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Greatest challenges for GCC petrochemical industry

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IE GEMBA Application Essay - Question H:
What do you believe are the greatest challenges facing the sector or industry you would like to specialize in at IE? What role do you hope to be able to play in this sector or industry in the medium term?

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Greatest challenges for GCC petrochemical industry

  1. 1. What do you believe are the greatest challenges facing the sector or industry you would like to specialize in at IE? What role do you hope to be able to play in this sector or industry in the medium term?
  2. 2. The Middle East petrochemical landscape The key challenges for the industry Pivotec, HyVent Technology & Gulf Interchem What makes us unique? Companies’ actions on industry’s challenges Summary
  3. 3. The Middle East Petrochemical landscape Historic development attributable to unexploited, abundant natural gas reserves Phenomenal growth through organic expansion The sector in digits (2011): Generates sales of 44.7 Bio USD Accounts for 43% of non-oil exports Saudi Arabia accounts for 67% of Middle East production 80% of production is exported outside Middle East 80,000 direct employment opportunities
  4. 4. The petrochemical market players
  5. 5. The key challenges for the industry CREATE ECONOMIC VALUE Innovation Value Chain Responsible Supply Chain PROTECT NATURAL RESOURCES Resource efficiency Communities Waste DEVELOP PEOPLE Employees Social commitment Ethics Driving Growth through Sustainability
  6. 6. Why these key challenges? Capitalize on feedstock advantages Develop a less cyclical product base, thus yielding more stable returns over the long term Capture the value-adding that is now exported Newly distorted supply-demand balance due to – increasing export supply > shale gas innovation (US) – decreasing import demand > MeOH-to-olefins (Asia) Rapid expansion of urban youth population – create value-adding job opportunities – leverage on multicultural diversity
  7. 7. The key challenges in action Innovation  Innovation focus on  Value creation  Cost optimization  Safety & quality  Acquire requisite technology & know-how for downstream developments  Increased budget allocation to R&D in strategically important areas of competence Value Chain Driving Growth through Sustainability CREATE ECONOMIC VALUE PROTECT NATURAL RESOURCES DEVELOP PEOPLE  Focus on product lifecycle management  Reduce non-renewable energy & material inputs to process  Reduce environmental foot- print of manufacturing & distribution processes  Develop solutions to enable customers to reduce footprint  Develop solutions to reduce society’s footprint  Design product and process solutions to close the lifecycle through recovery of material and energy value. Responsible Supply Chain  Infrastructure upgrade  Port side facilities  Railway Land Bridge (KSA)  Road network  Challenge of piracy  Address road safety  Transport of hazardous material
  8. 8. The key challenges in action Resource efficiency  Feedstock diversification  Reduce carbon footprint  Reduce water usage  Reduce emissions  Reduce energy usage  Reduce material loss Communities Driving Growth through Sustainability CREATE ECONOMIC VALUE PROTECT NATURAL RESOURCES DEVELOP PEOPLE  Responsible Care® initiative endorsed  Leverage on community projects applied to  Plastic related education  Safety  Water  Health(care)  Environment Waste  Reduce waste generation  Develop innovative solutions to upcycle waste  Foster partnership & collaboration with specialized companies
  9. 9. The key challenges in action Employees  Attract & retain talent  Improve employment of local population  Improve working & living conditions  Training & education Social Commitment Driving Growth through Sustainability CREATE ECONOMIC VALUE PROTECT NATURAL RESOURCES DEVELOP PEOPLE  Downstream expansion necessity to cope with demographic pressures  Development of labor- intensive processing centers  Promote diversity Ethics & compliance  Install Code of Ethics  Competition Law  International Trade Controls  Insider Trading and Stock Tipping  Conflicts of Interest  Environment, Health, Safe ty and Security  Intellectual Property  Product Risk Management
  10. 10. Growth through downstream innovations shall require ability to access, acquire or develop technology attrition and retention of skilled workers mental shift in driving away from existing business models investor-friendly business environment Growth through downstream innovations shall yield generation of valuable job opportunities reduction in environmental footprint long-term sustainable societal developments capture the value-adding creation at origin The key challenges summarized
  11. 11. Since 2011, Bernard van den Wouwer has established three interlinked companies active in developing, processing, upcycling and trading chemical waste streams generated at petrochemical production facilities. The core focus of the developments center around low-value, highly complex (petro)chemical waste streams convert low-value streams into valuable chemical products potential for upcycle recycling through innovative technology zero waste-out-of-waste streams originating from Middle East production facilities Pivotec, HyVent Technology & Gulf Interchem
  12. 12. Integration of the companies HyVent Technology (Bahrain / The Netherlands)  owner of patented technology for waste treatment (hydrothermal)  owner of state-of-the-art laboratory in The Netherlands  business model based on licensing agreements Pivotec Arabia (Bahrain / Saudi Arabia)  processing, production & treatment of organic or inorganic chemicals  access to treatment technology through sourcing  business model based on tolling fee agreements Gulf Interchem (Bahrain)  trading arm of the business set-up  marketing of new chemical molecules on international market  business model based on purchase-sales agreements Roadtomarket Note: Bernard van den Wouwer is the Managing Director of all companies
  13. 13. Pioneering & innovator technology-driven knowledge base (chemistry, engineering) patentable innovations first-time producer of chemical molecules in Saudi Arabia total solution provider Create shareholder value for petrochemical producer waste disposal cost saving revenue generation from waste streams’ sale (pay-for-waste) What makes us unique?
  14. 14. What makes us unique? (cont.) Sustainability approach environmental-friendly treatment of waste streams climb the “Waste Hierarchy”-ladder from disposal to re-use / recycle first-of-its-kind: waste streams drive innovation Social engagement direct employment opportunities for local community high-end jobs throughout the treatment plant
  15. 15. Companies’ action on industry’s challenges CREATE ECONOMIC VALUE Innovation Value Chain Responsible Supply Chain PROTECT NATURAL RESOURCES Resource efficiency Communities Waste DEVELOP PEOPLE Employees Social commitment Ethics Driving Growth through Sustainability
  16. 16. “The future will be green & sustainable, or not at all” Adapted from Jonathon Porritt
  17. 17. Sources GPCA website (www.gpca.org.ae) Sustainability Report Borouge 2012 Sustainability Report Sabic 2012 Annual Report Saudi Kayan 2012 Annual Report Tasnee 2010 The GCC in 2020: Downstream Expansion in the Middle East Chemical Industry (KPMG Report – Dec 2011) plant pictures: Borouge, Kemya, Tasnee, PetroRabigh, Saudi Kayan, Sharq, Petrokemya, BASF, Ineos, Qapco, Jana, Equate Addendum

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