle East

Source: Stratas Advisors

S. No. Country Company Location Facility Expected Completion

13 UAE DUGAS- IG Petrochemical Dubai Maleic Anhydride 2023

14 UAE Adnoc & Borealis Abu Dhabi Petrochemical Plant2023

15 UAE Borouge Abu Dhabi PE, PP, Butadiene 2022

16 UAE Adnoc & CEPSA Ruwais LAB 2023

17 Bahrain NOGA Aromatic Complex Manama Aromatics 2020

18 Oman OMPET Sohar PTA/ PET plant 2023

19 Oman ORPIC Duqm Refinery & Petrochemical Complex Duqm Aromatics 2025

20 Oman Mingyuan Holding Group Duqm Petrochemical plant 2022

21 Oman Project Development and management international

Adam Dakhliya Chloro Alkali 2021

22 Oman Orpic - Liwa Plastic industrial complex Sohar PE, PP 2020

23 Kuwait KIPC Al Zour Petrochemical Complex Al Zour Petrochemical Plant2024

© Stratas Advisors. All rights reserved. 17

Major Petrochemical Projects- Middle East

Source: Stratas Advisors

13

17

1415

16 18

19

21

20

22

12

23

11

87

6

451

3

29

10

© Stratas Advisors. All rights reserved. 18

Feedstocks Impact on Cracker Margins

Source: Stratas Advisors

0

100

200

300

400

500

600

700

800

2018 2020 2025 2030 2040

$ U

S/ M

T

Ethane NGL Naphtha Gas oil Refinery Off Gas

Key Takeaways

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Key TakeawaysOlefins

• Global ethylene demand is forecasted to increase by 2.7% annually

• Global propylene demand is forecasted to increase by 0.8% annually

• Middle East is the overall exporter of olefins• Propylene export from the region is forecasted to remain constant• Ethylene export is forecasted to increase 12% annually due to

increasing supply from the region

• In Middle East, Saudi Arabia is accounting for 58% ethylene production, highest in the region, Saudi is benefitted by the availability of cheap ethane

• In long term Middle East required investment is US $105 billion for olefins plants (for supply of 30 MMTPA of ethylene, 2 MMTPA of propylene)

© Stratas Advisors. All rights reserved. 21

Key Takeaways

Aromatics

• Benzene, Toluene demand is expected to grow 1.2% annually, whereas Xylene demand is forecasted to grow by 1.4%

Cracker Margin• Naphtha based cracker facilities will be economically benefitted next few

years because of low crude oil prices

• Longer term ethane base cracker facility will be economically benefitted, as the expected price differential between natural gas and crude oil will increase

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