Markaaz Sector Report 2014

K
KSA P
Petroch
hemiccals
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Waning l cosst advanttage
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Res
search Hiighlights
Anaalysis of KS
SA’s petrocchemical se
ector highlighting gro
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driv d future outlook for
the industry
 MARKAZ SECTOR RESEARCH
Saudi Arabia Petrochemicals - August 2014

Research

M.R. Raghu CFA, FRM | Head of Research

rmandagolathur@markaz.com

N.C. Karthik Ramesh | Manager– Research

KRamesh@markaz.com

Rakesh Khanna | Research Analyst

rkhanna@markaz.com

Ajay Samuel | Intern

Support

Jenevivu Lasrado | Executive Secretary, Research

jlasrado@markaz.com

Nael Aboul Huda | Manager, Media & Communications

naboulhuda@markaz.com

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 MARKAZ SECTOR RESEARCH
Saudi Arabia Petrochemicals - August 2014

Table of Contents
1. Executive Summary .................................................................................... 6

2. Saudi Arabia Petrochemical Sector Overview........................................... 10

Importance of the Saudi Arabia petrochemical sector in the country .................... 11

Petrochemical and refining integration ............................................................... 12

Diversification into other allied sectors ............................................................... 13

Strategy plan for 2002-2020 ............................................................................. 15

3. Sector Analysis .......................................................................................... 17

Number of companies, production in terms of volume, value .............................. 17

Market Share Estimation ................................................................................... 21

4. Major Players in the GCC Region .............................................................. 23

Domestic Market Leaders .................................................................................. 23

Saudi Basic Industries Corporation (SABIC) ........................................................ 23

Saudi Arabian Fertilizer Company (SAFCO) ......................................................... 28

Yanbu Petrochemical Company (YANSAB) .......................................................... 32

Joint Ventures with Major International Players .................................................. 36

5. Outlook for the Sector/Key Trends ........................................................... 37

Use of technology in the industry ...................................................................... 37

Integration of refining and petroleum for mitigation of risk ................................. 39

Competition within the GCC .............................................................................. 40

Shift towards heavier feed stock........................................................................ 41

6. Price trends and Outlook .......................................................................... 43

Prices of feed stock .......................................................................................... 43

Prices of petrochemicals ................................................................................... 44

7. Growth Drivers .......................................................................................... 46

Emergence of Joint Ventures in the Gulf region .................................................. 46

Increasing Demand in the Asian markets ........................................................... 46

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 MARKAZ SECTOR RESEARCH
Saudi Arabia Petrochemicals - August 2014

Cost Advantage ................................................................................................ 48

Government Support ........................................................................................ 49

Recovery from the Global crisis ......................................................................... 50

Increasing markets for main by-products ........................................................... 51

8. Challenges ................................................................................................. 58

Anti-Dumping charges ...................................................................................... 58

Reducing Availability of gas feed stock............................................................... 58

Development of Shale Gas Technologies ............................................................ 59

Implementation problems in Integration of Refining and Petrochemicals .............. 60

Volatility in prices ............................................................................................. 61

9. Regulatory Aspect ..................................................................................... 62

International regulations relating to the environment.......................................... 62

Rules and regulations in Saudi Arabia that will impact the sector’s functioning ..... 63

10. SWOT Analysis of the Industry ................................................................. 65

Appendix 1: Petrochemical Industry Process cycle ............................................ 66

Appendix 2: Glossary ........................................................................................... 67

Appendix 3: GCC Petrochemical Companies ....................................................... 69

Appendix 4: Saudi Arabian Petrochemical Companies........................................ 70

Appendix 5: Top 20 Saudi Arabian Petrochemical Projects by value.................. 72

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 MARKAZ SECTOR RESEARCH
Saudi Arabia Petrochemicals - August 2014

Tables and Charts

Tables Charts
Major petrochemical companies in Saudi Saudi Arabia – Contribution to GDP by main
3.1 2.1
Arabia economic activities in 2012 (in %)
Global Chemical sales revenue by region Saudi Arabia – Break Up of Manufacturing GDP
3.2 (Billion USD) 2.2
by Sub-Sectors during 2008 – 2012 (in %)
GCC Non-Oil Export in 2012(in Billion US
4.1 Financials 2.3
Dollars)
Petrochemicals & Chemical exports as a % of
4.2 Risk Metrics 2.4 total non-oil exports in GCC Countries in 2012
Capacity of Basic Petrochemical production
4.3 Financials 3.1
during 2008-12 (in Million tons)
CAGR of Basic Petrochemical capacity from
4.4 Risk Metrics 3.2
2008-2012 (in %)
Average Capacity Utilisation of petrochemicals
4.5 Yanbu’s Output Capacity 3.3
sector from 2008-2012 (in %)
Chemicals Export Growth of Saudi Arabia
4.6 Financials 3.4
2002-2012 (in million tons)
Workforce Nationalization in Chemical
4.7 Risk Metrics 3.5
Industry 2012 (in %)
GCC Petrochemicals & Chemicals capacity Share of GCC Countries from Overall chemical
5.1 3.6
(MTPA) Sales Revenues in 2012 (in %)
Platts Global Petrochemical Index in Dollars Annual Revenue of SABIC 2008-13 (in Million
6.1 4.1
per Metric Ton USD)
Price of petrochemicals in US Dollars/Metric
6.2 4.2 Net Margin of SABIC 2008-13 (in %)
Tons
Natural Gas Price Estimates across the world
7.1 4.3 ROE of SABIC during 2009-13 (in %)
(in USD/MMbtu)
Annual Revenue of SAFCO 2008-13 (in Million
Charts (Contd) 4.4
USD)
GCC Chemicals Export by Destination in 2012
7.1 4.5 Net Margins of SAFCO 2008-13 (in %)
(in %)
7.2 Paints Demand growth (in %) 4.6 ROE of SAFCO during 2008-12 (in %)
Fertilizers Production Capacity of GCC Annual Revenue of YANSAB 2010-13(in Million
7.3 4.7 USD)
countries in 2012 (in million tons)
GCC Chemicals Sales Revenue by Segment,
7.4 4.8 Net Margin of YANSAB 2010-13 (in %)
2012 (in %)
GCC Polymer Exports by Country in 2007 and
7.5 4.9 ROE of YANSAB during 2008-13 (in %)
2012 (in %)
Greater China Light Vehicle Sales (2005-2012 Basic Petrochemical Exports by Value from
7.6 5.1 GCC (in Billion USD) in 2012
in Millions of Units)
Top Shale Gas Reserve holders in the World Yearly Average Naphtha Prices in Europe
8.1 6.1 during 2009-2013 (in USD per tonne)
(in Trillion cubic metres)
Price trends of Brent Crude (in USD / barrel) Global Yearly Natural Gas Spot Prices (in
8.2 6.2
Dollars per MMBtu)

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 MARKAZ SECTOR RESEARCH
Saudi Arabia Petrochemicals - August 2014

 
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