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Evaluating the Middle Easts influence on the Asian Chemical and Petrochemical Industry

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Upcoming Mega Energy Projects in Saudi Arabia. US$10 billion Petro-Rabigh Project ... Sukuk issuance of US$800 million. Diversification in SABIC's sources of finance ... – PowerPoint PPT presentation

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Title: Evaluating the Middle Easts influence on the Asian Chemical and Petrochemical Industry


1
Evaluating the Middle Easts influence on the
Asian Chemical and Petrochemical Industry
Presented by Mr. Ali Alshamrani General
Manager, SABIC Asia Pacific 5 September 2006
Conference on Cost Effective Strategies for
Chemicals and Petrochemicals Asia
2
Overview
  • Trends and developments in the Middle East
  • The Middle East and Asia
  • Expansion plans in the Middle East
  • SABIC

3
Bilateral trade between GCC and Asia
  • Gulf Cooperation Council (GCC) Members
  • Kuwait
  • Kingdom of Saudi Arabia
  • Kingdom of Bahrain
  • Qatar
  • United Arab Emirates
  • Sultanate of Oman
  • Increasing trade with Asia

4
Chinas bilateral trade with the GCC
  • FTA between China and GCC by end 2006
  • Chinas bilateral trade with the GCC hit 21
    billion
  • Trade between GCC and China to triple to US100
    billion in the next 5 years

5
Petrochemical exports from GCC
  • Annual exports of all petrochemical products from
    the GCC have exceeded 30 million tons last year
  • 50 million tons in 2008
  • 48 million tons of liquid chemicals exports from
    the Middle East in 2008 projected

Bahrain
Kuwait
Saudi Arabia
Qatar
Oman
United Arab Emirates
6
WTO
  • Benefits of trading
  • More balanced economy
  • Tariffs and subsidies will be lowered
  • Gain cost advantage and access to foreign markets
  • Shape the future of the world trade system

7
Ethylene capacity in The Middle East
8
McKinsey Company
9
Ethylene Capacity Growth in the Middle East
Source CMAI
10
Upcoming New Capacities in the GCC
11
Upcoming Mega Energy Projects in Saudi Arabia
  • The US10 billion Aramco-Total export refinery
  • The US6 billion Aramco-ConocoPhillips export
    refinery
  • SABIC's Saudi Kayan Petrochemicals Company (Saudi
    Kayan)
  • SABIC - YANSAB

12
Upcoming Mega Energy Projects in Saudi Arabia
  • US10 billion Petro-Rabigh Project
  • US24 billion King Abdullah Economic City
  • New plant of ChevronPhillips exports of 750,
    000 tons
  • National Petrochemical Industrialization Company
    and Saudi International Petrochemical Company -
    New complex with annual exports of around 2
    million tons
  • Project Management and Development - 1.3 million
    ton cracker complex and amines plant production
    of 3 million tons

13
Petrochemical Expansions in the Gulf region
  • Joint venture between Kuwaits Equate
    Petrochemicals Company and Dow
  • PIC-BTX complex in Kuwait

14
Petrochemical Expansions in the Gulf region
  • Qatar
  • UAE
  • Oman
  • GCC cumulative total investments of US37
    billion at end 2002, with additional US40
    billion expected by 2010

15
What makes the Middle East so successful?
16
Reasons for the Middle Easts Success
  • Abundant competitively-priced natural gas
    feedstock
  • Ideal central location between the Americas and
    Asia

17
Reasons for the Middle Easts Success
  • Other Factors
  • Strong political support
  • Liquidity for project finance
  • Reasonable production and construction costs
  • Tax incentives - foreign
  • partners
  • State-of-the-art production facilities

18
Formation of Gulf Petrochemicals and Chemicals
Association (GPCA)
  • Framework for regional cooperation and strategic
    alliances
  • GPCA is first voluntary, non-profit association
    of its kind in the Middle East to address
    members concerns and exchange information

19
Growing Alliance between The Middle East and Asia
  • Booming demand for petrochemicals in Asia
    especially China
  • The Middle East supply will meet half the demand
    for chemical imports from China

20
New Trends in Financing
  • SABICs pledge of US15 billion
  • Sukuk issuance of US800 million
  • Diversification in SABICs sources of finance

21
SABICs Success Story
22
SABICs Ranking
GLOBAL TOP 50
Source Chemical Engineering News
23
SABICs MEG Expansion Plans

KMT
Source SABIC PCI
24
SABIC globally and in Asia Pacific
  • 26 subsidiaries and sales offices in
    international markets
  • 29 distribution and storage facilities worldwide
  • Setting up new offices and warehouses

25
What are the challenges in the future, and can
the Middle East maintain its leadership position?
26
Security and Safety in the Middle East
  • Prompt delivery even in times of unrest
  • No disruption to supply regardless of the
    situation
  • Well protected sites
  • Security is paramount

27
Competition The Rise of China, Russia and India
  • Rapid growth
  • Forecast for production capacity for
    petrochemicals in China annual average increase
    of 22 until 2001
  • Chinas local petchem production cannot meet
    domestic demand

28
Challenges Ahead
  • Lacking behind the Middle East in infrastructure,
    resources, feedstock, research and technology
  • Common factor among China, India and Russia
    potential to huge consumer market but far behind
    in other areas

29
Threats and Opportunities
  • Alternative Sources of Energy
  • Renewables
  • IT
  • Unforeseen threats and impacts

30
Volatile Issues
  • Geopolitical issues and impacts
  • Major current concerns
  • Lack of credible solutions

31
Whats Ahead?
  • Remain updated on threats
  • Future success
  • Ability to steer a clear path

32
Boom or Bust?
  • Will world economy grow?
  • Will demand for petrochemicals be fulfilled?
  • Will profits be extended?

33
Shift of Gravity
  • Shift of the petrochemical industrys
    centre-of-gravity
  • Economics will decide future of the industry
  • Downturn or an Extended peak?

34
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