PETRONASCHEMICALS GROUP BERHAD€¦ · · 2016-11-25F&M O&D Revenue by Segment Revenue by Region...

PETRONAS CHEMICALS GROUP BERHAD

Corporate Presentation

September 2016

PETRONAS Chemicals Group Berhad (“PCG”), its subsidiaries and related corporations confirm that care has been taken in ensuring the accuracy and correctness of

information, statements, text, articles, data, images and other materials contained and appearing in this presentation and the associated slides (hereinafter referred

to as "the MATERIALS"). Accordingly PCG, its subsidiaries and related corporations and its or their directors, officers, employees, agents and advisers (hereinafter

referred to as "We") represent that, to the best of our knowledge and belief that the MATERIALS which are owned and directly related to us therein are accurate,

correct and true.

The MATERIALS is not exhaustive. We do not assume any obligation to add, delete or make any changes to the MATERIALS and we may do so, if we feel necessary,

without prior notice.

We expressly disclaim all liabilities whatsoever for any direct, indirect, special or consequential loss or damages howsoever resulting directly or indirectly from the

access to or the use of this MATERIALS and the reliance on the MATERIALS contained herein. You should rely on your own evaluation and assessment of the

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The MATERIALS may also contain information provided by third parties and we make no representation or warranty regarding the accuracy, reliability, truth and

completeness of the said third parties' information.

In no event would the MATERIALS constitute or be deemed to constitute an invitation to invest in PCG, its subsidiaries and related corporations or an invitation by

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ForwardForwardForwardForward LookingLookingLookingLooking StatementsStatementsStatementsStatements andandandand AssociatedAssociatedAssociatedAssociated RisksRisksRisksRisks

The MATERIALS and related discussions, including but not limited to those regarding the petrochemicals environment, anticipated demand for petrochemicals,

plant turnaround activity and costs, investments in safety and operational risk, increase in turnaround activity and impact on production, future capital expenditures

in general, generation of future receivables, sales to customers, cash flows, costs, cost savings, debt, demand, disposals, dividends, earnings, efficiency, gearing,

growth, strategy, trends, reserves and productivity together with statements that contain words such as "believe", "plan", "expect" and "anticipate" and similar

expressions thereof may constitute forward looking statements.

Such forward-looking statements are subject to certain risks and uncertainties, including but not limited to, the economic situation in Malaysia and countries in

which we transact business internationally, increases in regulatory burdens in Malaysia and such countries, changes in import control or import duties, levies or

taxes in international markets or in Malaysia, and changes in prices or demand for products produced by us, both in Malaysia and in international markets, as a result

of competitive actions or economic factors. Such forward looking statements are also subject to the risks of increased costs in related technologies and such

technologies producing expected results, and performance by third parties in accordance with contractual terms and specifications.

Should one or more of these uncertainties or risks, among others, materialize, actual results may vary materially from those estimated, anticipated or projected.

Specifically, but without limitation, capital costs could increase, projects could be delayed, and anticipated improvements in capacity or performance may not be

fully realised. Although We believe that the expectations of management as reflected by such forward looking statements are reasonable based on information

currently available, no assurances can be given that such expectations will prove to have been correct. Accordingly, you are cautioned not to place undue reliance

on the forward looking statements. We undertake no obligation to update or revise any of them, whether as a result of new information, future events or otherwise.

This presentation and its contents are strictly confidential and must not be copied, reproduced, distributed, summarised, disclosed, referred or passed to others at

any time without the prior written consent of PCG.

Warranties and Exclusion of Liability

3

Company Overview

Performance Highlights

Growth Prospects

RAPID Petrochemical Projects

Market Outlook

4

COMPANY

OVERVIEW

A leading chemical player in the region

5

� First plant in 1985

� Made up of 29 subsidiaries, joint ventures & associated companies

� Over 4,600 employees

� Listed sinceNovember 2010

� ~RM53* billion (~USD13 billion) market

capitalisation

� Member of MSCI Asia Ex-Japan /

MSCI Asia Ex-Japan Chemicals

� Top 10 in FBM KLCI, FBM Emas Shariah

and Bursa Malaysia FTSE4GOOD Index

� One of South East Asia’s largest integrated

gas-based chemicals producer

� Largest Methanol producer in South East

Asia and fourth largest in the world

� Second largest Urea producer in South

East Asia in 2016 with SAMUR

� Third largest LDPE producer in South

East Asia

� Largest MTBE capacity in South East Asia

*As at 30 June 2016

KertihKertihKertihKertih IPCIPCIPCIPC

� Ethylene

� Polyethylene(1)

� Benzene

� Paraxylene

� Ammonia, Carbon

Monoxide & Oxogas

� Ethylene Glycols

� Butanol, Ethanolamines,

Glycol Ethers, Butyl

Acetate, and other

performance chemicals

� Acetic Acid(2)

1

6

KertihKertihKertihKertih

GurunGurunGurunGurunLabuanLabuanLabuanLabuan

BintuluBintuluBintuluBintulu

1SipitangSipitangSipitangSipitang3

2

5

4

6

GebengGebengGebengGebeng

PengerangPengerangPengerangPengerangINDONESIASINGAPORE

THAILAND

MALAYSIAMALAYSIAMALAYSIAMALAYSIA

7

� Total 10.8 mil mtpa of existing

production capacity

� Total of 18 manufacturing plants

across the Group:

� Wholly-owned: 9 plants

� Partly-owned: 5 plants

� Associates: 4 plants

� Two integrated petrochemical

complexes in Kertih, Terengganu

and Gebeng, Pahang

� Three manufacturing complexes in

� Gurun, Kedah

� Bintulu, Sarawak

� Federal Territory of Labuan

� New complexes in Sipitang, Sabah

by 2016 and Pengerang, Johor by

2019

SipitangSipitangSipitangSipitang

Gebeng Gebeng Gebeng Gebeng IPCIPCIPCIPC2

� MTBE

� Propylene

� Acrylics, Oxo-alcohols,

Butanediol (2)

� Aroma, 2-EH Acid,

HR-PIB(2)

GurunGurunGurunGurun3

� Urea

� Ammonia

� Methanol

BintuluBintuluBintuluBintulu4444

� Ammonia

� Urea

6

� Ammonia

� Urea

LabuanLabuanLabuanLabuan5555

� Methanol

4.9 mil mtpa 5.9 mil mtpa

1.94 mil mtpa

PengerangPengerangPengerangPengerang7

� Polyethylene

� Polypropylene

� Ethylene Glycols

110 ktpa

3.15 mil mtpa

(1) Low Density Polyethylene (LDPE), Linear Low Density Polyethylene (LLDPE),

High Density Polyethylene (HDPE)

(2) Products from associates (addition to PCG capacity is based on PCG equity)

Olefins & DerivativesOlefins & DerivativesOlefins & DerivativesOlefins & Derivatives

xx mil mtpa New capacities

Fertilisers & MethanolFertilisers & MethanolFertilisers & MethanolFertilisers & Methanol

Production capacity spread across Malaysia

7

� Operational

flexibility to modify

product mix, minimise

molecule loss, and

optimise profits across

the entire value chain

� Integrated support and

ancillary services

leading to substantial

operational and

logistic efficiencies

Fully integrated production facilities with significant synergies across the production chain

EthaneEthaneEthaneEthane EthyleneEthyleneEthyleneEthylene

Natural Natural Natural Natural

GasGasGasGas

MethaneMethaneMethaneMethane

PropanePropanePropanePropane

LLDPE/HDPELLDPE/HDPELLDPE/HDPELLDPE/HDPE

Ethylene OxideEthylene OxideEthylene OxideEthylene Oxide

PropylenePropylenePropylenePropylene

EthanoEthanoEthanoEthano----

lamineslamineslamineslamines

MEAMEAMEAMEA

DEADEADEADEA

TEATEATEATEA

UcarsolUcarsolUcarsolUcarsol

Alcohol EthoxylatesAlcohol EthoxylatesAlcohol EthoxylatesAlcohol Ethoxylates

Polyethylene GylcolsPolyethylene GylcolsPolyethylene GylcolsPolyethylene Gylcols

NonylphenolNonylphenolNonylphenolNonylphenol EthoxylatesEthoxylatesEthoxylatesEthoxylates

ButanolButanolButanolButanol

Butyl Glycols EthersButyl Glycols EthersButyl Glycols EthersButyl Glycols Ethers

Butyl AcetateButyl AcetateButyl AcetateButyl Acetate

EthyleneEthyleneEthyleneEthylene

GlycolsGlycolsGlycolsGlycols

MEGMEGMEGMEG

DEGDEGDEGDEG

LDPELDPELDPELDPE

AmmoniaAmmoniaAmmoniaAmmonia

Styrene Styrene Styrene Styrene

MonomerMonomerMonomerMonomer

OxogasOxogasOxogasOxogas

Kertih IPC : Increased Margin Capture Down the Value Chain

= Ethane Chain= Basic feedstock = Propane Chain = Butane Chain= Methane Chain

8

� Physically present in

Malaysia, Thailand, China,

Indonesia, Vietnam, the

Philippines and India

� Higher netback market

particularly in South East Asia

and China

� Gearing towards value-

driven customer solutions

Term Customers

Spot Customers

Revenue by ContractRevenue by ContractRevenue by ContractRevenue by Contract

77770%0%0%0%

30%30%30%30%

51%

49%

Traders/Distributors

End Customers

Revenue by ChannelRevenue by ChannelRevenue by ChannelRevenue by Channel

*FY2015 Data

70%

30%

F&M

O&D

Revenue by SegmentRevenue by SegmentRevenue by SegmentRevenue by Segment

Revenue by RegionRevenue by RegionRevenue by RegionRevenue by Region

Malaysia

ChinaSEA

ROTW

37%

33%16%

14%

Established market leader in South East Asia and China

Strong competitive advantages with resilient business performance

9

• Fully integrated facilities andinfrastructure

Integration results in lower costs, optimum yields and greater flexibility

• Secure and competitive feedstocksupply

Advantaged gas-based feedstock, second only to Middle East players

• Large scale and diversified productportfolio

Economies of scale for various applications reduce market risk

• Close to keygrowthmarkets

Optimised inventory along with competitive storage & distribution

• Established market leader

#1 for Methanol, #3 for MEG and #4 for Urea by production capacity

10

PERFORMANCE

HIGHLIGHTS

93%93%93%93%

95%95%95%95%

80%80%80%80%

92%92%92%92%

85%

93%

2012 2013 2014 2015 1H 2016

Plant Utilisation Rate

11

� Highest annual Group

utilisation of 85% since

listing

� Improved feedstock

supply through close

relationship with supplier

� Improved plant

reliability resulting

from effective asset

management

O&D

Group

F&M

World class = 85%

Sustained world class operational performance

12

� Higher sales volume in

line with higher plant

utilisation

� Sales concentration in

South East Asia

� Optimisation of cost-to-

serve through logistics

and inventory

management

Asia Pacific

Group Sales Volume

2014

2015

1H2016

6.06.06.06.0

6.46.46.46.4

3.53.53.53.5South East

Asia

(Mil MT)

Maximised sales in higher netback markets

13

3,8373,8373,8373,837 3,5043,5043,5043,5042,7262,7262,7262,726 3,0913,0913,0913,091

1,445*1,445*1,445*1,445*

2012201220122012 2013201320132013 2014201420142014 2015201520152015 1H 20161H 20161H 20161H 2016

PAT (RM Million)

16,59916,59916,59916,59915,20215,20215,20215,202 14,59714,59714,59714,597

13,53613,53613,53613,536

6,3496,3496,3496,349

2012201220122012 2013201320132013 2014201420142014 2015201520152015 1H 20161H 20161H 20161H 2016

Revenue (RM Million)

5,7785,7785,7785,7785,0765,0765,0765,076 4,6444,6444,6444,644 4,6604,6604,6604,660

2,3502,3502,3502,350

2012201220122012 2013201320132013 2014201420142014 2015201520152015 1H 20161H 20161H 20161H 2016

EBITDA (RM Million)

44444444 3939393931313131 35353535

13131313

2012201220122012 2013201320132013 2014201420142014 2015201520152015 1H 20161H 20161H 20161H 2016

Basic EPS (sen)

35% 33% 32% 34% 37%

EBITDA Margin

23% 23% 19% 23% 23%*

PAT Margin

Robust financial results despite weak market conditions

*Note: 1H2016 PAT = RM1,445 million excluding elastomers project write-off in 2Q2016 amounting to RM241 million.

Post write-off, PAT = RM1,204 million and PAT Margin = 19%.

14

22.7

43.6

24.8

58.2

24.7

52.9

Shareholder'sFunds

Market Capitalisation

RM Billion

2014 2015 1H 2016

1H 2016

�RM0.07 dividend per

ordinary share

�RM560 million

dividend payout

�53% dividend payout

ratio

Shareholder’s funds sustained despite growth initiatives

15

� Growth CAPEX mainly for

SAMUR, Aroma

Ingredients, 2-EH Acid,

HR-PIB and RAPID

Petrochemical Projects Petrochemical Projects Petrochemical Projects Petrochemical Projects

� Operations CAPEX consists of

reliability and integrity

projects, turnaround

activities, value improvements

and other operational

requirements

2012201220122012 2013201320132013 2014201420142014 2015201520152015 1H20161H20161H20161H2016

Capital Expenditure (RM Billion)Capital Expenditure (RM Billion)Capital Expenditure (RM Billion)Capital Expenditure (RM Billion)

Growth

Operations

0.8

2.6

3.0

3.3

1.6

Capital expenditure allocated for existing assets and future growth

16

GROWTH

PROSPECTS

17

Global

Regional

Local

Basic

Petchem Derivatives

Specialty

Chemicals

1 2

From resource-based to knowledge-based

1

2

Strengthen basic petrochemicals

Selectively diversifying into derivatives,

specialty chemicals and solutions

Corporate Vision

i. Achieve sustainable world class plant

performance

ii. Competitive marketing capability with

regional presence

i. Deliver innovative customer solutions to

strengthen market position and protect value

ii. Diversification of petrochemicals into higher

value adding products

The Preferred Chemical Company Providing Innovative Customer Solutions

Our focus is to strengthen basic petrochemicals and selectively diversify into specialty chemicals

18

Sabah Ammonia and Urea

(SAMUR) Project

Description / LocationDescription / LocationDescription / LocationDescription / Location

New world-scale, green field

urea production facility at

Sipitang, Sabah

FeedstockFeedstockFeedstockFeedstock Methane

CostCostCostCost USD1.9 billion

Product / CapacityProduct / CapacityProduct / CapacityProduct / CapacityUrea (1.20 mil mtpa)

Ammonia (0.74 mil mtpa)

Target Target Target Target

CommissioningCommissioningCommissioningCommissioning2H 2016

Product UsageProduct UsageProduct UsageProduct Usage Fertilisers

SAMUR will propel PCG to be the second largest urea producer in South East Asia

19

Aroma Ingredients Project 2-EH Acid Project HR-PIB Project

Description / LocationDescription / LocationDescription / LocationDescription / Location

Integrated Aroma Ingredients

Complex at existing BASF

PETRONAS Chemicals Integrated

Petrochemical Complex in

Gebeng, Kuantan

Higher value adding product (2-

Ethylhexanoic Acid (or 2-EH Acid)

at existing BASF PETRONAS

Chemicals Integrated


Gebeng, Kuantan

Intermediate product for the

manufacturing of fuel and

lubricant additives at existing BASF

PETRONAS Chemicals Integrated


Gebeng, Kuantan

FeedstockFeedstockFeedstockFeedstockIsobutene, formaldehyde Butanediol, propylene Isobutylene

Product / CapacityProduct / CapacityProduct / CapacityProduct / CapacityCitral, Citronellol and L-Menthol

(30 kmtpa)

2-Ethylhexanoic Acid

(30 kmtpa)

Highly Reactive Polyisobutene

(50 kmtpa)

Target CommissioningTarget CommissioningTarget CommissioningTarget CommissioningCitral and Citronellol (2H 2016)

L-Menthol (1Q 2017)

4Q 2016 4Q 2017

Product UsageProduct UsageProduct UsageProduct Usage

Home and personal care products,

flavours, fine fragrances, food

ingredients,

pharmaceutical applications

PVC stabiliser, paint dryers,

synthetic lubricants, PVB

plasticiser, medical intermediates

and cosmetics

Component to manufacture

fuel and lubricant additives, such

as fuel detergents or dispersants

for engine oils

Menthol:Menthol:Menthol:Menthol:

Cooling effects in

personal care products

2222----EH Acid:EH Acid:EH Acid:EH Acid: HRHRHRHR----PIB:PIB:PIB:PIB:CitronellolCitronellolCitronellolCitronellol::::Citrus notes in

perfumes

Aroma Ingredients, 2-EH Acid and HR-PIB will diversify our portfolio into higher margin chemicals

CitralCitralCitralCitral::::Vitamins

20

RAPID

PETROCHEMICAL

PROJECTS

21

RAPID petrochemical projects are PCG’s major growth plan

PIPC

PAMERPAMERPAMERPAMERPetchem Petchem Petchem Petchem

PlantsPlantsPlantsPlants

Refinery & Refinery & Refinery & Refinery &

CrackerCrackerCrackerCracker

PDWT & PDWT & PDWT & PDWT &

RGT 2 RGT 2 RGT 2 RGT 2 Power PlantsPower PlantsPower PlantsPower Plants

Container Container Container Container

TerminalTerminalTerminalTerminal

RAPIDRAPIDRAPIDRAPID

PIC

PIC InvestmentUSD27 Bil

6 associated facilities

****Investment by PCG

World scale, fully integrated project and will be cost competitive

22

PETROCHEMICALInvestmentUSD2.6 Bil****

Petrochemical products

3.15 mil mtpa

RAPID Investment

USD16 Bil

Refinery

220 kbd Petroleum

Products

Steam Cracker

23

Fully integrated facilities and infrastructure with secure feedstock supply

67%

Pengerang

Deepwater

Terminal

Pengerang

Co-generation

Plant

Utilities &

Facilities

Raw Water

Supply Project

Regasification

Terminal

Air Separation

Unit

Supported by Ancillary Facilities

300 kbpd

Crude Oil

Steam CrackerRefinery

Refinery and Cracker Petrochemical Plants

C2 (Ethylene)

C3 (Propylene)

C4 (Butanediol)

Commodities

Differentiated

Specialty Chemicals

Naphtha & LPG

PCP ASURGT2PAMERUFPDT2

24

Capacity Growth with world scale plants

Portfolio Expansion with leading edge technology

29292929 5

10 44444444

2015 2016 - 2018 2019 2020

Number of Products

10.810.810.810.82.0

3.15 16.016.016.016.0

2015 2016 - 2018 2019 2020

Nameplate Capacity (Mil MT)

RAPIDSAMUR & Specialties ProjectsPCG

** RAPID

1. Raffinate-2

2. Homo PP

3. Impact PP

4. Random PP

5. Terpolymer

6. Flexi PE

7. mLLDPE

8. TEG

9. Butadiene

10.INA

* Specialties Projects

1. Citral

2. Citronellol

3. L-menthol

4. 2-EH Acid

5. HR-PIB

Notes:

New Products

*

**

Opportunity for capacity growth and portfolio expansion

25

Successful execution of our growth projects will elevate PCG as a key Asia Pacific player

Portfolio Positioning

• MethanolMethanolMethanolMethanol –––– APAPAPAP ####1111,,,, WorldWorldWorldWorld ####4444

• MEGMEGMEGMEG –––– SEASEASEASEA ####1111

• PPPPPPPP –––– SEASEASEASEA ####1111

• MTBEMTBEMTBEMTBE –––– SEASEASEASEA ####1111

• ButanolButanolButanolButanol –––– SEASEASEASEA ####1111

• UreaUreaUreaUrea –––– SEASEASEASEA ####2222

• EthoxylatesEthoxylatesEthoxylatesEthoxylates –––– SEASEASEASEA ####2222

• PEPEPEPE ---- >>>> 1111 milmilmilmil MTPAMTPAMTPAMTPA capacitycapacitycapacitycapacity

1 SecureSecureSecureSecure &&&& competitivecompetitivecompetitivecompetitive feedstockfeedstockfeedstockfeedstock supplysupplysupplysupply

StrategicStrategicStrategicStrategic locationlocationlocationlocation inininin SEASEASEASEA totototo benefitbenefitbenefitbenefit fromfromfromfrom

FTAsFTAsFTAsFTAs (AFTA,(AFTA,(AFTA,(AFTA, ACFTA,ACFTA,ACFTA,ACFTA, ASEANASEANASEANASEAN ++++ 3333 &&&& 6666)))) &&&& closeclosecloseclose

totototo keykeykeykey growthgrowthgrowthgrowth marketsmarketsmarketsmarkets

FullyFullyFullyFully integratedintegratedintegratedintegrated facilitiesfacilitiesfacilitiesfacilities &&&& infrastructure,infrastructure,infrastructure,infrastructure,

largelargelargelarge scalescalescalescale &&&& diversifieddiversifieddiversifieddiversified productproductproductproduct portfolioportfolioportfolioportfolio

operatedoperatedoperatedoperated atatatat worldworldworldworld classclassclassclass levellevellevellevel

PortfolioPortfolioPortfolioPortfolio ofofofof longlonglonglong termtermtermterm highhighhighhigh valuevaluevaluevalue

customerscustomerscustomerscustomers withwithwithwith locklocklocklock----inininin positionpositionpositionposition

PortfolioPortfolioPortfolioPortfolio ofofofof customizedcustomizedcustomizedcustomized solutionssolutionssolutionssolutions totototo

generategenerategenerategenerate higherhigherhigherhigher salessalessalessales premiumpremiumpremiumpremium andandandand locklocklocklock----inininin

positionpositionpositionposition

2

3

5

+

4

Size

Mega-trends

� Population / middle class:Population / middle class:Population / middle class:Population / middle class:

• MEG MEG MEG MEG –––– ApparelsApparelsApparelsApparels

• Ethoxylates Ethoxylates Ethoxylates Ethoxylates –––– Personal carePersonal carePersonal carePersonal care

• Methanol Methanol Methanol Methanol –––– Fuel & Fuel & Fuel & Fuel &

constructionconstructionconstructionconstruction

• Urea Urea Urea Urea –––– Food Food Food Food

� Mobile populationMobile populationMobile populationMobile population

• PE PE PE PE –––– Food packagingFood packagingFood packagingFood packaging

• PP PP PP PP –––– EEVEEVEEVEEV

26

MARKET

OUTLOOK

27

2016 remains challenging with continued uncertainty in market conditions

Ethylene

Olefins & Derivatives

We expect stabilized market sentiment for O&D and bearish F&M prices on the back of crude oil price

uncertainties and supply & demand balance

Polymers

Aromatics

MEG

Heavy turnarounds in

North East Asia amidst

slow downstream

demand

Low buying interest

beginning Q3 and firm

thereafter to meet

seasonal demand

Firm polyester demand

despite potential excess

supply

Firm PTA & polyester

demand despite long

supply

UreaExcess supply and

sluggish demand

Fertilizers & Methanol

Methanol

Reliable supply at the

back of firm MTO

demand

AmmoniaExcess supply and

limited demand from

industrial application

28

� Sustain world class operational excellence• Maximise plant utilisation via effective asset management and

feedstock supply reliability

• Cost optimisation

• Maintain good HSE performance

� Extract more value through commercial excellence • Expand presence in key market segments

• Improve customer experience

• Optimise cost-to-serve

� Effective project delivery • Commercial operations of SAMUR, Aroma Ingredients Complex

• Project execution of 2-EH Acid, HR-PIB, RAPID petrochemicals

Focusing on execution in challenging environment

29

APPENDICES

30

PETRONAS Chemicals Group Berhad

100%

PETRONAS

Chemicals

Methanol

Sdn Bhd

100%

PETRONAS

Chemicals

Ammonia

Sdn Bhd

PETRONAS

Chemicals

Fertiliser

Sabah

Sdn Bhd

100%

PETRONAS

Chemicals

Fertiliser

Kedah

Sdn Bhd

100%

PETRONAS

Chemicals

Marketing

Sdn Bhd

100% 100%

Kertih Port

Sdn Bhd

100%

PETRONAS

Chemicals

Marketing

(Labuan) Ltd

100%

PETRONAS

Chemicals

MTBE

Sdn Bhd

100%

Polypro-

pylene

Malaysia

Sdn Bhd

100%

Vinyl

Chloride

(Malaysia)

Sdn Bhd

100%

PETRONAS

Chemicals

Derivatives

Sdn Bhd

100%

PETRONAS

Chemicals

Glycols

Sdn Bhd

100%

PETRONAS

Chemicals

Polyethylene

Sdn Bhd

(1) Wholly-owned subsidiary as remaining shareholding is held through other subsidiaries within PCG (1 share held by Polypropylene Malaysia Sdn Bhd & 1 share held by

PETRONAS Chemicals Marketing (Labuan) Ltd)

(2) Subsidiary pursuant to Malaysian Financial Reporting Standards 10

88%

PETRONAS

Chemicals

Olefins

Sdn Bhd

87.5%

PETRONAS

Chemicals

Ethylene

Sdn Bhd

70%

PETRONAS

Chemicals

Aromatics

Sdn Bhd

63.44%

ASEAN

Bintulu

Fertilizer

Sdn Bhd

PETRONAS

Chemicals

LDPE

Sdn Bhd

60%

0.01%

PCM Chemical

India Private

Limited (2)

40%

BASF

PETRONAS

Chemicals

Sdn Bhd

40%

Kertih

Terminals

Sdn Bhd

30%

Idemitsu

SM

(Malaysia)

Sdn Bhd

BP

PETRONAS

Acetyls

Sdn Bhd

30%20%

Malaysian

NPK

Fertiliser

Sdn Bhd

WhollyWhollyWhollyWholly----owned subsidiariesowned subsidiariesowned subsidiariesowned subsidiaries

PartlyPartlyPartlyPartly----owned Subsidiariesowned Subsidiariesowned Subsidiariesowned Subsidiaries

Joint ventures and associatesJoint ventures and associatesJoint ventures and associatesJoint ventures and associates

99.99% (1)

PCM

(Thailand)

Company

Limited

64.35%

100%

PCM (China)

Company

Limited

100%

PRPC

Polymers

Sdn Bhd

100%

PRPC

Glycols Sdn

Bhd

100%

PRPC

Elastomers

Sdn Bhd

PCG Corporate Structure

31

Significant experience in the petrochemical industry with proven track recordsSignificant experience in the petrochemical industry with proven track recordsSignificant experience in the petrochemical industry with proven track recordsSignificant experience in the petrochemical industry with proven track records

Datuk SazaliHamzah

Managing Director /

Chief Executive Officer

�More than 25 years

in the industry

� Led Corporate

Strategic Study on

enhancing plant

performance and

operational

excellence

� Previously

MD/CEO,

PETRONAS

Penapisan Melaka

Sdn. Bhd.

RashidahAlias

Chief

Financial Officer


experience, of which

18 years in the

industry

� Fellow of the Institute

of Chartered

Accountants in

Australia and New

Zealand and Member

of the Malaysian

Institute of

Accountants

� Previously Senior

General Manager of

Group Treasury in

PETRONAS

M Yusri M Yusof

Head of

Manufacturing

� Served PETRONAS

for the past 27 years

� Led the Process and

Technology

Department and

plant Technical

Services

� Previously plant

head, PETRONAS

Chemicals Olefins,

Glycols and

Derivatives Sdn.

Bhd.

Akbar Md Thayoob

Head of

Commercial


in the industry

� Involved in the

Peninsular Gas

Pipeline project and

the Lateral Gas

Pipeline System for

the country

� Previously Head,

Retail Division,

PETRONAS

Dagangan Berhad

Abdul Aziz Othman

Head of Strategic

Planning and

Ventures


in the industry.

� Been in various

planning and

strategic

development

positions within

PETRONAS.

� Previously CEO,

Vinyl Chloride

(Malaysia) Sdn. Bhd.

PCG Key Management

32

PlantPlantPlantPlant LocationLocationLocationLocation Nameplate CapacityNameplate CapacityNameplate CapacityNameplate Capacity

PETRONAS Chemicals PETRONAS Chemicals PETRONAS Chemicals PETRONAS Chemicals

Ethylene Ethylene Ethylene Ethylene SdnSdnSdnSdn BhdBhdBhdBhd

(1 plant)(1 plant)(1 plant)(1 plant)

Kertih 400,000 mtpa

ethylene


Polyethylene Polyethylene Polyethylene Polyethylene SdnSdnSdnSdn BhdBhdBhdBhd


Kertih 300,000 mtpa

HDPE/LLDPE and pipe grade PE


Olefins Olefins Olefins Olefins SdnSdnSdnSdn BhdBhdBhdBhd


Kertih 684,720 mtpa

ethylene and propylene


Derivatives Derivatives Derivatives Derivatives SdnSdnSdnSdn BhdBhdBhdBhd

(4 plants)(4 plants)(4 plants)(4 plants)

Kertih 410,000 mtpa

ethoxylates, ethanolamines, glycol

ethers, butanol, butyl acetate,

nonylphenol ethoxylates,

polyethylene glycol and polyalkaline

glycol


Glycols Glycols Glycols Glycols SdnSdnSdnSdn BhdBhdBhdBhd


Kertih 765,000 mtpa

ethylene oxide and ethylene glycols


LDPE LDPE LDPE LDPE SdnSdnSdnSdn BhdBhdBhdBhd


Kertih 255,000 mtpa

LDPE


Aromatics Aromatics Aromatics Aromatics SdnSdnSdnSdn BhdBhdBhdBhd


Kertih 687,700 mtpa

paraxylene and benzene


Ammonia Ammonia Ammonia Ammonia SdnSdnSdnSdn BhdBhdBhdBhd


Kertih 1,132,400 mtpa

ammonia, oxogas, and carbon

monoxide

BP PETRONAS Acetyls BP PETRONAS Acetyls BP PETRONAS Acetyls BP PETRONAS Acetyls

Sdn Bhd Sdn Bhd Sdn Bhd Sdn Bhd (1)(1)(1)(1)


Kertih 500,000 mtpa

acetic acid


BASF PETRONAS BASF PETRONAS BASF PETRONAS BASF PETRONAS

Chemicals Sdn Bhd Chemicals Sdn Bhd Chemicals Sdn Bhd Chemicals Sdn Bhd (1)(1)(1)(1)

3 complexes:

• Acrylics Complex

• Oxo-Alcohols/Syngas

Complex

• Butanediol complex

Gebeng 910,000 mtpa

crude acrylic acid, glacial acrylic

acid, butyl acrylate, 2-ethyl hexyl

acrylate, 2-ethylhexanol, butanols,

phtalic anhydride, palatinol,

butanediol)


MTBE MTBE MTBE MTBE SdnSdnSdnSdn BhdBhdBhdBhd

(2(2(2(2 plants)plants)plants)plants)

Gebeng 815,000 mtpa

MTBE, propylene, and n-butane


Methanol Methanol Methanol Methanol SdnSdnSdnSdn BhdBhdBhdBhd

(2 plants)(2 plants)(2 plants)(2 plants)

Labuan 2,331,000 mtpa

methanol

ASEAN Bintulu Fertiliser ASEAN Bintulu Fertiliser ASEAN Bintulu Fertiliser ASEAN Bintulu Fertiliser

Sdn Sdn Sdn Sdn BhdBhdBhdBhd


Bintulu 1,200,000 mtpa

urea and ammonia


Fertiliser Kedah Fertiliser Kedah Fertiliser Kedah Fertiliser Kedah SdnSdnSdnSdn BhdBhdBhdBhd


Gurun 1,149,700 mtpa

urea, ammonia, and methanol


FertiliserFertiliserFertiliserFertiliser Sabah Sabah Sabah Sabah SdnSdnSdnSdn BhdBhdBhdBhd

Project SAMUR under

construction

(1 plant)

Sabah 1,940,000 mtpa

urea and ammonia

Malaysian NPK Fertilizer Malaysian NPK Fertilizer Malaysian NPK Fertilizer Malaysian NPK Fertilizer

Sdn Sdn Sdn Sdn Bhd Bhd Bhd Bhd (1)(1)(1)(1)


Gurun 310,000 mtpa

NPK

IdemitsuIdemitsuIdemitsuIdemitsu Styrene Styrene Styrene Styrene

Monomer Malaysia Sdn Monomer Malaysia Sdn Monomer Malaysia Sdn Monomer Malaysia Sdn

Bhd Bhd Bhd Bhd (1)(1)(1)(1)


Pasir

Gudang

240,000 mtpa

styrene monomer

(1) Associate company

PCG Existing Production Capacity

33


PRPC Polymers PRPC Polymers PRPC Polymers PRPC Polymers SdnSdnSdnSdn BhdBhdBhdBhd Pengerang 1,750,000 mtpa

polypropylene, mLLDPE,

flexi-PE (under evaluation)

PRPC Glycols PRPC Glycols PRPC Glycols PRPC Glycols SdnSdnSdnSdn BhdBhdBhdBhd Pengerang 1,400,000 mtpa

ethylene oxide, MEG, DEG, TEG

PCG RAPID Petrochemical Projects Capacity

34

PC Fertiliser, Gurun

• Methane based

• Feedstock linked to

market pricesKertih IPC

• Mainly Ethane based(1)

• Feedstock in line with avg.

ME Ethane producers

3

1

2Gebeng IPC

• Propane & Butane based

• Feedstock linked to Saudi

Aramco CP

Peninsular Gas

Utilisation pipeline

network

Gas fields

and pipelines(illustrative)

ABF, Bintulu

• Methane based


market prices

PC Methanol, Labuan

• Methane based


market prices

Project SAMUR, Sipitang

• Methane based

• Feedstock linked to market

prices

6

Ethane (as feedstock)Ethane (as feedstock)Ethane (as feedstock)Ethane (as feedstock) Methane (as feedstock)Methane (as feedstock)Methane (as feedstock)Methane (as feedstock) Methane (as fuel gas)Methane (as fuel gas)Methane (as fuel gas)Methane (as fuel gas)

UseUseUseUse • By-product of gas separation

and processing

•Used in production of olefins

and its derivatives

• PCG is only user and customer

Raw material in production of

methane based products

Process (furnace), Utilities and

power generation

Pricing Pricing Pricing Pricing

volatilityvolatilityvolatilityvolatility• Broadly fixed prices in long

term, negotiated contracts

• Relatively low cost base

• Linked to end-product market

prices and moves accordingly-

margin protection

• Regulated prices

• Subject to removal of subsidy

and moving towards market

prices

(1) Other feedstock in Kertih IPC: Butane, Methane and Heavy Naphtha

5

4

Advantageous arrangements for gas feedstock

35

Robust margins from competitive feedstock supply

Source: IHS, July 2016

PCG

36

ShippingShippingShippingShipping

Days*Days*Days*Days*

MalaysiaMalaysiaMalaysiaMalaysia

(Kertih)(Kertih)(Kertih)(Kertih)

Middle EastMiddle EastMiddle EastMiddle East

(Jubail, Saudi Arabia)(Jubail, Saudi Arabia)(Jubail, Saudi Arabia)(Jubail, Saudi Arabia)

USA** USA** USA** USA**

(Houston, Louisiana)(Houston, Louisiana)(Houston, Louisiana)(Houston, Louisiana)

China (Xiamen)China (Xiamen)China (Xiamen)China (Xiamen) 6 days 19 days 37 days

Japan Japan Japan Japan

(avg. Shimizu, Sakai, Kobe, (avg. Shimizu, Sakai, Kobe, (avg. Shimizu, Sakai, Kobe, (avg. Shimizu, Sakai, Kobe,

Mizushima)Mizushima)Mizushima)Mizushima)

9 days 23 days 34 days

Taiwan (Kaohsiung)Taiwan (Kaohsiung)Taiwan (Kaohsiung)Taiwan (Kaohsiung) 6 days 19 days 37 days

Indonesia (avg. Surabaya, Indonesia (avg. Surabaya, Indonesia (avg. Surabaya, Indonesia (avg. Surabaya,

Semarang)Semarang)Semarang)Semarang)4 days 16 days 42 days

Thailand (Bangkok)Thailand (Bangkok)Thailand (Bangkok)Thailand (Bangkok) 3 days 16 days 43 days

Shipping ConsiderationsShipping ConsiderationsShipping ConsiderationsShipping Considerations

• Smaller ships and smaller

loads economically viable

• Less crowded routes

• More frequent vessels

• Only large ships to

maintain economies of

scale

• Potential delay through

crowded Straits of

Malacca

• Only large ships to

maintain economies

of scale

Source: sea-distances.org

* Assuming 12 knots/hr average cruising speed

** via Panama Canal

Close to key growth markets

Market Overview 2015-2016Ethylene, LDPE, Aromatics, Fertilisers &Methanol

37

600

800

1,000

1,200

1,400

1,600

USD/

USD/

USD/

USD/ m

tmt

mt

mt

Ethylene & LDPE Ethylene & LDPE Ethylene & LDPE Ethylene & LDPE

EthyleneEthyleneEthyleneEthylene

LDPELDPELDPELDPE

500

600

700

800

900

1,000

USD/

USD/

USD/

USD/ m

tmt

mt

mt

AromaticsAromaticsAromaticsAromatics

ParaxyleneParaxyleneParaxyleneParaxylene

BenzeneBenzeneBenzeneBenzene

100

200

300

400

500

600

USD/

USD/

USD/

USD/ m

tmt

mt

mt

FertilisersFertilisersFertilisersFertilisers & Methanol& Methanol& Methanol& Methanol

MethanolMethanolMethanolMethanol

UreaUreaUreaUrea

AmmoniaAmmoniaAmmoniaAmmonia

38

THANK YOU

For enquiries please contact us at:For enquiries please contact us at:For enquiries please contact us at:For enquiries please contact us at:

PETRONAS Chemicals Group Berhad

Level 14, Tower 1, PETRONAS Twin Towers

KUALA LUMPUR CITY CENTRE, 50088 KUALA LUMPUR, MALAYSIA

[email protected]

www.petronaschemicals.com.my

These presentations and/or other documents have been written and presented by PETRONAS Chemicals Group Berhad (“PCG”). PCG is solely responsible for the

accuracy and completeness of the contents of such presentations and/or other documents. J.P. Morgan does not have any responsibility for or control over the

contents of such presentations and/or other documents.

No endorsement is intended or implied notwithstanding the distribution of the presentations and/or other documents at J.P. Morgan’s Asia Pacific CEO-CFO

Conference 2016. The materials and information in the presentations and other documents are for informational purposes only, and are not an offer or

solicitation for the purchase or sale of any securities or financial instruments or to provide any investment service or investment advice.

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