USSaudiForum - Panel 6 - Mutlaq al Morished - Downstream Petrochemicals


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The 3rd US-Saudi Business Opportunities Forum was held Sep 16-18, 2013, bringing together officials, business people, educators and specialists highlighting the U.S.-Saudi trade relationship and how U.S. companies can participate in Saudi Arabia's expansion.

Saudi Arabia is undergoing an extraordinary economic boom. Massive public investment, rapid private-sector growth and new sector initiatives are driving an expansion projected to offer more than $1 trillion in trade and investment opportunities over the next decade.

This panel of distinguished experts highlighted the national priority and international opportunity in the downstream petrochemical sector.

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  • Upstream SectorKnown natural gas reserves in Saudi Arabia are increasing by min. 5 TCF annuallyHeavy investment in the application of new technologiesHuge efforts in creating linkages between refining and chemical industries inside and outside the countryConstant rapid development of industry: Saudi Aramco currently developing major chemical complexes through joint ventures with Dow Chemical, Total, and with ConocoPhillipsHuge investment and efforts by authorities to diversify the chemical portfolio into more complex, distinctive products such as specialty chemicals and engineering thermoplastics which will poise the country for increases in quality and quantity of our exportsSaudi Arabia now actively encourages private investment in the downstream chemical sector in order to strengthen our position as a global chemical leader and diversify towards value-added specialty chemicals, formulated products, and performance polymers.The Saudi government aims to encourage further investment to produce a substantial number of upstream products as well as a range of sophisticated downstream products for the development of the local and international market
  • USSaudiForum - Panel 6 - Mutlaq al Morished - Downstream Petrochemicals

    1. 1. DOWNSTREAM PETROCHEMICALS ….WORLD-CLASS INDUSTRIAL PARKS Mutlaq H. Al-Morished CFO, SABIC September 17, 2013 Los Angeles
    2. 2. No. 1 ► 37 years of solid well-sustained global growth ► Total assets of $ 90 bln, at end of 2012 ► 2012 revenues were $ 50 bln ► 2012 net income of $ 6.6 bln ► Record production volume of 72 MMT in 2012 ► 40,000 employees in 40+ countries ► 6 Strategic Business Units ► 60 world-class plants worldwide ► 18 Technology, Innovation and Application Centres, globally SABIC… a global player
    3. 3. No. 2 Exceptionally strong financial profile • Highest rated chemical company (rated A1, A+, A+ on standalone basis). Only chemical company whose credit ‟ratings‟ and „outlook‟ have never been downgraded • Consistent delivery of high profitability and cash flow generation. Cash flow from operations in H1-2013 was $8.4 bln • Prudent and conservative record of balance sheet management – total asset base is the largest in global petrochemical industry Global footprint and diversified operations • Wide range of products across 6 strategic business units: Chemicals, Polymers, Performance Chemicals, Fertilizers, Metals, and Innovative Plastics • Around 60% of consolidated sales conducted through international subsidiaries in Europe, Asia and Americas World-class operational standards • Global supply chain center of excellence • Focus on manufacturing excellence and sustainability • Global marketing network and distribution platform • Strong customer franchise with network in over 100 countries • Focus on safety, environmental standards, and compliance Growing focus on technology & innovation • Over 1,500 scientists and researchers at 17 Technology, Innovation and Application Centers worldwide • Over 3,000 issued patents and over 5,600 pending patent applications worldwide • Over 1,000 registered trademarks, globally KSA assets - lowest cost quartile • Economies of scale • Competitively priced feedstock • Proximity to end markets • World-class leading edge infrastructure Strong and stable shareholder • Kingdom of Saudi Arabia (Aa3/AA-/AA-) • Strategic asset for the Kingdom • Access to competitive funding • Access to competitively priced feedstock Globally, SABIC is the most profitable petrochemical company Global leadership positions * • # 1 producer of MTBE and Mono Ethylene Glycol • # 1 producer of Polycarbonate • # 1 exporter of Granular Urea • # 2 producer of Methanol • # 3 producer of Polyethylene and Polypropylene SABIC… a global player * Source: IHS & ChemSystems
    4. 4. No. 3 Rubber tire: PBR & Carbon Black Seats: Polyurethane Light shield: Polycarbonate Electrical parts: POM (PolyAcetal Monomer) / DOP Exterior parts: Carbon Fiber (potential), Polyurethane Anti-freeze Ethylene Glycol Lubricants: LAO and Ethoxylates Paints and coatings: Acrylates, OXO , MMA, Polyurethane & Ethoxylates Powertrain body & chassis: Metals Exterior parts: Plastics, Polyurethane Structural panels: Polyurethane, Plastics Rubber: Hoses, belts Electronics: Acrylonitrile Butadiene Styrene (ABS), Polyurethane Exterior parts: Polycarbonate Light shield: PMMA Rubber seals: EPDM SABIC Chemicals and Polymers enable auto industry
    5. 5. No. 4 POWER Saudi Arabia HYDROCARBON RESOURCES Enablers WATER REFINING METAL Basic Chemicals Downstream ChemicalsSpecialized Industrial Parks provide materials and services Auto industry Household industry Non fossil fuel energy industry Packaging industry Major industrial footprint in Saudi Arabia
    6. 6. No. 5 Engineering Plastics Park (POM, PMMA, Acrylonitrile Butadiene Styrene (ABS), Polycarbonate) Metals Park Rubber Park (tire & rubber goods) Carbon Fiber ParkPolyurethane Park (seating & insulation) Additives Park (fuel, lubricants and construction) Paints and Coatings Park The specialized parks will produce parts and finished materials for wide ranging industrial applications in Saudi Arabia for consumption by local, regional and international markets Personal care and Detergents Opportunities for specialized industrial parks
    7. 7. No. 6 Middle East (including GCC & Turkey) 20%Parks‟ finished products output Europe 12% AFRICA 11% Local (KSA) 57% Revenue expected to be $2.6 trillion by 2020 - considered an attractive region for future investment (based on EY‟s survey, 2011) Industrial parks to market in the region and internationally
    8. 8. No. 7 RUBBER INDUSTRY OVERVIEW Tires Hoses Seals Engine belts Conveyor belts END APPLICATIONS Primary raw materials Utilities Nat/Syn rubber CBlack/Fillers Fine Chem Process Oil Electricity Steam Machinery Mixing Tires MRG Steel cord Fabric Molds Wire/Fabric Metal Inserts Semi finished rubber (sheet etc) Testing Institutes Warehouse Distribution Scrap and Recycling New Sales Service/Repair Mold & Dies Engineering designs (CAD/ CAM) Info Centers Trade Association Sales Marketing T&I; applications know-how Rubber park……an example
    9. 9. No. 8 Running Businesses Location Ethoxylates Jubail Ethanolamines Jubail LAO Jubail 2-EH Jubail DOP Jubail iBAL Jubail Acetic Acid Jubail Projects Location Natural Alcohols Jubail MDI Jubail TDI Jubail Polyether Polyols-MEA Jubail Hexene –I Jubail n-Butanol Jubail PBR Jubail Carbon Black Jubail EPDM Jubail BR Jubail TPE Jubail PMMA Jubail POM Jubail ACN Jubail MMA Jubail Acrylic Acid Jubail Butyl Acrylate Jubail 2-EH Acrylate Jubail Methyl Acrylate Jubail NaCN Jubail Carbon Fiber Yanbu SABIC’s Performance Chemicals to support downstream industries
    10. 10. No. 9 Saudi Arabia plans to invest $70 bln to further develop the petrochemcial landscape, including the downstream sectors: ► development of vast chemical complexes next to oil refineries in order to facilitate the downstream sector ► public companies making way for privately held firms in the sector ► Besides world-class industrial cities in Jubail and Yanbu, construction of KAUST, Jazan Economic City, Yanbu, enhancing the infrastructure capacity and resources… support the downstream petrochemcials Jazan Economic City Future landscape of Saudi downstream petrochemcials
    11. 11. No. 10 ► estimate $70 bln investment in the Saudi downstream petrochemicals ► broad range of funding opportunities for local and international investor base ► lenders favorably look at such robust projects ► typical funding mix for petrochemicals downstream projects would entail: Debt 60-70% Equity 30-40% Capital Markets Local and intl. Bank Debt Export Credit Agencies Government Funds • Public Investment Fund (PIF) • Saudi Industrial Development Fund (SIDF) • Project and country specific • Local and international banks often participate in syndicate loans • Project Bond/Sukuk issuances $70 bln investment in downstream sectors…financing considerations
    12. 12. No. 11 ► SABIC products provide leadership in quality and security of supply ► Technology and Innovation capabilities: 18 technology, application and innovation centers worldwide – unmatched T&I capability in the Middle East ► Specialized technical institutes to support specialized parks, such as High Institute for Elastomers Industries (HIEI) and the Higher Institute for Plastics Fabrication (HIPF) ► Strong global connections and relationships with industries and investors ► SABIC itself is a customer for $12 bln of industrial materials and services ► Strong „on-ground‟ project engineering and execution capabilities SABIC has executed multi-billion $ world-class and best-in-class projects SABIC inspires investment & partnerships in downstream industries Diversification into downstream industries …. a national priority with international opportunities
    13. 13. No. 12 The date of this presentation is September 17, 2013 This presentation has been prepared by Saudi Basic Industries Corporation (SABIC). No representation or warranty is given or to the accuracy or the completeness of the information contained herein. This presentation is confidential and is being submitted to selected recipients only. If handed out at a physical roadshow meeting or presentation, it should be returned promptly at the end of such meeting/presentation. It may not be reproduced (in whole or in part), distributed or transmitted to any other person without the prior written consent of SABIC. This presentation contains forward looking statements. The words “believe”, “expect”, “anticipate”, “intend” and “plan” and similar expressions identify forward-looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding business strategy, plans and objectives, are forward- looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the markets and economy present and future business strategies and the environment in which the investors will operate in the future. Further, certain forward-looking statements are based upon assumptions of future events which may not prove to be accurate. The forward-looking statements in this document speak only as at the date of this presentation and SABIC assumes no obligation to update such forward-looking statements. Disclaimer
    14. 14. No. 13