GCC Petrochemicals Industry , GOICs Perspective

Presented by: Suleiman Albalushi

WORLD REFINING AND PETROCHEMICAL TECHNOLOGY SUMMIT 2013 25 - 27 November, 2013, Doha, Qatar

Contents:

GCC Petrochemical Industry; opportunities for downstream industries Challenges GOIC services for the petrochemical Industry Concluding remarks

GOIC in brief . . . .
Established in 1976 7 members : United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar, Kuwait and Yemen.

Objectives :
Achieve Industrial cooperation and coordination between member states.

Propose industrial ventures between member states,

Prepare, evaluate and recommend industrial projects, Collect and disseminate information about industrial data and studies

GOIC services
Practice Areas
Economic Development
Economic Competitiveness Assessment Policy and Regulatory Gap Analysis Investment Strategies and Business Cases

Cluster Strategy
Business Models Partnership and Investment Strategies

Industrial Policies and Development

Industrial Investment Strategies

Expertise
Industrial Expertise

Industrial Market Intelligence New Industrial Investment Opportunities within the GCC Industrial Coordination, Market Technical Cooperation and Expertise Exchange Locating, Screening and Industrial Technical Assistance Recommending Regional Investments Opportunities and Support for SMEs along with Qualified Business Investment Promotion Partners Market and Technology Assessments

Technology Expertise
Manufacturing Technologies Industrial/Automotive/Chemicals/ Energy Cleantech,
CONFIDENTIAL | 4

Industrial Structure and Operations Industrial Sensing, & Project Promotion Project Planning & Implementation Detailed Economics and Performance
GOIC-PRTM Overview | 2011 Proprietary

Size of Chemical Industry in the GCC - 2102

Firms by Sector
Investments by Sector
0.7% 3.9% 8.4% 41.2%

Labor by Sector

51.5%

16.6%

60.0%
1.4% 38.6% 35.4%

38.9% 3.4%

Total Chemicals = 3017 firms Total all Industries : 15,165

Cumulative Chemicals: 199 Billion US Dollars Total all Sectors : 336 Billion US Dollars
Base year : 1990

Total Chemicals : 260,808 Total all sectors : 1.3 Million

Refined Petroleum Products Chemicals & Chemical Products Pharmaceutical Products Rubber & Plastics Products
Source : GOIC Data

Main economic activities contribution to GDP ( % GDP, 2012)

GCC Total GDP : 1,579,911 Million US Dollars

MINing ,QUAR.& FUEL

Estimated Contribution by Chemicals & Petrochemicals Sector 1.5% & Refing by 2.1% 49%

9%
OTHER ACTIVITIES

MANUFACTURING

9% 10% 8% 4% 6%

5%

CONSTRUCTION

GOVT.SERVICES FINANANCE,INSUR. & BANK

TRADE REST.& HOTEL

TRAN.,COMM.& STORAGE

Source :National Statistical Data, GOIC Report, 2012

Installed & Planned Capacity of Basic Petrochemicals In GCC up to 2016 ( 000 Tons per year)

65,000 55,000 45,000 35,000 25,000 15,000 5,000

2010 Ethylene Methanol

2011 Propylene

2012

2013 Benzene

2014 Toluene

2015 O-Xylene

2016 P-Xylene

Butadiene

Source : GPCA & GOIC research

GCC Ethylene Production 2013

(Total World Capacity : 143,402,426 Tons/Year)

1%

2% 88% 8%

1%

kuwait

Qatar

Saudi Arabia

UAE

World
Source : Oil & Gas Journal, 2013

Example : Ethylene Derivatives

PET PBT

EG

Ethanolamines
EO

Ethoxylates
EPDM EDC VCM PVC

Alpha Olefins

LDPE

Tri chloro ethylene

LLDPE
HDPE VAM

Ethylene
EB SM

Tetra chloro ethylene

Synthetic Ethanol Ethyl Acetate

PVOH

PVAC

EVA

SAN

SBR

ABS

PS
Source : GOIC Research

GCC Petrochemical opportunities - Methane

FEEDSTOCK

BASIC CHEMICALS

INTERMEDIATES

DERIVATIVES

APPLICATIONS

Fertilizers (2012) Ammonia (2012) Technical Urea (2013)

Formaldehyde (2013) Acetic Acid (2022)

UF Resin (Thermoset Plastics) Industrial Solvents

Natural Gas

Syn Gas

Methanol (2011)

Ethyl/Butyl Acetate (2013)

Industrial Solvents

The four digit ISIC numbers in the box indicatesthe linking subsectors

Available in GCC

Under development /Planning

Not Available / In Adequate

Source : GOIC Research-2012

GCC Petrochemical opportunities - Ethylene

FEEDSTOCK BASIC CHEMICALS INTERMEDIATES DERIVATIVES APPLICATIONS

LDPE (2013) Ethylene NGLs/ Naphtha (Cracker) Propylene Polyethylene (2013) HDPE (2013) LLDPE (2013)

Packaging, pipes Containers Cling films As seals, diaphrams, strips, profiles (Automotive As sealants, hoses, Industries) strips (Construction/cables Anti-vibration chemicals) mounts (Mechanical goods)

EPDM (2013)

Available in GCC

Not Available / In -Adequate

Source : GOIC Research

The four digit ISIC numbers in the box indicates the linking subsectors LDPE: Low-Density Polyethylene HDPE: High-Density Polyethylene LLDPE: Linear Low Density Polyethylene EPDM: Ethylene Propylene Diene Monomer

GCC Petrochemical opportunities - Propylene

FEEDSTOCK

BASIC CHEMICALS

INTERMEDIATES

DERIVATIVES

APPLICATIONS

Naphtha (Cracker)

Propylene

Polypropylene (2013) BOPP (2013)

Acrylates (2011) Acrylamides (2011)

Fiber (2030)

Film (2013) Paints, coatings, Textile /Fiber (2022) Flocculant, thickening agent, water treatment (2029)

Acrylonitrile (2011)

Acrylic Acid (2011)

Available in GCC The four digit ISIC numbers in the box indicates the linking subsectors BOPP: Bi-axially Oriented Polypropylene

Not Available / In -Adequate

Source : GOIC Research

GCC Petrochemical opportunities - Benzene

FEEDSTOCK BASIC CHEMICALS INTERMEDIATES DERIVATIVES APPLICATIONS

Polystyrene (2013) Ethyl Benzene (2011) Styrene (2013) SBR (2013)

HIPS, EPS Packaging Rubber products, Tires Engineering Plastic, Refrigeration

ABS (2013)

Benzene

Nitro Benzene (2011)

Aniline (2021) MDI (2030)

Dyes, Photography Rigid polyurethane (2013)

LAB (2023)

Detergent, cleaning chemicals

Available in GCC Not Available / In Adequate

The four digit ISIC numbers in the box indicates the linking subsectors HIPS: High Impact Polystyrene; EPS: Expanded Polystyrene; LAB: Linear Alkyl Benzene; SBR: Styrene Butadiene Rubber; ABS: Acrylonitrile Butadiene Styrene; MDI: Methylene Diphenyl Diisocyanate

Source : GOIC Research

GCC Petrochemical opportunities - Benzene

Source : GOIC Research

GCC Petrochemical opportunities - Toluene / Xylene

Source : GOIC Research

Petrochemical Derivatives
Added Value products for UAE: LDPE,PVC resin, PS, PET,BR,SBR, PC

Added Value products for Kuwait: EPS, SAN resins, ABS resin, SBR, PET

Added Value sub-sectors for Oman: Methanol , Aromatics

Potential for Engineering Plastics in GCC : Nylons or PA,PC,ABS,PET,PBT,POM,

Source : GOIC Market studies

Challenges:
Feedstock competing with energy demand. Shortage of gas leading to use of liquids, examples: Kuwait Aromatics, KSA , Oman Aromatics. Increasing power demand projections in GCC, shortage of gas , long-term gas export commitments. Example, Saudi consumption of energy is growing 8-10% annually. Capitalize on economies of scale , creation of integrated complexes for Refineries and petrochemicals . Technological development in specialty products , R& D development, innovation and differentiation, increase products slate to sustain a competitive edge .

Unlocking of shale gas and impact on the long term.

Infrastructure to increase local manufacturing , increase export and generate employment. Downstream Industries development, raw materials prices, industrial land use .

GOIC Services- Manufacturing Investment Opportunities

Opportunities in Chemicals & Petrochemicals Plastics & Rubber
investment opportunities in industrial sectors
Environment & Recycling 1%
Metals 16%

Chemicals

Agro-Industries 4%
Food 10%

Textiles & Leather 2% Non-Metallic Minerals 6%

Engineering 23%

Chemicals 16% Plastics & Rubber 17%

Medical 5%

GOIC Services for the petrochemical Industry Recent Petrochemical studies 2009-2012
Oman Aromatics Downstream Sector Study Kuwait Aromatics Sector Study UAE Petrochemical Sector Study Engineering plastics Study GCC Industrial Map Road Map Manufacturing Investment opportunities for Kuwait

Ongoing Initiatives
Identification of investment opportunities Multi-clients studies Feasibility and bankable studies. Technology assessment and evaluation

Concluding Remarks:
GCC Petrochemicals is a growing business. The region will continue to play a major role as a producer and exporter of petrochemicals. Regional Aromatics capacity will grow faster and more downstream will come up in the region. Regional comparative advantage leveraged for ethylene based petrochemical will not be the same for Aromatics. Feedstock will be heavier and mixed. R&D will get more attention in the region.

GOIC-PRTM Overview | 2011 Proprietary

| 21 CONFIDENTIAL