Gulf Aromatics GCC - · PDF fileGulf Aromatics GCC . ... 2014 2015 2016 2017 2018 2019 2020...

M A H M O U D A L - Q A T T A N

P L A T T S 2 A R O M A T I C S S U M M I T

9/19/2014 TKAC business confidential Do Not Share

1

Gulf Aromatics GCC

Presentation Content


2

KARO Company Overview.

Gulf, GCC story, economy & energy.

PX outlook.

Gulf PX balance, Gulf competiveness.

Benzene Outlook.

Conclusion

Ownership Structure


3

TKSC

57.5% 100%

42.5%

40%

40%

20%

Kuwait Refining and Aromatics


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Kuwait aromatics started in December 2009, based on FRN feed from MAB refinery.

Located in an a petrochemical site integrated with site utilities and infrastructure.

PX capacity achieved 868 KTPA, 110% of Design. all PX is exported to India sub. Continent and Asia. Benzene ranges from 360-280 KTPA depending on mode of operations.

Commissioned a number of studies and improvements to enhance feedstock quality towards aromatics precursors.

Kuwait aromatics today is solely dependent on refinery naphtha. Kuwait condensate is highly paraffinic and does not add any value to aromatics feedstock while it make good feed for liquid cracker.

Kuwait Refining and Aromatics


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Current Kuwait refinery capacities around 0.936 MMBPD- 30% of Kuwait crude production.

Kuwait refining capacity will increase to 1.415 MMBPD from existing capacity .936 MMBPD. With the addition of a new refinery 0.615 MMBPD, retirement of Shuaiba Refinery and increasing MAB capacity with clean fuel project.

Total exportable naphtha will increase by another 1.5 MMton with the commissioning of the new refinery.

Current collaborations with the refinery Kuwait Naphtha foot print study, current

Post CFP and Post NRP.

Debottlenecking of current facilities to over 1 MMTPA PX, 2018.

Additional PX capacity around 1.5 MMTPA PX, based on available naphtha 2019-2020.

Integrating new facilities part of the new refinery and a petrochemical complex.

Capacity MBPD

Crude 936

.ARDs 264

.HCR (VR) 50

.HCR (VGO Feed) 131.5

.FCCU 43

.Delayed Coker 80

.Distillates HTUs 391

(Naphtha, Kero & Diesal

.Reformers 51

KNPCCapacity MBPD

Crude 1415

.ARDs 760

.HCR (VGO Feed) 205.5

.FCCU 43

.Delayed Coker 117

.Distillates HTUs 823

(Naphtha, Kero & Diesal)

.Reformers 54

KNPC

. Conversion capacity :

(4 VGO HCR, 1 FCCU, 3 trains delayed cokers)

. Residue Hydrotreating :

. Distillate Hydroteating :

. Reforming capacity :

. Hydrogen Capacity :

. Sulfar Capacity : 12000 TPD

365 MBPD (46% on crude, excl NRP)

760 MBPD (51% on Crude)



1134.5 MM SCFD

. Conversion capacity :

(3 VGO HCR, 1Voc. Resid HCR, 1 FCCU, 2 trains delayed cokers)

. Residue Hydrotreating :

. Distillate Hydroteating :

. Reforming capacity :

. Hydrogen Capacity :

. Sulfar Capacity :





596.5 MM SCFD

3000 TPD

Kuwait Challenges


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Naphtha quality and gasoline local demand.

Fuel gas allocation!!

Integration model with the new refinery and a mixed cracker!!

Government Policies.

Local investment in hydrocarbon resources.

Social – economical needs.

9/19/2014 TKAC business confidential Do Not Share 7

1976

1981 1985

1990 1995

2000 2005

2010

Mixed feeds – new Products

More specialized products Increase petrochemical down stream portfolio

Social demands

Growth

Diversity – down stream opportunities

Kuwait Aromatics Oman Aromatics

EQUATE/BROUGE/QA

TAR

QATAR ethylene

SA ethylene

Low refinery Integration----------------more refinery integration projects

2015 2020

New Aromatics Capacities

Gulf ,GCC, Petrochemical Story

Gulf economical Attributes


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GCC growth rate on average is slightly higher than global average GDP change. 4.5%

Growth is fuel by energy demand and oil prices. Non oil sector is increasingly contributing to GDP growth.

Abundant sovereignty funds investments world wide. Among top 10 world on value.

Gulf Hydrocarbon Position


9 GCC countries holds 33%

of oil proven reserves. With only 23% of world oil production. Increasing in 2020 to 25%. Only 5% of world refining capacities.

Most of GCC countries are considered short in natural gas except for Qatar and Oman.

Large gas field condensate production mainly in Qatar and Oman.

0

20

40

60

80

world GCC OPEC

world

GCC

OPEC

23.6%

Oil Production

23%

4%

6%

33%

25%

9%

Refinery Capacities MBPD

N.America

Africa

S,America

Asia

GCC 5% of total

Aromatics feed stock in GCC


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GCC has been for a long time a reliable source of energy for the petrochemical world mainly in Asia through continuous supplies of petrochemical naphtha. Only small portion of the naphtha produced locally is consumed as feedstock.

With the growth of new refineries around the GCC more naphtha feedstock will be available for aromatics production along with meeting the increased demand for gasoline in the local markets.

Condensate will play a role as feedstock in place like Qatar and to a lower degree in other locations.

0

1000

2000

3000

4000

5000

6000

7000

8000

2014 2015 2020 2014 2015 2020 2014 2015 2020

world Asia ME

Demand

ref.Capacity+gasfieldCond.

Naphtha Condensate supply/demand 1000 BPD

Aromatics feed stock in GCC


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GCC is a good global contributor to condensate trade with around 2 million BPD production. Most of the condensate is flowing from Qatar from its large gas fields production.

Condensate quality varies between the gulf countries as most associated gas condensate are low in aromatics precursor while Qatar condensate is considered to be much better in aromatics precursors. Accordingly Qatar is building the first condensate based aromatics unit in the gulf.

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2014 2015 2016 2017 2018 2019 2020

world

NA.

GCC

Global Condensate Production 1000BPD

PCI data

PX outlook


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PX demand is forecasted to grow on average around 6% per year. with the indication from the slow down in house hold construction in China and release of cotton inventories it is foreseen that the PX demand growth will slow down perhaps to as low as 5%.

Capacity additions in 2014 exceeded growth rate and will eventually reach 6 million tons pushing prices down and causing the industry to restructure to balance supply demand and support PX prices, accordingly the margins dropped to around 210 $ and operating rates dropped through stoppages, early shutdowns and delayed start up. Basically the restructuring was not effective and sustainable and accordingly operating rates will farther decrease below 80% as more excess volumes make it to the markets.

More confirmed capacities will see its way in from 2015-2020, around 12-14 million tons. While demand is basically from 40 million tons in 2015 to 53 million tons in 2020 Leading to lower operating rate closer to 83%, some consultants suggest that it will drop to below 75%. 0.805

0.81

0.815

0.82

0.825

0.83

0.835

0.84

0.845

0

10000

20000

30000

40000

50000

60000

70000

2000 2005 2010 2015 2020

Global PX growth 1000 ton

Capacity Production Total Consumption Utilisation

PCI data

Asia/ GCC capacities growth


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Asia is the focus of growth will see more capacities coming on line increasing from 36 MM ton in 2014 to 60 MM ton in 2020.

Over capacities in the next three years will lead lower operating rates and lower margins The rates will start to balance around 2018.

ME contribution to the world capacities will increase from 10% in 2013 to 15% in 2020 . Growing from 3.6 million tons to over 9.7 million tons mostly from GCC countries very much driven by local naphtha availability. The main growth will be lead by S.A. as revealed by Aramco to be a global player in the aromatics business.

Global PX Capacities by region

90%

10%

2013

world capacity ME Capacity

36 MT

PCI data

85%

15% 2020

world capacity

ME Capacity

60 MT


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ME is a major contributor to the Asia added capacities with only a small portion 5-10% consumed locally while the rest will find its way to the major growth market balancing the short fall in Asia.

ME naphtha and condensate availability will drive the growth in aromatics for next few years.

PCI data


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GCC during the same period, 2014-2020 will add another 7.2 MM tons which will find its way to Asia. . GCC will remain an advantaged producer pushing production volumes out and increasing operating rates above 90%.

0

1000

2000

3000

4000

5000

6000

2014 2015 2016 2017 2018 2019 2020

world

GCC

world 74%

GCC 26%

Other 26%

GCC share of PX future growth 2014-2020

PCI data-KPPC

Where are the margins ending??


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The new capacities will exert higher pressure on margin pushing PX-N spread to remain low on average around 320-370 $ per ton. The low margin period is now expected to last to end of 2017.

Margins will enhance to 400 $ by 2018 .

Most cycle trends forecast have reasonable probability relatively good accuracy for the short period of 5 years forward as confirmed projects move from planning to execution. Beyond these periods uncertain it is will very much depend on history repeating itself on capacity increase and growth based on industry performance.

0

200

400

600

800

20

14

20

17

20

20

20

23

20

26

20

29

Asia PX-N

Asia PX-N

PCI data

What about Benzene


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Benzene production in GCC countries is mostly coming as a co-product from PX operations. The volume of benzene is normally 35-40% of PX depending of naphtha quality and condensate content.

It is anticipated that BZ-N margins will stabilize around 300 $ in the future as more aromatics plants and liquid crackers come on line in Asia and higher Benzene volumes become available for trade . PCI data

GCC competiveness


18 Aromatics production model in GCC

courtiers is a completely different ball game to the cheap ethane model in the same area. The complexity of the model comes from the cost of feedstock and disposal of hydrogen price and other light end in a relatively subsidized local market, replacement value.

GCC in general have a good policy for industrial support in power, water and fuel. These by themselves will greatly enhance GCC margins in a taught aromatics market.

Some GCC countries have a clear policy FOR investments related incentives on feedstock price to encourage job creation and diversification in a highly demanding and growing environment.

Middle East Korea USGC

Variable cost Compare 102 $ Brent

Net Raw Material Costs $/te PX Utility Costs $/te PX

Logistics $/te PX

0.7

0.8

0.9

-5000

45000

95000

2000 2005 2010 2015 2020

PX Asia 1000 tonnes

Capacity Production Total Consumption

Net Trade Utilisation PCI data

Conclusion


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PX demand is forecasted to maintain a strong growth over the next 5 years at a rate of 5-6%.

ME in general and the gulf in particular will actively participate on PX trade balance to world wide more towards Asia.

The gulf countries has in place strong investment precursors , feedstock, funds and the need to diversify the economy.

Gulf countries are natural seed for aromatics business growth due to naphtha inventories and refinery expansions with a growing condensate output.

Gulf lacks experienced personnel and needs to properly address this deficiency to create a competitive task force.

GCC in general need to have in place a well established strategies and policies which addresses strengths, weaknesses, threats, opportunities and challenges.

Gulf countries need to redirect inefficient subsidies to more productive industrial growth.

The gulf will continue to be a global effective player in the energy and petrochemical markets, despite shale challenges, and can only enhance its role by being a more efficient player.

THANK YOU


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