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2017

Oil Field Chemicals

Saudi Aramco: Public


Disclaimer

The next slides contain forward-looking statements regarding future events based on current
expectations, estimates, forecasts, and projections. The data is subject to updating, revision, further
verification and amendment without notice. No reliance may be placed for any purpose on the
information or opinions contained in this presentation or any other document or statement, or on the
completeness, accuracy or fairness of such information or opinions therein. No representation or
warranty, express or implied, is made or given by or on behalf of Saudi Aramco or its employees, or
any other person as to the accuracy or completeness or fairness of the information or opinions
contained in this presentation and no responsibility or liability is accepted by any of them for such
information or opinions or for any errors, omissions, misstatements, negligent or otherwise, or for
any communication written or otherwise, contained or referred to in this presentation.

Saudi Aramco: Public


Your company can benefit from “the KSA advantage”

5
4 Government

2 3 World-class
support

1 Affordable
Skilled labor logistics
Funding
land & utilities
incentives

The KSA advantage

KSA is the largest Middle East market and one of the top 20 world economies

Source: Saudi Aramco analysis

Saudi Aramco: Public


Table of Content

■ Corrosion Inhibitors
■ Production chemicals
■ Drilling muds
■ Well Stimulation Fluids
■ Demulsifiers

Saudi Aramco: Public


Several opportunities, across manufacturing and services, exist for
corrosion inhibitors

Manufacturing/investment Opportunities
Employment1
Raw Materials Finished Products

Potential to develop local Potential for manufacturers of 140


plants for ethoxylates, input materials such as FTEs
copolymers, phosphonates and ethoxylates to integrate
amidoamines vertically into blending and
which are key end products for formulation of finished
final formulations products
GDP contribution1

Additional SME opportunities


Testing & Certification Logistics
$ 30
and transportation mn
1-2 SMEs (CBM, Testing and 1-2 SMEs (iso containers,
Inspection) flatbed trailers, trucks)

1. Employment and GDP figures are estimations based on NAICS code 212322; calculations based on 2025 demand
Source: Saudi Aramco Analysis

Saudi Aramco: Public


Corrosion Inhibitors are an important production chemical,
constituting ~20% of a large Middle Eastern OFS market
2014 Production chemicals for oil field applications
Global market segmentation (%) Middle East Market segmentation (%)

9% At a global
11%
5% 24% level, In the Middle
1%
demulsifiers East
6% 2%
9% and demulsifiers
40%
corrosion 7% and corrosion
inhibitors inhibitors
7%
command command
20% ~45% market 13% ~60% of an
8%
share of an ~130 ktpa
7% ~2million market
10% ton market 21%

Demulsifiers Scale inhibitors Other Demulsifiers Biocides Paraffin inhibitors


Corrosion Inhibitors H2S Scavenger Corrosion Inhibitors Scale inhibitors Gas well foamers
Water clarifiers Paraffin inhibitors Water clarifiers H2S Scavenger Other
Biocides Gas well foamers

Source: Saudi Aramco analysis, IHS Report: Specialty Chemicals Update program

Saudi Aramco: Public


Corrosion Inhibitors also have applications beyond oil field
chemicals such as water, power generation and processing
2014 Global Market Breakdown
By Application By Industry Sector

8%
6% In KSA,
9% largest
28% 11% 21%
consumers
10% of corrosion
12%
inhibitors are
oil & gas,
13%
metal
processing
30% and water
32% 20%
treatment

Inhibitors pH adjusters and Stabilizers Power generation Metal processing


Coagulants and Flocculants Anti-foaming agents Oil & gas Chemical processing
Biocides & Disinfectants Others Pulp & paper Others

Source: Saudi Aramco analysis, Technavio Market Research, RCJY report, Purolite Internacional and SRI reports

Saudi Aramco: Public


Corrosion inhibitor formulations comprise of several key input
materials in different proportions

Corrosion inhibitor chemicals covered in this value proposition

Fatty diamines
Copolymers
Polyoxyalkylated amines / alcohols (EO/PO based)
Quaternaries
Amidoamines

Corrosion Betaines
inhibitors Phosphate esters
Phosphonates
Acetylenic alcohols
Imidazolines
Quaternary ammonium salts
Alkyl pyridine

1. Formulation will be different based on manufacturer and end application


Source: IHS

Saudi Aramco: Public


The KSA Corrosion inhibitors market is expected to grow at 4%
annually reaching 23 KTPA in 2025
KSA corrosion inhibitors demand market size

Water Oil & gas


+4%

8
+7%
7 7
7
7 7
6 7
6
6
13
Volume 10 11 11
(‘000 MT) 8 8 9 9
6 7

2012 2013 2014 2015 2016 2017 2018 2019 2020 2025

Water value $30 $31 $32 $33 $34 $35 $36 $37 $38 $45
($ MM)

O&G Value $31 $31 $36 $39 $41 $45 $47 $54 $57 $75
($ MM)

Source: Saudi Aramco analysis, IHS Chemicals: specialty chemicals update program, GWI

Saudi Aramco: Public


Corrosion inhibitor market in ME for oil field applications is
expected to grow up to 41 Ktpa by 2025, at 4% CAGR
Oil field applications only
ME corrosion inhibitors expected market size evolution (‘000 Tons)

Rest of Middle East


KSA
41
4%
Both the ME
and KSA 28 28 29
30

markets are 28
expected to
grow at roughly 20 20
Volume 20 19
(KTPA)
the same pace,
with KSA
13
commanding 8 9 9 10
(32%)
(32%) (32%) (34%)
~30% of the ME (30%)
market 2016 2017 2018 2019 2025
Rest of ME
Value 143 146 155 162 245
($ MM)

KSA Value $45 $47 $54 $57 $75


($ MM)

Source: Saudi Aramco analysis, IHS Chemicals: specialty chemicals update program

Saudi Aramco: Public


Gaps across the value chain for corrosion inhibitors present
opportunities for SMEs
Corrosion inhibitors manufacturing value chain Low High

Tiering Tier-1/2/3

Chemical Solution packaging Transportation and Technical


Step Raw materials
synthesis & formulation logistics assistance

Localization
potential
• Raw materials of • Potential for local • 8 players in KSA already • Limited presence of • Technical
EO already facilities to approved for advanced assistance is part
localized at Sadara produce key formulation- limited maintenance and of contract with
value park synthesis products potential for new pure testing/inspection tier1’s
• Petroleum such as play blenders facilities • Potential exists
products e.g. ethoxylates , • Potential for new • Potential exists to for Tier 1’s
heavy naphtha copolymers, blending facilities to further develop further develop
already available phosphonates and cater to market growth logistics and supply additional local
Gaps amidoamines
locally and potential for chain capabilities such capabilities to
• Limited potential manufacturers of key as handle after
for additional raw chemicals to integrate - Long haul trucking sales requests
vertically (e.g. set up a
materials as - Iso containers
several other • Limited presence of toll vocational
- Loading and institute)
products are blenders warehousing
proprietary

Source: Saudi Aramco analysis

Saudi Aramco: Public


No synthesis products are currently produced in Kingdom,
however raw material such as EO/PO are readily available
Raw materials used in the synthesis of corrosion inhibitors Not Exhaustive

Chemical(s) Current KSA production EO/PO ✓


Fatty diamines  Available
Copolymers 
Polyoxyalkylated and ethoxylated
amines / alcohols 
Quaternaries 
Amidoamines  EO and PO are key raw
Betaines  materials for several
Phosphate and polymeric esters  synthesis products
Phosphonates  necessary for corrosion
inhibitors- these are
Acetylenic alcohols  readily available from
Imidazolines  Sadara
Quaternary ammonium salts 
Alkyl pyridine 
Source: Saudi Aramco

Saudi Aramco: Public


SMEs have an opportunity to enhance logistics across the value
chain
Corrosion inhibitors and logistics value chain
Supplier Key features SME opportunities

• Corrosion inhibitors can be stored in drums, with a • Offer customized on-site logistics
capacity of ~13,000L, or in iso-tanks, with a • Supplying iso-containers, conveyer belts, and drums
Loading capacity of ~24,000L • Drive loading operations

• Corrosion inhibitors can be transported in one of two • Enhance value offering via reduced turnaround times
ways: • Transport corrosion inhibitors via tank, drums, or iso-
Transportin – Tank, drum, or iso-tank storage and transported on tanks
g cargo trailers, van trailers or flatbed trailers • Provide trucking for the transportation of corrosion
– Pumping stations along a pipeline inhibitors

• Pumping, monitoring, and measuring equipment • Offer state of the art monitoring and measuring
required to ensure smooth operations systems
Terminal
operations & • To control liquid flow and output to the storage tanks or • Supplying advanced storage facilities such as tanks
storage the well site, different pressure pumps are used and drums
• To manage high volume of corrosion inhibitor transfer,
manifold trailers are used

Saudi Aramco currently manages its own corrosion inhibitor logistics and
transport and is willing to consider credible 3PL to provide additional services
Source: Saudi Aramco

Saudi Aramco: Public


Gaps across the value chain for corrosion inhibitors present
opportunities for SMEs
Corrosion inhibitors manufacturing value chain
Tiering Tier-1/2/3

Chemical Solution packaging Transportation and Technical


Step Raw materials
synthesis & formulation logistics assistance

1. Potential for 2. Potential for 3. Potential for 1-2 5. Offer customized 8. Partner with
SMEs to liaise players to set additional on-site logistics leading
with leading up 1-2 formulation 6. Provide enhanced players to
producers facilities to facilities for value offering via establish
and make produce key corrosion inhibitors reduced vocational
niche raw synthesis to cater to existing turnaround times and training
materials products from demand as well as 7. Offer state of the facilities to
Opportunities required for EO/PO raw future growth in art monitoring train local
synthesis material such demand and managing staff in
(beyond as ethoxylates 4. Potential for systems technical
EO/PO) additional local toll assistance
blending facilities

Source: Saudi Aramco analysis

Saudi Aramco: Public


Next steps: Please direct all inquiries to

Khazisyed Ahmedjeelani
Industrial development department
Saudi Aramco
Khazisyed.ahmedjeelani@aramco.com

We invite you to engage with the iktva program


and grow your business in Saudi Arabia

Saudi Aramco: Public


Table of Content

■ Corrosion Inhibitors
■ Production chemicals
■ Drilling muds
■ Well Stimulation Fluids
■ Demulsifiers

Saudi Aramco: Public


Key opportunities for localization – Other production chemicals

Input chemicals and Blending and Logistics and


materials formulation supply chain

• Vertically integrate • Provide handling services


Opportunity

• Establish local production production of input e.g. drums and iso


of key input materials1 materials and develop containers
e.g. polyacrylamide, blending facilities • Provide transportation
polyacrylates and non ionic and loading e.g. flatbed
surfactants • Establish local toll trailers and manifold
blending facilities trailers

• No local production of • Additional demand of ~8 • Demand for 40-60


these raw materials in KSA ktpa in KSA and ~42 ktpa additional iso tanks and
Rationale

• Diverse applications in Middle east by 2025 drums by 2025


beyond oil field chemicals • Opportunity for raw • Demand for ~2-4
(e.g. surfactants) material manufacturers additional flatbed and
to integrate and capture manifold trailers by 2025
market share
• Limited presence of local
toll blenders
1. Composition and demand to be determined after discussion with leading players
Source: Saudi Aramco analysis

Saudi Aramco: Public


Other production chemicals compose of several products, each
composed of different formulations of input materials
Typical production chemicals (excl. demulsifiers and corrosion inhibitors)
Middle East breakdown (2016)
Water clarifiers

Formaldehyde 18%
free biocides 27% Biocides is the
dominant segment
Scale inhibitors in the Middle East,
with a volume of 17
Production H2S Scavenger 4% Ktpa over the total
chemicals 2%
33% market volume of
Paraffin 51 Ktpa
16%
inhibitors

Gas Well
Foamers Water Clarifiers Scale Inhibitors Paraffin Inhibitors
Biocides (organic) H2S Scavenger Other
Other
(excl. demulsiifer and
corrosion inhibitor)

1. Formulation will be different based on manufacturer and end application


Source: IHS

Saudi Aramco: Public


Other production chemicals is expected to grow at 5% annually
until 2030, reaching 103 Ktpa in Middle East
ME Other production chemicals expected market size evolution (‘000 Tons)

Rest of Middle East


KSA
103

5%
78
Expected market size
in 2030 will be ~2X 70
55 54 57
the current market 53
size
38 37 37

33
20 25
17 18

2016 2017 2018 2025 2030

Production chemicals category is expected to grow hand in hand with drilling


fluids consumption in Middle East

Source: Saudi Aramco analysis, CDSI, I..S report: specialty chemicals program

Saudi Aramco: Public


While some raw materials are available, potential exists to
manufacture several others locally
Not Exhaustive

Water clarifiers
Polyamines ✓ (Jubail)
Polyacrylamides 

Formaldehyde Quaternary phosphonium  (Yanbu)


free biocides Glutaraldehyde  (Jubail)

Phosphonates   Polyvinyl sulfonates


Scale inhibitors Phosphate esters ✓ (Ras Al-Khair) ✓ Co-polymers
Polyacrylates 
Triazines 
H2S Scavenger Amines ✓ (Jubail)
Ethanolamine ✓
Paraffin
inhibitors Aminealkylaryl sulfonates 
(Jubail) (Jubail)
Ammonium ether sulfates 
Gas Well Alphaolefin sulfonates ✓
Foamers Alkyl naphthalene
sulfonates 
MEG/TEG ✓  Nonionic surfactants
Other Phosodium nitrite 
Anionic surfactants 

Raw materials such as polyacrylamide, anionic surfactants and sulfonates


have several other applications and have potential for local production
Source: Saudi Aramco

Saudi Aramco: Public


Several opportunities exist for local players to enhance logistics
and transportation for production chemicals
Requirements and gaps Opportunities
Loading • Offer customized on-site logistics
40-60 additional iso • Be a supplier of iso containers and
containers (24,000 liter drums
capacity)1 and/or drums • Drive loading operations (Aramco
(13,000 liter) by 2025 currently manages its own operations)

Transportation • Enhance value offering via reduced


turnaround times
2-4 additional flatbed trailers • Be a supplier of transportation
(TEU) by 2025 equipment (e.g. flatbed trucks)
• Drive transportation operations (Aramco
currently manages its own operations)

Terminal ops
2-4 additional manifold • Offer state of the art monitoring and
trailers (TEU) by 2025 measuring systems
Limited monitoring in place • Supply manifold trailers as a part of a
larger portfolio

1. Assuming iso containers are replaced every 2 weeks


Source: Saudi Aramco analysis

Saudi Aramco: Public


Key conclusions and next steps

Key conclusions
In case you are interested in discussing this
✓ Consumption of other production chemicals opportunity further, please contact
in KSA nd ME is expected to increase by ~8
ktpa and 23 in 2025 respectively driving
opportunities for additional local blending
✓ Limited presence of toll blenders in KSA Khazisyed Ahmedjeelani
presents an opportunity for local players Industrial Development Department

✓ Several chemicals essential to other Saudi Aramco


production chemicals can be localized in KSA Khazisyed.ahmedjeelani@aramco.com
e.g. polyacrylamide, polyacrylates and non
ionic surfactants
✓ Local players can also supply key equipment
and services to enhance logistics and supply
chain, for instance players can offer flatbed
trucking, iso containers, drums and manifold
trailers

Source: Saudi Aramco analysis

Saudi Aramco: Public


Table of Content

■ Corrosion Inhibitors
■ Production chemicals
■ Drilling muds
■ Well Stimulation Fluids
■ Demulsifiers

Saudi Aramco: Public


Key opportunities for localization – Drilling muds
Input chemicals and Blending and Logistics and Disposal and after sales
materials formulation supply chain

• Provide trucking • Provide disposal


Opportunity

• Establish local services especially services for stimulation


• Establish additional
production of key flatbed trucks chemicals
blending facilities
input materials e.g. • Provide storage and • Provide inspection,
PAC, guar gum, • Establish local toll loading equipment maintenance and after
premium lubricants and blending facilities (conveyor units, sales
cross linking agents jumbo bags etc.)

• Growth of ~6% CAGR • Additional demand of • Demand for ~10 • More stringent
in drilling muds will drive ~50 ktpa in KSA and additional flatbed environmental
Rationale

growth in raw materials ~130 ktpa in Middle trailers till 2025 regulations (GAMEP)
• Diverse applications east by 2025 • Demand for ~14 • ~50 ktpa additional
beyond oil field • Limited presence of additional mobile consumption in KSA
chemicals (e.g. binders, local toll blenders conveyor units and by 2025 will require
food industry) 30,000 jumbo bags by additional disposal
2025

1. Composition and demand to be determined after discussion with OFS players


Source: Saudi Aramco analysis

Saudi Aramco: Public


Going forward, we expect a growth of 6% CAGR in drilling muds,
with KSA accounting for ~30% of Middle East demand
ME drilling muds expected market size evolution1 (KTPA, $MM)

Rest of Middle East KSA 2,208

6%

• Growth in drilling 1,334 1,392


1,266 1,272 1,591
fluids will be driven
by both increased
production (~20% 912 945
Value 920 902
increase expected ($ MM)

across Middle East) 618


and increased well 345 370 423 447
(28%)
(27%) (29%) (32%) (32%)
activity.
• Increase in drilling 2016 2017 2018 2019 2025
activity expected to Rest of ME
take off post 2019 Volume 277 267 264 269 401
(KTPA)

KSA
Volume 104 110 123 127 156
(KTPA)

1. Excludes minerals such as barite, bentonite, hematite, lignite and calcium carbonate
Source: Saudi Aramco analysis, IHS Chemicals: specialty chemicals update program

Saudi Aramco: Public


Several raw materials required for formulations are not available in
KSA- opportunity exists for new players
Not Exhaustive
Drilling muds raw material availability
Chemicals available in KSA Chemicals limited/not available in KSA
Sodium and calcium Primary and secondary emulsifiers

Potential localization opportunity1


chloride
Xanthanum gum
Processed
barite Polyionic cellulose (PAC)

Anionic
HT thinner
polyelectrolytes

Diesel/LAO/ Premium lubricants for drilling


Lubricants
Cross linking agents
Calcium
carbonate Guar gum

Chemical synthesis compounds like guar gum and emulsifiers have diverse
applications beyond drilling muds
1. Actual volumes to be determined based on discussion with OFS players. Demand for PAM ~50 ktpa across water treatment appli cations
Source: Press research, Saudi Aramco analysis

Saudi Aramco: Public


Several opportunities exist for local players to enhance logistics
and transportation for drilling muds
Requirements and gaps Opportunities
Loading • Offer customized on-site logistics
14 additional mobile • Be a supplier of loading equipment
conveyor units and sand (e.g. mobile conveyor units)
kings (25 MT) by 2025 • Drive loading operations (Aramco
currently manages its own operations)

Transportation • Enhance value offering via reduced


10 additional flatbed trailers turnaround times
(TEU) by 2025 • Be a supplier of transportation
Long existing lead times equipment (e.g. flatbed trucks)
making planning difficult • Drive transportation operations (Aramco
currently manages its own operations)

Terminal ops • Offer state of the art monitoring and


30,000 additional jumbo measuring systems
bags (1.5 MT) in 2025
• Supply advanced storage facilities such
Limited monitoring in place as mobile silos
Limited use of advanced • Offer palletized package well stimulation
eqpt. like mobile silos fluids (jumbo bags)
Source: Saudi Aramco analysis

Saudi Aramco: Public


Key conclusions and next steps

Key conclusions
In case you are interested in discussing this
opportunity further, please contact
✓ Consumption of drilling fluids in KSA is
expected to increase by ~50 ktpa in 2025
driving opportunities for additional local
blending and additional players for disposal
Khazisyed Ahmedjeelani
✓ Limited presence of toll blenders in KSA
presents an opportunity for local players Industrial Development Department
Saudi Aramco
✓ Several chemicals essential to drilling muds
can be localized in KSA e.g. PAC, guar gum, Khazisyed.ahmedjeelani@aramco.com
premium lubricants and cross linking agents
✓ Local players can also supply key equipment
and services to enhance logistics and supply
chain, for instance players can offer flatbed
trucking, mobile conveyor units and jumbo
sacks

Source: Saudi Aramco analysis

Saudi Aramco: Public


Table of Content

■ Corrosion Inhibitors
■ Production chemicals
■ Drilling muds
■ Well Stimulation Fluids
■ Demulsifiers

Saudi Aramco: Public


Key opportunities for localization - Well Stimulation Fluids
Input chemicals and Blending and Logistics and Disposal and after sales
materials formulation supply chain

• Provide trucking • Provide disposal


Opportunity

services especially services for stimulation


• Establish additional
• Establish local flatbed trucks chemicals
blending facilities
production of key • Provide storage and • Provide inspection,
input materials e.g. • Establish local toll loading equipment maintenance and after
PAM, HF and borates1 blending facilities (conveyor units, sales
jumbo bags etc.)

• Growth of ~8% CAGR • Additional demand of • Demand for ~25 • More stringent
in well stimulation fluids ~160 ktpa in KSA and additional flatbed environmental
Rationale

~400 ktpa in Middle trailers till 2025 regulations (GAMEP)


• Diverse applications
east by 2025 • Demand for ~40 • ~160 ktpa additional
beyond oil field
chemicals (e.g. water • Limited presence of additional mobile consumption in KSA
treatment) local toll blenders conveyor units and by 2025 will require
100,000 jumbo bags additional disposal
by 2025

1. Composition and demand to be determined after discussion with OFS players


Source: Saudi Aramco analysis

Saudi Aramco: Public


The market in the Middle East is expected to grow at ~8% CAGR, with
KSA commanding ~30% market share

ME well stimulation agents expected market size evolution (‘000 Tons)

Rest of Middle East KSA


652

8%
• KSA expected to
grow in line with 462
363 377
the rest of the 337 340
ME, and is
expected to Value 242 248
($mm) 237 234
account for
~30% of the 190
100 107 121 129 (29%)
market (33%) (34%)
(30%) (31%)
• Strong market
growth expected 2016 2017 2018 2019 2025
after 2019 Rest of ME
volume 670 648 656 660 1093
(KTPA)

KSA volume 282 295 330 344 449


(KTPA)

Source: Saudi Aramco analysis, IHS Chemicals: specialty chemicals update program, Rystad

Saudi Aramco: Public


Several raw materials required for formulations are not available in
KSA- opportunity exists for new players
Well stimulation fluids raw material supplier companies
Chemicals available in KSA Chemicals limited/not available in KSA
Hydrofluoric acid

Potential localization opportunity1


Hydrochloric acid
Ammonium bio fluoride/ methyl formate

Formic acid Enzymes

Polyacrylamide (PAM)

Acetic acid Triethanolamine titanite

Organoborates
Aluminum
Chromium and Zirconium processing

Chemical synthesis compounds like PAM and hydrofluoric acid acid have
diverse applications beyond well stimulation fluids
1. Actual volumes to be determined based on discussion with OFS players. Demand for PAM ~50 ktpa across water treatment appli cations
Source: Press research, Saudi Aramco analysis

Saudi Aramco: Public


Several opportunities exist for local players to enhance logistics
and transportation for well stimulation fluids
Requirements and gaps Opportunities
Loading • Offer customized on-site logistics
40 additional mobile • Be a supplier of loading equipment
conveyor units and sand (e.g. mobile conveyor units)
kings (25 MT) by 2025 • Drive loading operations (Aramco
currently manages its own operations)

Transportation • Enhance value offering via reduced


25 additional flatbed trailers turnaround times
(TEU) by 2025 • Be a supplier of transportation
Long existing lead times equipment (e.g. flatbed trucks)
making planning difficult • Drive transportation operations (Aramco
currently manages its own operations)

Terminal ops • Offer state of the art monitoring and


100,000 additional measuring systems
jumbo bags (1.5 MT) by 2025
• Supply advanced storage facilities such
Limited monitoring in place as mobile silos
Limited use of advanced • Offer palletized package well stimulation
eqpt. like mobile silos fluids (jumbo bags)
Source: Saudi Aramco analysis

Saudi Aramco: Public


Key conclusions and next steps

Key conclusions
In case you are interested in discussing this
opportunity further, please contact
✓ Consumption of well stimulation fluids in KSA
is expected to increase by ~160 ktpa in 2025
driving opportunities for additional local
blending and additional players for disposal
Khazisyed Ahmedjeelani
✓ Limited presence of toll blenders in KSA
presents an opportunity for local players Industrial Development Department
Saudi Aramco
✓ Several chemicals essential to well
stimulation fluids can be localized in KSA e.g. Khazisyed.ahmedjeelani@aramco.com
PAM, Organoborates, Hydrogen fluoride
✓ Local players can also supply key equipment
and services to enhance logistics and supply
chain, for instance players can offer flatbed
trucking, mobile conveyor units and jumbo
sacks

Source: Saudi Aramco analysis

Saudi Aramco: Public


Table of Content

■ Corrosion Inhibitors
■ Production chemicals
■ Drilling muds
■ Well Stimulation Fluids
■ Demulsifiers

Saudi Aramco: Public


Key opportunities for localization – Demulsifiers

Input chemicals and materials Blending and Logistics and


formulation supply chain

Opportunity

• Vertically integrate production of • Provide handling services e.g.


• Establish local production of key input materials and develop drums and iso containers
input materials1 e.g. ethoxylates, blending facilities • Provide transportation and
alkylated phenols, alkoxylated
resins and block copolymers • Establish local toll blending loading e.g. flatbed trailers and
facilities manifold trailers

• No local production of these raw • Additional demand of ~8 ktpa in • Demand for 20-30 additional iso
materials in KSA KSA and ~23 ktpa in Middle east tanks and drums by 2025
Rationale

• Diverse applications beyond oil by 2025 • Demand for ~1 additional flatbed


field chemicals (e.g. surfactants) • Opportunity for raw material and manifold trailers by 2025
manufacturers to integrate and
capture market share
• Limited presence of local toll
blenders

1. Composition and demand to be determined after discussion with leading players


Source: Saudi Aramco analysis

Saudi Aramco: Public


The demulsifiers market in ME is expected to grow at ~7% CAGR,
with KSA commanding ~35% market share
ME demulsifiers expected market size evolution (KTPA, $mm)

Rest of Middle East KSA


238

7%

KSA and ME are 149 162


141
128 131
expected to grow at
roughly the same 92 97
Value 88 88
growth rate going ($ MM)
76
forward to 2025; with 40 43 49 52 (32%)
(35%) (35%)
KSA’s market share (31%) (33%)
remaining roughly 2016 2017 2018 2019 2025

constant at ~35% Rest of ME


55 $896.
55 $965. $1,04 $1,22
$xxx 57 59 78
Volume 4 3 2 3
(KTPA)

KSA $896. $965. $1,04 $1,22


Volume 17
$xxx 18 20 21 25
4 3 2 3
(KTPA)

Source: Saudi Aramco analysis, IHS Chemicals: specialty chemicals update program

Saudi Aramco: Public


Several raw materials required for formulations are not available in
KSA- opportunity exists for new players
Not Exhaustive
Demulsifiers raw material availability
Chemicals available in KSA Chemicals limited/not available in KSA
Alkoxyalkylated resins with low- or high
Polyglycol esters

Potential localization opportunity1


oxide content
and ethers
Oxyalkylated phenols

Sulfonates
Oxyalkylated polyamines

Polymerized oils Alkanolamine condensation products


and esters
Oxyalkylated polyglycols
Polymerized
Block copolymers (EO/PO ; polyol block
polyglycols
etc.)

EO/PO, which is key to several products is readily available in Sadara; select


products like alkoxylates and copolymers also have application in surfactants
1. Actual volumes to be determined based on discussion with OFS players. Demand for PAM ~50 ktpa across water treatment appli cations
Source: Press research, Saudi Aramco analysis

Saudi Aramco: Public


Several opportunities exist for local players to enhance logistics
and transportation for demulsifiers
Requirements and gaps Opportunities
Loading • Offer customized on-site logistics
20-30 additional iso • Be a supplier of iso containers and
containers (24,000 liter drums
capacity)1 and/or drums • Drive loading operations (Aramco
(13,000 liter) by 2025 currently manages its own operations)

Transportation • Enhance value offering via reduced


turnaround times
1-2 additional flatbed trailers • Be a supplier of transportation
(TEU) by 2025 equipment (e.g. flatbed trucks)
• Drive transportation operations (Aramco
currently manages its own operations)

Terminal ops
1-2 additional manifold • Offer state of the art monitoring and
trailers (TEU) by 2025 measuring systems
Limited monitoring in place • Supply manifold trailers as a part of a
larger portfolio

1. Assuming iso containers are replaced every 2 weeks


Source: Saudi Aramco analysis

Saudi Aramco: Public


Key conclusions and next steps

Key conclusions
In case you are interested in discussing this
✓ Consumption of demulsifiers in KSA nd ME is opportunity further, please contact
expected to increase by ~8 ktpa and 23 in
2025 respectively driving opportunities for
additional local blending
✓ Limited presence of toll blenders in KSA Khazisyed Ahmedjeelani
presents an opportunity for local players Industrial Development Department

✓ Several chemicals essential to demulsifiers Saudi Aramco


can be localized in KSA e.g. ethoxylates , Khazisyed.ahmedjeelani@aramco.com
alkylated phenols, alkoxylated resins and
block copolymers
✓ Local players can also supply key equipment
and services to enhance logistics and supply
chain, for instance players can offer flatbed
trucking, iso containers, drums and manifold
trailers

Source: Saudi Aramco analysis

Saudi Aramco: Public

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