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Indian PetrochemIndian Petrochem -- 20122012

November 8, 2012November 8, 2012

Mumbai, IndiaMumbai, India

Industry OverviewIndustry Overview

an ay armaManaging DirectorChemical Consulting, IHS ChemicalDubai, UAEsan ay.s arma s.com

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Presentation OutlinePresentation Outline

Global PetrochemicalIndustry overview

North America Industry -Revival

MDE Industry Impact ones o e n us ry

China Industr Opportunities and Challenges

2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

onc us ons

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Current State of the Global IndustryCurrent State of the Global Industry

Global Markets are focusing on

rapidly growing economies and

new supply

Production ex ansion mostl in the

Middle East or China, but Shale Oil

and Gas is putting the U.S. and

Canada back in play

Large cost position differences have

inflated profits for some

The rest are forced (by the market)

to maintain strict price, production

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Economy: Slower Pace of Economic GrowthEconomy: Slower Pace of Economic Growth

Quarterly Annualized ValueConstant Trillions 2005 U.S. Dollars

Quarterly Annualized ValueConstant Trillions 2005 U.S. Dollars

Trillions Global Economy was

o e grow curve or

seven quarters $58$58

Peak Q3 2008

Expanding again, but

pace has slowed to

3.0% er ear due to

$54$54

Back to

Previous Peak

Q2 2010

EU and inflation

Taking longer than $48$48

$50$50

Trough Q1 2009

Source: IHS Global Insight

expected to recover totrend line performance

$44$44

$46$46-

2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

4

0505 0606 0707 0808 0909 1010 1111 1212 1313 1414

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Demand: Shift in Demand Distribution is evidentDemand: Shift in Demand Distribution is evident

Economic Expansion:Basic demand to fast Distribution of Global Demand

economies is evident80%

90%

100%

W. Europe

Middle EastAll Others

nves men ec s ons:Two Options: Produce in

demand centers or 50%

60% N. America

everage a c ear cos

advantage

20%

30%

Sustainability includes a

systematic addition of

0%

1990 1995 2000 2005 2010 2015 2020

2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

en er o n us ry as s e o s aen er o n us ry as s e o s aper ormance pro uc s

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Capacity: Resources Attract CapacityCapacity: Resources Attract Capacity

Cumulative Capacity GrowthCumulative Capacity Growth

Mill ion Metric TonsMill ion Metric Tons

Capacity growth

indicates demand ull

700700 Middle East (Hydrocarbon)and/or relative costposition

500500

Developed Countries

on local labor; supports

diversified investment

China

200200

300300 International Markets

expand as target for

. mer ca

00

100100- -growth economy

- if you can compete

2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

9090 9595 0000 0505 1010 1515 2020

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Trade: Ethylene Equivalents TradeTrade: Ethylene Equivalents Trade -- 20202020

International Market depends heavily on existing supply channels

Net trade of Ethylene Equivalents in 2020 equals 21% of Global production

35

40 Millions of Metric Tons

-35

-40

e as or mer can supp y suppor s rap econom c grow e sew ere

25

30

-25

-30

10

15Export Supply

-10

-15

-

Import Demand

0

5

MiddleMiddle NorthNorth OtherOther ChinaChina EuropeEurope IndiaIndia SouthSouth AllAll0

-5

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7

EastEast AmericaAmerica AsiaAsia AmericaAmerica OthersOthers

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Global FeedGlobal Feed--slate Still Heavily Weightedslate Still Heavily WeightedTowards OilTowards Oil--Based FeedsBased Feeds

World Ethylene Feedstock Percentages - 2006/2011/2016 Comparison

80%

90%

100%

40%

50%

60%

10%

20%

30%

06 11 16 06 11 16 06 11 16 06 11 16 06 11 16 06 11 16 06 11 16

NAM SAM WEP MDE NEA SEA ISC

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MDE and North America have clear advantageMDE and North America have clear advantage

1650

Dollars per Metric Ton, Ethylene

West EuropeAvg.

1250

1450

Typical China

Northeast

Asia Avg.U.S. Avg.U.S. Avg.850

1050

Asia Avg.

Middle EastAvg.

. .. .

450

500 20 40 60 80 100 120 140 160

EthaneEthane

2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

Cummulative Ethylene Capacity (million metric tons)

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Presentation OutlinePresentation Outline

Global PetrochemicalIndustry overview

North America Industry -Revival

MDE Industry Impact ones o e n us ry

China Industr Opportunities and Challenges

2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

onc us ons

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Shale ImpactEmergence of two regions of lowShale ImpactEmergence of two regions of lowcost productioncost production

Shale development has enabled North America to become one of thelowest cost regions in the global market

Combined with the Middle East, over 40% of the global ethylenecapacity is cost advantaged

2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

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N. America Energy Market Shift Felt around theN. America Energy Market Shift Felt around thePetrochemical WorldPetrochemical World

120%20

Gas as % of Crude$US per Million Btu

80%

100%

14

16

60%

8

10

12

20%

40%

4

6

0%000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

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Crude (WTI) Natural Gas Gas as % of Crude

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North American Ethylene Capacity Increases ToNorth American Ethylene Capacity Increases ToLeverage Ethane FeedstockLeverage Ethane Feedstock

Announced (-000- MT) 2012-2014 2016-2020BASF/Fina (Port Arthur) 180

Dow (Taft / Freeport) 386 1500*Equistar (All locations) 521Exxon (Baytown) 1500

Formosa (Point Comfort) 800

Ineos (Chocolate Bayou) 107

Oxy (Ingleside) 550*

Shell (Northeast) 1000*

Westlake (Lake Charles) 220

Williams (Geismar) 300

Nova (Eastern Canada) 250*Braskem/Idesa (Mexico) 1000

Total 1,714 9,500

2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

13Dow, Shell, NOVA, and Oxy capacity additions shown are CMAI estimates

umu a ve o a ,

* Dow, Shell, NOVA, and Oxy capacity additions shown are IHS estimates

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North America Exports .Come Back Into FocusNorth America Exports .Come Back Into Focus

9.0

Million Metric Tons, Ethylene Demand growth in

develo in re ions

7.0

8.0OthersGlycolStyrenics

outpace capacity

5.0

6.0 s a derivative imports

2.0

3.0

.Assume Middle East will

grow market share

0.0

1.0 North America returns as

competitive supplier

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Presentation OutlinePresentation Outline

Global PetrochemicalIndustry overview

North America Industry -Revival

MDE Industry Impact ones o e n us ry

China Industr

Opportunities and Challenges

2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

onc us ons

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The Middle East has Doubled Ethylene CapacityThe Middle East has Doubled Ethylene Capacityover Five Yearsover Five Years

4040Capacity, MillionCapacity, Million MetricMetric TonsTons

3030

55

2020

55

1010

000606 0707 0808 0909 1010 1111 1212 1313 1414 1515 1616

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Saudi ArabiaSaudi Arabia IranIran Qatar Qatar KuwaitKuwait United Arab EmiratesUnited Arab Emirates Other MDEOther MDE

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The Middle EastThe Middle East Ethylene Story So Far...Ethylene Story So Far...Capacity Additions 2008Capacity Additions 2008--1212

Iran

Saudi Arabia

Jubail Chevron Philli s Q3 2008

Arya Sasol Q1 2008

Jam Q1 2008

Morvarid Q3 2010

Saudi Ethylene Polyethylene Co. Q3 2008

Petro-Rabigh Q2 2009

Sharq Q4 2009

Saudi Kayan Q3 2010

u yer

TKOC Q4 2008

RLOC Q1 2009

2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

Borouge 2 Q3 2010

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A Global ImpactA Global Impact

1818

2020

180180

200200Eth lene Production, Million Metric TonsEth lene Production, Million Metric Tons MDEMDE Portion of TotalPort ion of Total,, PercentPercent

14141616

140140160160

88

1010

8080

100100

44

66

4040

6060

0000

9090 9292 9494 9696 9898 0000 0202 0404 0606 0808 1010 1212 1414 1616

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Aromatics InvestmentsAromatics Investments -- a More Modest Pacea More Modest Pace

Saudi Arabia

Saudi Chevron Philli s Bz 2008

IranBorzuyeh (Bz, Px) 2008

Jubail Chevron Phillips (Styrene) 2008

Saudi Kayan (Bz, Phenol) 2010

OtherKuwait Aromatics (Bz, Px) 2009

TKSC (Styrene) 2009

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Oman Aromatics (Bz, Px) 2009

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Investment PlansInvestment Plans

Saudi ArabiaSaudi ArabiaSaudi ArabiaSaudi Arabia QatarQatar

QatarQatar

SadaraSadara 1500kt1500kt 20162016

SadaraSadara 1500kt1500kt 20162016 QP/QAPCOQP/QAPCO 1300kt1300kt 20182018 QP/QAPCOQP/QAPCO 1300kt1300kt 20182018

United Arab EmiratesUnited Arab Emirates

BorougeBorouge 33 1500kt1500kt 20142014

United Arab EmiratesUnited Arab Emirates

BorougeBorouge 33 1500kt1500kt 20142014

KuwaitKuwait

PICPIC 1400kt1400kt 2017/82017/8

KuwaitKuwait

PICPIC 1400kt1400kt 2017/82017/8

IranIranIranIran

KavyanKavyan 11 1000kt1000kt 20122012 KavyanKavyan 22 1000kt1000kt 20132013

IlamIlam 458kt458kt 20142014

KavyanKavyan 11 1000kt1000kt 20122012 KavyanKavyan 22 1000kt1000kt 20132013

IlamIlam 458kt458kt 20142014

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The Middle East Will Add Less Ethylene CapacityThe Middle East Will Add Less Ethylene Capacitythan North America or China in the Next Ten Yearsthan North America or China in the Next Ten Years

Incremental EthyleneIncremental Ethylene Capacity 2012Capacity 2012--2022*2022*

North America

Middle East

China

0 2 4 6 8 10 12 14 16 18 20

World

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Million Metric Tons * Includes Hypothetical Capacity

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ProductsProducts Will Follow the Most Cost Effective PathWill Follow the Most Cost Effective Pathto Marketto Market Downstream Industry Development??Downstream Industry Development??

HydrocarbonHydrocarbonHydrocarbonHydrocarbonConsumerConsumerDemandDemand

ConsumerConsumerDemandDemandValueValueValueValue

Labor CostLabor CostLabor CostLabor Cost

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Presentation OutlinePresentation Outline

Global PetrochemicalIndustry overview

North America Industry -Revival

MDE Industry Impact ones o e n us ry

China Industr

Opportunities and Challenges

2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

onc us ons

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ChinaChina -- Leading the Global Demand GrowthLeading the Global Demand Growth

China Share in Global Demand (Million Metric Tons)

2007 2009 2011

26% 34%

74%69% 66%

World = 289 World = 284 World = 330

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Fast Growing Chinese MarketFast Growing Chinese Market

Million Metric Tons

160

The key success factors:The key success factors:

120 I.I. Government supportGovernment supportII.II. Strong demand growth fromStrong demand growth from

80III.III. Chinese companys nimble growthChinese companys nimble growth

strategystrategy

40

60

0

20

1996 1998 2000 2002 2004 2006 2008 2010 2012

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Production DemandAggregate of PE, PP, PVC, MEG, methanol, phenol, styrene, PTA, butadiene

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Coal Chemical is a Fast Growing SectorCoal Chemical is a Fast Growing Sector

CoalCoal CoalCoal

20%20%OtherOther12%12%

4%Coal11%

Ethylene Cracker96%

Ethylene

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Demand For Import Remain StrongDemand For Import Remain Strong

Mill ion Metric Tons

50

40

30

10

02006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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Methanol PE PP PVC MEG Styrene Phenol Butadiene PTA

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Presentation OutlinePresentation Outline

Global PetrochemicalIndustry overview

North America Industry -Revival

MDE Industry Impact ones o e n us ry

China Industr

Opportunities and Challenges

2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

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ConclusionsConclusions

Increased ethane cracking in North America

Reduces supply of C3 and C4 co-products -

Results in significant increase in exports from NAM Returns as primary investment location

Com etes with low-cost Middle East

The Middle East will remain a substantial olefin derivative supplier to Asia

and other re ions

Future investments will be limited by availability of low cost feedstocks

Industry is moving downstream slowly to add value and create jobs

Long-term demand growth remains robust in China

China remains a very competitive world factory floor

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