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Markaz Sector Report 2014 
Kuwait Petrochemicals 
Waning low cost advantage 
Research Highlights 
Analysis of Kuwait’s pet...
MARKAZ SECTOR RESEARCH 
Kuwait Petrochemicals – August 2014 
Kuwait Financial Centre K.P.S.C. “Markaz” 2 
Disclaimer 
This...
MARKAZ SECTOR RESEARCH 
Kuwait Petrochemicals – August 2014 
Kuwait Financial Centre K.P.S.C. “Markaz” 3 
Table of Content...
MARKAZ SECTOR RESEARCH 
Kuwait Petrochemicals – August 2014 
Kuwait Financial Centre K.P.S.C. “Markaz” 4 
Cost Advantage ....
MARKAZ SECTOR RESEARCH 
Kuwait Petrochemicals – August 2014 
Kuwait Financial Centre K.P.S.C. “Markaz” 5 
Tables Charts 
3...
MARKAZ SECTOR RESEARCH 
Kuwait Petrochemicals – August 2014 
Kuwait Financial Centre K.P.S.C. “Markaz” 6 
Cost of the full...
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Kuwait Petrochemicals Industry Research Report

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Kuwait is a country blessed with abundant Oil resources. The Government of Kuwait has given thrust to sectors such as Petrochemicals, which can make use of the cheap feedstock available. Petrochemicals sector has been developed as part of the export diversification strategy of the Kuwait government. Kuwait has made persistent efforts to improve and enhance its Petrochemicals sector at par with the regional players in GCC. Kuwait Government is implementing a “Strategy 2002-2020” for the development of Petrochemicals sector in the country.

In this report, we have analyzed the opportunities for the Kuwait Petrochemical sector in the form of upcoming Joint ventures, increasing synergies for Petrochemical and refining integration and the cost advantage enjoyed by the Kuwait Petrochemical companies. The report also covers the government policies and initiatives which impact the functioning of the Petrochemicals sector in the country. The report discusses in detail the challenges faced in the form of volatility in prices of feedstock and increasing competition within the Petrochemical players in the GCC region. The report analyzes the opportunities available for the sector, which is mainly driven by the increasing demand from the Asian countries for Petrochemicals and products like paints, plastics and Polymers.

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Kuwait Petrochemicals Industry Research Report

  1. 1. Markaz Sector Report 2014 Kuwait Petrochemicals Waning low cost advantage Research Highlights Analysis of Kuwait’s petrochemical sector highlighting growth drivers, trends, investments, challenges and future outlook for the industry
  2. 2. MARKAZ SECTOR RESEARCH Kuwait Petrochemicals – August 2014 Kuwait Financial Centre K.P.S.C. “Markaz” 2 Disclaimer This report has been prepared and issued by Kuwait Financial Centre K.P.S.C (Markaz), which is regulated by the Capital Markets Authority and the Central Bank of Kuwait. The report is owned by Markaz and is privileged and proprietary and is subject to copyrights. Sale of any copies of this report is strictly prohibited. This report cannot be quoted without the prior written consent of Markaz. . Any user after obtaining Markaz permission to use this report must clearly mention the source as “Markaz “. The report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable but no representation or warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinion of Markaz and are subject to change without notice. Markaz has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. This report may not consider the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and to understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Investors should be able and willing to accept a total or partial loss of their investment. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily indicative of future performance. Kuwait Financial Centre K.P.S.C. (Markaz) may seek to do business, including investment banking deals, with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of Markaz, Markaz has not reviewed the linked site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to Markaz’s own website material) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through this report or Markaz’s website shall be at your own risk. For further information, please contact ‘Markaz’ at P.O. Box 23444, Safat 13095, Kuwait ; Email: research@markaz.com ; Tel: 00965 1804800; Fax: 00965 22450647. Research Support 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 Sankara Narayanan M | Intern Jenevivu Lasrado | Secretary, Research jlasrado@markaz.com Nael Aboul Huda | Manager, Media & Communications naboulhuda@markaz.com
  3. 3. MARKAZ SECTOR RESEARCH Kuwait Petrochemicals – August 2014 Kuwait Financial Centre K.P.S.C. “Markaz” 3 Table of Contents 1. Executive Summary ......................................................................................... 6 2. Sector Overview .............................................................................................. 9 Refining and Petrochemical Integration ................................................................... 13 Diversification into allied sectors ............................................................................. 14 3. Sector Analysis .............................................................................................. 15 Number of companies, production in terms of volume, value..................................... 15 Market Share estimation ........................................................................................ 19 4. Major Players ................................................................................................. 21 Government companies ......................................................................................... 21 Strategic Business Units (SBUs) of PIC .................................................................... 22 Joint Ventures ....................................................................................................... 24 Private Players ...................................................................................................... 27 Figure 4.5: Overview of Kuwait Petrochemicals Sector .............................................. 27 5. Key Trends ..................................................................................................... 28 Use of Technology from foreign countries ................................................................ 28 Integration of refining and petrochemical for mitigation of risk .................................. 28 Shift towards heavier feed stock ............................................................................. 30 Increasing Investments in Kuwait ........................................................................... 31 6. Price Trends ................................................................................................... 33 Prices of feed stock ............................................................................................... 33 Prices of Petrochemicals......................................................................................... 33 7. Growth Drivers .............................................................................................. 34 Recovery from the Global crisis ............................................................................... 34 Increased demand from Asian Markets .................................................................... 34
  4. 4. MARKAZ SECTOR RESEARCH Kuwait Petrochemicals – August 2014 Kuwait Financial Centre K.P.S.C. “Markaz” 4 Cost Advantage ..................................................................................................... 36 Government Initiatives ........................................................................................... 36 Emergence of Joint Ventures in Kuwait ................................................................... 36 Increased markets for the by-products .................................................................... 37 8. Challenges ..................................................................................................... 44 Competition from Saudi Arabia and Qatar ................................................................ 44 Anti-Dumping charges ........................................................................................... 46 Reducing Availability of gas feed stock .................................................................... 47 Development of Shale Gas Technologies ................................................................. 49 Implementation problems in Integration of Refining and petrochemicals .................... 50 Volatility in Prices .................................................................................................. 51 Lack of Clear Strategy of the Kuwait Government ..................................................... 52 Reduced imports in China ...................................................................................... 53 9. Regulatory Aspect ......................................................................................... 55 Environmental Regulations ..................................................................................... 55 Regulations in Kuwait ............................................................................................ 55 10. SWOT Analysis ............................................................................................... 59 11. Appendix ........................................................................................................ 60 GLOSARRY............................................................................................................ 64
  5. 5. MARKAZ SECTOR RESEARCH Kuwait Petrochemicals – August 2014 Kuwait Financial Centre K.P.S.C. “Markaz” 5 Tables Charts 3.1 Revenues of Petrochemical Sector (in bn USD) - Region Wise 2.1 Oil Reserves (in bbls), 2013 6.1 Price in US Dollars/Million Tons 2.2 Oil Fields in Kuwait 7.1 Paints Demand growth (in %) 2.3 Oil Production in Kuwait (in thousand barrels per day) 8.1 GCC Petrochemicals & Chemicals capacity (MTPA) 2.4 Oil Exports from Kuwait (in bn USD) 8.2 Impact of Anti-Dumping charges on imports in India 2.5 Non-oil exports by value (in USD bn), 2012 8.3 Ease of Doing Business Index in the year 2012 2.6 Contribution of various sectors to Kuwait’s GDP, 2012 11.1 Kuwait's Trade and investment 3.1 Capacity of Basic Petrochemical production (in mn tons) 11.2 GCC Chemical and Petrochemical exports in 2012 3.2 Compounded Annual Growth Rate (Capacity addition in Mn tons) from 2008-2012* 11.3 Price Estimates of Brent Crude (in USD/barrel) 3.3 Average Capacity Utilization of petrochemicals sector from 2008-2012 11.4 Petrochemical Sales (in USD mn) 3.4 Capacity Utilization of petrochemicals sector from 2010-2012 11.5 Average Capacity of Chemicals and Petrochemical production in GCC(2008-2012) 3.5 Kuwait's production capacity of petrochemical products (in mn tons) in 2010 11.6 Capacity Addition of petrochemicals in GCC(MTPA) 3.6 Nationals in Chemical Industry 2012 (in %) 11.7 Equiploymers-Financials 3.7 Export Share by value in 2012(in %) in GCC 11.8 Qurain Income Statement (Annual Standardized in Millions of U.S. Dollars) 3.8 Exports CAGR from GCC (2009-2015) 11.9 Petrochemical Projects in Kuwait 4.1 PIC’s Investments in various companies 11.10 Naphtha price tends 4.2 Shareholding in China Integrated Project Charts (contd.) 4.3 Profit margin of Equipolymers 7.7 Greater China Light Vehicle Sales (2005-2012 in Millions of Units) 4.4 Net Income of Qarain Petrochemical Industries Corporation (in USD mn) 8.1 Total Investments as a percentage of GDP in GCC 4.5 Overview of Kuwait Petrochemicals Sector 8.2 Petrochemicals Projects Status in Kuwait, 2014 5.1 GCC Petrochemicals & Chemicals capacity (Million Tons per Annum - MTPA) 8.3 Revenue share from petrochemicals in 2012 among GCC Countries 5.2 Petrochemical Exports (in USD bn) from GCC in 2012 8.4 Estimated reduction in Gas feed stock availability in GCC 5.3 Total Investments in Kuwait as percentage of GDP 8.5 Top Shale Gas Reserve holders in the World (in Trillion cubic meters) 7.1 GDP Growth in China and India (in USD bn) 8.6 Price trends of Brent Crude (in USD / barrel) 7.2 Chemicals and Petrochemicals Import by India (in USD bn) 8.7 2012 Petrochemical exports from Kuwait by value (%) – region wise 7.3 Demand for Chemicals and Petrochemicals in China by value (in USD bn) 11.1 Naphtha price tends 7.4 Fertilizers Production Capacity of GCC countries in 2012 (in million tons) 7.5 GCC Chemicals Sales Revenue by Segment, 2012 (in %) 7.6 GCC Polymer Exports by Country in 2007 and 2012 (in %)
  6. 6. MARKAZ SECTOR RESEARCH Kuwait Petrochemicals – August 2014 Kuwait Financial Centre K.P.S.C. “Markaz” 6 Cost of the full report: $250 For payment details please write to: info@e-marmore.com Or Kindly use our online payment gateway at www.e-marmore.com
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