Vision To be a leading global manufacturer and marketer of hydrocarbon and metal products. To provide distinctive high quality industrial products and services to our customers, meeting the expectations of our shareholders through optimum utilization of our available human and natural resources together with the use of state-of-the-art technology - maintaining safe and environmentally sound practices . Mission
Established in September 1976 to spearhead Saudi Arabia’s industrialization beyond oil.
One of the top 10 diversified chemical companies in the world.
Produces and markets globally superior quality chemicals, fertilizers, polymers, fibers and metals to more than 100 countries.
A family of 18 world-scale industrial complexes in Saudi Arabia, two complexes in Netherlands and Germany, and interests in offshore industrial ventures.
SABIC Today (Contd.)
International recognition and awards for being amongst the safest in the industrial sectors in which we compete.
Largest industrial R&T complex in the Middle East.
Provides high-level customer services through 12 international affiliates and our European operations.
Shared Services Petrochemical Coordination Fertilizers Metals Basic Chemicals Inter-mediates Poly-olefins PVC & Polyester Strategic Business Units Vice Chairman Finance Control R& T HR Corp. Core SABIC Organization
Production Growth (Million Metric tons)
Productivity per Employee (per Metric tons)
Sales Volume (Million Metric tons)
Sales Revenue (Billion US Dollars)
Total Assets (Billion US Dollars)
Metals Intermediates Fertilizers Polyolefins PVC & Polyester Basic Chemicals Total Production 12% 8% 18% 44% 2% 16%
The World of SABIC SABIC 100% SABIC 100% SABIC 100% SABIC 75% Pension General Organization 15% General Organization for Social Insurance 10% SABIC 100% SABIC 100% SABIC 90% Fobak 10% SABIC 41% SAFCO Employees 10% Private SAFCO and Al-Jubail Shareholders 49% SABIC 50% Al-Jubail Chemical Fertilizer Co. Taiwan Fertilizer Company 50% SABIC 57.17% Private Sector 42.83%
The World of SABIC SABIC 50% Exxon Mobil 50% SABIC 50% Exxon Mobil 50% SABIC 70% Neste Oy-Finland 10% Ecofuel-Italy 10% Saudi-European Petrochemical Co. Arab Petroleum Investment Corporation APICORP 10% SABIC 50% Celanese 25% Duke Energy 25% SABIC 50% SAFCO National Chemical Fertilizer Co. 50% SABIC 50% Shell Oil Co 50% SABIC 70% National Industrial Gases Co. and Yanbu Industrial Gases 30% SABIC 50% Japanese Eastern Petrochemical Company led by Mitsubishi Corporation 50% SABIC 50% Japanese companies led by Mitsubishi Gas Chemical Co. 50% SABIC 51.7% 15 Saudi Arabian and Regional Arabian Industrial Fibers Co Private Sector partners 48.3%
Vital statistics Ethylene Secular growth: ~4% Global capacity: 250 bn lbs/yr Average revenues: $55 bn Average EBITDA: $20 bn Estimated value: $90 bn Natural state: Gas Propylene* Secular growth: ~5% Global capacity: 125 bn lbs/yr Average revenues: $25 bn Natural state: Gas * for chemical uses Collectively 6% of global chemical sales; closer to 15% in terms of major downstream (derivative) product equivalents Source: Goldman Sachs Research, SRI 1
What does it cost to build plants from scratch? Costs for greenfield builds:
Brownfields range from 70%-85% of greenfields
Debottlenecks range from 30%-60% of brownfields
Source: Chemical Data, Goldman Sachs Research
What’s downstream? Ethylene Propylene The growth disconnect: Polypropylene (PP) is outpacing polyethylene (PE) by about 150 bps Source: Goldman Sachs Research, CMAI
Where do they show up eventually? Ethylene PE: Packaging (shrink wrap, tupperware), fabricated parts (buckets, trash cans, pipes), wire and cable insulation PVC: Housing & construction (pipes, siding, window profiles, fencing, decking), wire & cable insulation Glycol: PET resin - packaging (beverage/water bottles); Polyester fiber - apparel, carpets; antifreeze Alpha-olefins: Detergents, consumer products Polystyrene: Hard goods, packaging, insulation VAM: Coatings (paints), adhesives 7
Where do they show up eventually? Propylene PP: Packaging (cheaper alternative to PET resin, bottle caps), hygiene products (diapers), carpets (cheaper alternative to nylon), fabricated parts Acrylonitrile: Apparel (acrylic, nylon), autos (nylon, ABS), synthetic rubber, carpeting (nylon) Oxos: Plasticizers (make PVC flexible), coatings PO: Autos & furniture (polyurethane foams); apparel (spandex), aviation antifreeze (propylene glycol), pharmaceuticals, autos (BDO/PBT) Acrylic acid: Coatings (paints) Cumene: Autos, CDs, DVDs, electronic equipment (polycarbonate), construction (phenolic resins)
Ethylene economics: Producing cheap is necessary but not sufficient US naphtha-based HDPE delivered to China*: Add-ons account for 30% of the costs on average Assumes ~$20/bbl average price for crude oil Source: Goldman Sachs Research 9
Ethylene economics: Cheap feedstock and market proximity are the optimal combination Competitive positioning vis-à-vis the Chinese market: Note: US (N) = US naphtha-based; US (E): US ethane-based Middle East (cheap feedstock), China (location) and Alberta (a bit of both) are ahead Source: Goldman Sachs Research
Implications: The Middle East and Asia continue to grow preferentially in ethylene Source: Goldman Sachs Research, SRI
Market participants: Who are the majors? Ethylene bn lbs share Dow 23.6 9% Exxon Mobil 16.8 7% Shell 13.3 6% SABIC 11.8 5% Equistar 11.7 5% BP 8.6 4% Chevron Phillips 7.8 3% Formosa 7.0 3% NOVA 6.6 3% BASF 5.2 2% Propylene bn lbs share Exxon Mobil 8.4 6% Shell 7.6 5% Equistar 5.0 3% BP 4.8 3% Dow 4.7 3% Enichem 2.9 2% Chevron Phillips 2.9 2% Formosa 2.7 2% Total Fina 2.3 2% BASF 2.3 2% Top 10 make up less than 50%; no outsized player Source: Goldman Sachs Research, SRI
What’s the supply outlook for key products? Ethylene chain: Propylene chain: 2003 and 2004: Relatively quiet years; for ethylene, 2005 too Source: Goldman Sachs Research 17
SABIC around the World SABIC Headquarters SABIC Research & Technology Distribution and Storage Facilities Jubail Suez Canal Vadodara Mumbai New Delhi Chnnai Hong Kong Singapore Jakarta Shanghai Taipei Ulsan Sakurajima Tokyo Namikata Lavera Barcelona Marseille Livorno Rome Malta Milan Bologna London Felixstowe Gainsborough Houston Wilmington Payne Los Angeles Antwerp Rotterdam Essen Wallhamn Moscow Paris Gebze Manila Sittard Gelsenkirchen SABIC Manufacturing Sites SABIC International Subsidiaries & Sales Offices Mer New Jersey Seoul Riyadh Dammam Yanbou Bahrain Dubai, Jabal Ali Geleen Dusseldorf Imam Port Istanbul
Business Opportunities in Saudi Arabia
Largest market in the Gulf Cooperation Council states (GCC)
Some 3,700 factories
26 industrial cities
Land at reasonable prices
Modern utilities and infrastructure in industrial cities
Royal Commission for Jubail and Yanbu
Saudi Industrial Development Fund (SIDF) and commercial banks
Between 2.5% to 5.5% SIDF contribution toward consultancy fees for business case research and assessment
Business Opportunities with SABIC
SABIC’s supply of value added products stimulated an embryonic growth in the local downstream industry
198 0 ’s - fewer than a 100 plastic converters
2002 - over 500, a 437% increase
1986 - 41kmt of plastics consumed
2002 – 770kmt , a 1700% increase
Value addition upstream stimulates further value
Business Opportunities with SABIC
150 projects downstream using SABIC products. SABIC is the feedstock supplier and also offers R&T support.
Linear Alpha Olefins Sulphanates
PolyAlpha Olefin Sulphanates
Safety Chairs for Children
Toluene Disocyanate (TDI)
Business Opportunities with SABIC
Applications: Major adhesive for production of plywood, waferboard, tranndboard and particle board
Demand: 30,000 mt/y
Market: Industrialized countries in western Europe, Japan, U.S.
Capacity: 32,000 mt/y combining urea or melamine with formaldehyde
Capital Investment: US $32.5 million
Funding: Equity; SIDF loan; Commercial bank loan
Manpower: 17 workmen
Return on Investment: 11.63%
Pay Back: 9 years
Business Opportunities with SABIC Amino Resins (cont) Materials: 23,700 mt/y forlmaldehyde; 21,720 mt/y urea; 2,000 mt/y melamine Manufacturing: Amino resins are made both by batch and continuous process, according to process the planned sales products as special or general purpose amino resins. Important mole ratio factors are – mole ratio of reactants; catalyst, pH or reaction mixture, reaction time and temperature.
Business Opportunities with SABIC Linear Alpha Olefin Sulphanates Application: Soap additive Market: Regional and international Capacity: 20,000 mt Capital investment: US $14 million Funding: 75% loan; 25% equity Manpower: 20 workmen Return on Investment: 31% Pay back period: 3 years Material: C12-C18 Manufacturing process: Sulphanation of LAO
Business Opportunities with SABIC PolyAlpha Olefin Sulphanates from Decene-1 Application: Oil base for high performance Market: Regional and international Capacity: 15,000 mt/y Capital investment: US $38 million Funding: 75% loan; 25% equity Manpower: 22 workmen Return on Investment: 34% Pay back period: 3 years Material: Decene-1 Manufacturing process: Linear branching with catalyst
Business Opportunities with SABIC Safety Chairs for Children Capacity: 450,000 units/year Capital investment: US $6.114 million (SR 22.87 million) Funding: 50% equity; 50% SIDF loan Manpower: 110 workmen Raw materials: Polypropylene, High density Polyethylene Internal rate of return: 26.5% Break even point: 26.6% Pay back period: 5 years Annual sales: US $18.85 million (SR 70.5 million) Manufacturing method: Injection molding, blow molding International companies producing machinery: Seokyung Engineering, Seoul, Korea Permanent ARC Mold, Taiwan
Business Opportunities with SABIC Toluene Disocyanate (TDI) (Aromatics Chain) Products: Flexible foam for furniture, bedding Applications: Used in the production of polyurethane systems, primarily flexible foam for furniture, bedding and other applications Demand: KSA’s demand is projected to grow around 8% per annum. Over 75% of the demand is in the main industrialized regions, some consumption is dispersed throughout developing countries. Local GCC consumption is around 7,000 tons with good growth prospects. Market: KSA, GCC, U.S., Japan, Western Europe Capacity: 22,000 mt/y Manpower: 62 workmen Materials: 0.6580 tons Toluene; 0.9500 tins Nitric Acid; 0.11 tons Hydrogen; 0.96 tons Chlorine; 0.4250 tons carbon monoxide, catalyst chemicals
Business Opportunities with SABIC Toluene Diisocyanate (TDI) (Aromatics Chain) Cont Manufacturing process: Toluene diisocyanate is currently produced by three unit processes: nitration of toluene to dinitrotoluene; reduction of dinitrotoluene to toluene diamine; phosgenation of toluene diamine to toluene diisocyanate Recommendation: The following firms have competitive TDI technology (joint venture basis): Allied Chemicals Nippon Soda ICI Bayer Olin Tolochemie DuPont Rhone Poulenc Mitsui Toatsu Mitsubishi Chemical Union Carbide
Business Opportunities with SABIC Alkyd Resins (Aromatics Chain ) Products: Paints Applications: Used in paint production, mainly for exterior quality products Demand: GCC 11,000 mt/y and growing Market: KSA; Kuwait; US; Europe Capacity: 5,000 mt/y Capital investment: US $7 million Manpower: 21 workmen Materials: 0.1865 tons PAN; 0.1040 tons Glycerine; 0.3145 tons Linseed oil; 0.1600 tons Xylene; 0.2950 tons white spirit
Business Opportunities with SABIC Alkyd Resins (Aromatics Chain) cont Manufacturing process: The production of alkyd resins involves the sterification of polyhydric alcohol and polybasic acids in the presence of small quantities of solvent (azeotropic process). The product is then blended with a solvent to make the alkyd resin products. Recommendation: Suppliers of technology include Courtaulds; Deutsch Texaco; Hoechst; Hygrotherm (UK); ICI
Business Opportunities with SABIC Paraformaldehyde Applications: Used in preparing solvent based coatings or for reconversion to formaldehyde in places when 37% solutions of formaldehyde are not available. Demand: 150,000 mt/y held by a limited number of producers with large formaldehyde interests Market: 11,000 mt/y Capacity: US $8.02 million (SR 30 million) Capital investment: 30% equity; 20% commercial loan; 50% SIDF loan Manpower: 16 workmen Materials: Formaldehyde, process chemicals
Business Opportunities with SABIC Paraformaldehyde (cont) Manufacturing process: Paraformaldehyde is made by the vacuum concentration of 37% aqueous formaldehyde. As concentration increases polymerisation begins and can be taken up to 98% when it is a white solid. Recommendation: From a competitive point of view, formaldehyde (as the 37% solution in water) will always be preferred as a raw material as it is cheaper and usually readily available locally since most countries, especially those with large wood/timber industries, produce formaldehyde based on (imported) methanol.
Business Opportunities with SABIC Polyether Polyols Applications: Used in the production of polyurethan systems, primarily flexible foam but with rigid foam and other uses also significant Demand: World consumption is growing to over 2.1 million mt/y, local GCC consumption is 23,000 tons and is likely to reach 40,000 tons Market: GCC, western europe, Japan, U.S. Capacity: 20,000 mt/y Capital investment: US $73 million Manpower: 32 workmen Materials: 0.0350 tons of Glycerine; 1.01 tons prop Ethylen Oxide
Business Opportunities with SABIC Polyether Polyols (cont) Manufacturing process: Polyether polyols production consists of four basic process operations – the polymerization reaction of propylene oxide initiated with glycerine and catalyst (KOH pellets); the neutralization of the catalysts; the treatment of the polyol with decoloring agents and the filtration step to remove the other materials used in the preceding step.
Business Opportunities with SABIC Polyether Polyols (cont) Recommendation: Potential sources of batch polymerization technology for PO production are ARCO; Chemetics; Pressindustria. There are two main uses for polyols in the GCC with the largest being in flexible polyurethane foam slabstock for the furniture and bedding industry. The second application is in rigid polyurethane foams for the building industry. Foams may be supplied either in a prefabricated form (SAPTEX) or applied on site by spraying (Al Babtain)
Business Opportunities with SABIC
Details on these and other projects contact our Riyadh headquarters
Flexibility in discussing arrangements
Your business comes first
SABIC and its Suppliers
Supply Management organization (SMO)
Manages the supplier relationship worldwide
Database of approved suppliers with at least 1,000 active at any one time
Join the approved suppliers list by calling SMO in Al-Jubail on the Gulf coast of Saudi Arabia
Consolidate, restructure and focus on core competencies
800,000 mt/y PE plant at PETROKEMYA
17 th affiliate – Jubail United Petrochemical Company
Two million tons additional capacity by 2002-2004
Production target of 48 million mt/y by 2010
Constantly exploring overseas opportunities for expansion