TECHNOLOGY & LICENSING STRATEGY IN A

CHANGING ETHYLENE VALUE CHAIN LANDSCAPE

Global Refining & Petrochemicals Congress
Mumbai, 25-26 May 2017

Martijn Vogelzang & Guido Crevecoeur

TECHNOLOGY & LICENSING STRATEGY IN A CHANGING
ETHYLENE VALUE CHAIN LANDSCAPE

Main topics:
1. Changes in the ethylene landscape
 Supply-demand
 Capacity
 Net trade

2. SABIC’s strategic response

 Investments in new capacity

3. SABIC’s Technology & Innovation strategy

 Process & product technology
 Licensing of proven technologies

Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 1

SABIC RANKS AMONG THE TOP PRODUCERS WORLDWIDE

#1
Mono-ethylene glycol
#2
Methanol
#3
Polyethylene
MTBE Polybutylene terephthalate
Polycarbonate Engineering plastics
Polyphenylene ether and its compounding
Polyether imide
NPC [MMT] NPC [MMT]
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 0 2 4 6 8 10
SABIC DOW
SINOPEC EXXONMOBIL
Royal Dutch/Shell SABIC
Formosa Group SINOPEC
Dow LyondellBasell
Japanese MEG Conso CNPC LDPE
Kuwait Government MEG NPC IRAN LLDPE
NPC-Iran DEG CHEVRON PHILLIPS
HDPE
Reliance Industries TEG INEOS
BOREALIS
PTTGC
NOVA
SAR_Public
FPG
Henan Yonjin Chem.
TOTAL PC
Exxon Mobil Corp. 2016 Global MEG Nameplate Capacity LOTTE CHEMICAL 2016 Global PE Nameplate Capacity
CNPC
ADNOC
INEOS

► SABIC is a major player in the ethylene value chain

Data source: IHS Markit and SABIC proprietary intelligence
Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 2
CHANGED ETHYLENE LANDSCAPE
50 Compounded Annual Growth Rate (CAGR)
Ethylene Production by Source & Region Region Period Naphtha Ethane Propane Butane Gas Oil MTO CTO
45 NA 2010-->16 -16% 4% -1% 14% -21%
2016-->22 -7% 7% 1% -6% 0%
SA 2010-->16 -2% -1% 7% -100%
40
2016-->22 2% 2% -6%
EUR 2010-->16 -3% 2% 13% 8% -2%
35
Ethylene Production [MMT]

2016-->22 -1% 6% 0% -1% -3%

CIS 2010-->16 0% 12% 13% 12% -2%
30
2016-->22 6% 7% 29% 24% 11%
ME 2010-->16 6% 6% 4% 19%
25 2016-->22 0% 3% 1% 2% -100%
AFR 2010-->16 -100% -4% 4% -4%
20 2016-->22 9% 5% -4%
INS 2010-->16 8% 10% 12%
15 2016-->22 6% 9% 5% 18%
NEA 2010-->16 1% 21% 4% 6% 76%
10 2016-->22 1% 7% 3% 2% 12% 25%
SEA 2010-->16 4% 6% 2% 4% 13%
5 2016-->22 7% -3% 9% 10% 11%

-
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
NA SA EUR CIS ME AFR INS NEA SEA
Naphtha Ethane Propane Butane Gas Oil MTO CTO Other MTP

Ethane is the strongest growing feedstock:

► Ethane growing strongly in NA (shale gas) and in ME
► Naphtha shrinking in NA and EUR but still growing in Asia
► MTO (methanol-to-olefin) and CTO (coal-to-olefin) growing in
China, but remain small compared to ethane and naphtha

Data source: IHS Markit Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 3
C2 DERIVATIVES DEMAND CONTINUES TO SHIFT TO ASIA
Compounded Annual Growth Rate (CAGR)
70 Region Period MEG LDPE LLDPE HDPE
MEG & PE Global Demand Growth by Region NA 2010-->16 -1% 1% 2% 1%
2016-->22 2% 2% 3% 3%
60 SA 2010-->16 4% -1% 1% 1%
2016-->22 1% 3% 3% 3%
EUR 2010-->16 0% -1% 2% 1%
50
Domestic Demand [MMT]

2016-->22 0% 1% 2% 1%
CIS 2010-->16 3% 1% 5% 3%
40 2016-->22 3% 2% 4% 2%
ME 2010-->16 6% 2% 5% 5%
2016-->22 3% 3% 4% 4%
30 AFR 2010-->16 1% 3% 7% 5%
2016-->22 23% 2% 4% 4%
INS 2010-->16 5% 8% 10% 7%
20 2016-->22 4% 7% 10% 8%
NEA 2010-->16 5% 5% 7% 6%
10 2016-->22 4% 4% 6% 5%
SEA 2010-->16 0% 2% 6% 5%
2016-->22 3% 4% 5% 5%
0
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
NA SA EUR CIS ME AFR INS NEA SEA
MEG LDPE LLDPE HDPE

Demand of main ethylene derivatives

► NEA, NA and EUR are the world’s largest markets for MEG and
PE
► INS is the fastest growing region, followed by NEA
► These regions continue to grow in the 2016-2022 period at or just
below the speed of the past 6 years
Data source: IHS Markit Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 4
CAPACITY LOCATIONS FOLLOW BOTH DEMAND AND FEEDSTOCK
LOCATIONS
60 Compounded Annual Growth Rate (CAGR)
MEG & PE Global Capacity Growth by Region Region Period MEG LDPE LLDPE HDPE
NA 2010-->16 -1% 1% 1% 2%
50 2016-->22 9% 5% 8% 5%
SA 2010-->16 0% -1% 0% 0%
2016-->22 0% 0% 1% 1%
Capacity [MMT]

40 EUR 2010-->16 0% -1% -1% -2%

2016-->22 0% 0% 0% 0%
CIS 2010-->16 3% 1% 0% 6%
30 2016-->22 10% 6% 23% 15%
ME 2010-->16 2% 8% 3% 7%
2016-->22 2% 4% 3% 2%
20 AFR 2010-->16 0% 2% 1%
2016-->22 0% 4% 3%
INS 2010-->16 1% 0% 6% 3%
10 2016-->22 12% 19% 11% 6%
NEA 2010-->16 8% 3% 5% 4%
2016-->22 8% 6% 4% 3%
0 SEA 2010-->16 0% 1% 10% 1%
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2016-->22 5% 0% 5% 4%

NA SA EUR CIS ME AFR INS NEA SEA

MEG LDPE LLDPE HDPE Capacity growth for MEG and PE
► After slow or even negative growth over the past 6 years in
NA, growth is now accelerating
► Capacity growth in ME continues, but at a somewhat lower
pace than in recent years
► Highest capacity growth in INS, driven by demand growth
and liquid feedstock from new refineries
► Capacity growth in NEA remains robust

Data source: IHS Markit, Capacity includes Hypothetical Capacity Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 5
NA EXPORT GROWTH ACCELERATES
25 Compounded Annual Growth Rate (CAGR)
RegionPeriod MEG LDPE LLDPE HDPE
20 NA 2010-->16 7% 1% -4% 9%
2016-->22 19% 19% 26% 16%
15 SA 2010-->16 -2% 5% 2% 1%
2016-->22 11% 4% 7% 9%
10
EUR 2010-->16 0% 17% 12%
5 2016-->22 4% -53% 2% 5%
Net Trade [MMT]

CIS 2010-->16 -1% 6% 10% -11%

0 2016-->22 -20% 20%
ME 2010-->16 1% 14% 7% 12%
-5 2016-->22 1% 4% 3% 1%
AFR 2010-->16 1% 4% 13% 9%
-10 2016-->22 23% 3% 4% 4%
INS 2010-->16 7% 11% 7% 4%
-15
2016-->22 -3% 2% 7% 9%
-20 SEA 2010-->16 1% 50%
MEG & PE Global Net Trade by Region 2016-->22 33% 6% 15%
-25 NEA 2010-->16 1% 17% 2% 11%
2016-->22 6% 4% 17% 7%
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
2010
2016
2022
NA SA EUR CIS ME AFR INS SEA NEA
MEG LDPE LLDPE HDPE

Trade flows shift from ME to NA

► NA sees explosive growth in exports
► ME remains the largest exporter, but has to yield most of the
growth to NA and will see a CAGR of only a few percent for its
main ethylene derivatives
► NEA continues to be the largest importer and maintains robust
growth
Data source: IHS Markit Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 6
HOW SABIC REACTS TO THESE NEW REALITIES

“SABIC to
convert Wilton
“ExxonMobil cracker to
still working ethane-based in “SABIC eyes
towards joint two phases” coal-based
USGC cracker “SABIC, China petchem
project with Aramco crude complex joint
SABIC” to chemicals JV venture”
expected to
shape by 2020-
2025”

SABIC strategy:
► Meeting regional demand growth
► Feedstock diversification
► Portfolio differentiation
► Invest in technology for autonomous growth
Data source: Platts; ICIS Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 7
TECHNOLOGY & INNOVATION FOCUS

Sustained efforts in
► New and improved technology
► Differentiated products within a commodity portfolio

World-class infrastructure and know-how

 Five key geographies with innovation hubs in USA, Europe, Middle East, Indian Subcontinent, North East Asia

Practical innovation
 Application development with key customers at the heart of our strategy
 More than 150 new products created every year
 Backed by 10,960 global patent filings

Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 8

EXAMPLE OF TECHNOLOGY INNOVATION
500 kta CO2 purification plant at SABIC affiliate United in Saudi Arabia

US Patent 6224843 issued to SABIC

► CO2 is used in production of urea and methanol and is sold into the food & beverage
industry
Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 9
PRODUCT INNOVATION IN FOOD PACKAGING

1. Extrusion coating grade from CTR® tubular LDPE technology production

RESIN EXTRUSION
FILLER CONSUMER
PRODUCER COATER

UNIQUE MWD PROCESSABILLITY: BETTER HOTTACK COMPLIANT TO REGULATIONS

DISTRIBUTION MADE • High line speeds & SEALING • ADDITIVE FREE
IN CTR® PROCESS • Thin coating layers
• Improved adhesion CTR®=Clean Tubular Reactor

2. New SABIC® LDPE film grade produced in CTR® process

 Excellent draw-down ability as low as 12 μm
 Higher production line speed
 Can be used in both mono and co-extruded film
 Provides full compliance with stringent food contact regulations for
both fatty and non-fatty foods

Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 10

PROCESS & PRODUCT TECHNOLOGY STRATEGY IS KEY

SABIC is revisiting its technology strategy:

Main Drivers:
1. Maximise use of proprietary technology in new projects, leveraging:
 CAPEX/OPEX improvements for chemicals
 Enhanced product development on selected polymer technology platforms

2. Monetise SABIC’s proven technology portfolio, through:

 Active licensing of SABIC technology to 3rd parties, combined with:
 R&D efforts and Technical Service
 Sharing of Operational Excellence
 (where applicable) Catalyst sales

3. Explore opportunities to license non-proven technologies and patents

From traditionally licensing technologies from others SABIC is now moving towards proprietary
developments and licensing technologies out to 3rd parties
Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 11
COMPREHENSIVE PORTFOLIO OF PROVEN TECHNOLOGIES
CTR LDPE LDPE
Ethylene Production EO/EG EO/EG
Naphtha
Naphtha UHMWPE UHMWPE
cracker CO2
PP PP
CV
Ethylene Butane 1-butene
cracker LLDPE/HDPE LLDPE
LAO 1-Butene

Ethane 1-Hexene HDPE HDPE

STARTEC Styrene
C8-C20 LLDPE LLDPE
Acetic Anhydride
Vinyl Acetate
Acetic Acid PTA PET PET Tape line PET Tape
Paraxylene
MMA AA

Butadiene PBL HRG

Acrylonitrile ABS ABS
SAN
Styrene EPS PS
Acetone
Benzene O2

Cumene Phenol BPA BPA

Propylene
Methane Methanol DMC DPC PC
PC
CO NaOH
Chlorine Chlorine Phosgene PC

SABIC SABIC
Jointly owned Others
Technology owners Chemical Polymer

Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 12

A WIDE RANGE OF TECHNOLOGIES FOR 3rd PARTY LICENSING

Butadiene α-Sablin LAO1 EO/EG2 CTR® LDPE LLDPE/HDPE UHMWPE*

Butene-1 CO2 BPA PP ABS-Emulsion ABS-Mass

Phenol Acetic Acid PC*

1 Technology jointly owned with Linde * Only captive licensing

2 Marketed by Scientific Design, a SABIC/Clariant JV

Polymers Technologies State of art technologies supported with

Chemicals Technologies world class engineering and licensing partners

Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 13

LICENSING COMES WITH FULL SERVICES AND SUPPORT PACKAGE

PDP Engineering Training Manuals

PDP preparation with Licensor support Organize and provide Training manuals
world class projects engineering training to client Technology manuals
engineering partners phases trainees & operation Lab & Quality manuals
Safety reviews Review engineering staff
documents

Commissioning Technical Operating technical Debottlenecking

& Start up Exchange support services services

Provide Organize & conduct Provide trouble Provide

Commissioning & technical exchange shooting and site debottlenecking
startup assistance meetings assistance services
Plant assessments Expand production
capacity of existing
facilities

Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 14

SUMMARY

►Significant changes in ethylene value chain: demand, supply and trade

flows
►In response, SABIC is globalising its asset footprint and investing in
alternative feedstock for ethylene
►Increased focus on developing proprietary technologies
►Active marketing of SABIC’s proven technologies

Contact:
Martijn Vogelzang Guido Crevecoeur
Director Licensing Licensing Marketing Manager
martijn.vogelzang@sabic.com guido.crevecoeur@sabic.com
+31 6 3192 9952 +31 6 4691 0261

Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 15

Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 16
DISCLAIMER

DISCLAIMER: THE MATERIALS, PRODUCTS AND SERVICES OF SAUDI BASIC INDUSTRIES CORPORATION (SABIC) OR ITS SUBSIDIARIES OR
AFFILIATES (“SELLER”) ARE SOLD SUBJECT TO SELLER’S STANDARD CONDITIONS OF SALE, WHICH ARE AVAILABLE UPON REQUEST.
INFORMATION AND RECOMMENDATIONS CONTAINED IN THIS DOCUMENT ARE GIVEN IN GOOD FAITH. HOWEVER, SELLER MAKES NO
EXPRESS OR IMPLIED REPRESENTATION, WARRANTY OR GUARANTEE (i) THAT ANY RESULTS DESCRIBED IN THIS DOCUMENT WILL BE
OBTAINED UNDER END-USE CONDITIONS, OR (ii) AS TO THE EFFECTIVENESS OR SAFETY OF ANY DESIGN OR APPLICATION
INCORPORATING SELLER’S MATERIALS, PRODUCTS, SERVICES OR RECOMMENDATIONS. UNLESS OTHERWISE PROVIDED IN SELLER’S
STANDARD CONDITIONS OF SALE, SELLER SHALL NOT BE RESPONSIBLE FOR ANY LOSS RESULTING FROM ANY USE OF ITS MATERIALS,
PRODUCTS, SERVICES OR RECOMMENDATIONS DESCRIBED IN THIS DOCUMENT. Each user is responsible for making its own determination as to
the suitability of Seller’s materials, products, services or recommendations for the user’s particular use through appropriate end-use and other testing and
analysis. Nothing in any document or oral statement shall be deemed to alter or waive any provision of Seller’s Standard Conditions of Sale or this
Disclaimer, unless it is specifically agreed to in a writing signed by Seller. Statements by Seller concerning a possible use of any material, product, service
or design do not, are not intended to, and should not be construed to grant any license under any patent or other intellectual property right of Seller or as a
recommendation for the use of any material, product, service or design in a manner that infringes any patent or other intellectual property right.

SABIC and brands marked with ™ are trademarks of SABIC or its subsidiaries or affiliates.
© 2017 Saudi Basic Industries Corporation (SABIC). All Rights Reserved.

† Anybrands, products or services of other companies referenced in this document are the trademarks, service marks and/or trade names of their respective
holders.

Global Refining & Petrochemicals Congress, Mumbai, 25 May 2017 No. 17