NEWS 06 | NEWS INTERVIEW 10 | ATEX STANDARDS 24 | PROJECT UPDATE 27 | DATA 31 | FACE TO FACE 32
NEWS, DATA AND ANALYSIS FOR THE REFINING AND PETROCHEMICAL INDUSTRIES
FEBRUARY 2010
TECHNOLOGY FOCUS LICENSE AGREEMENTS ARE PUSHING PRODUCERS TO NEW HIGHS
FLOW CONTROL
MOVING EAST
President off ExxonMobil Chemical says opportunities abound East off Europe
Stephen Pryor, president of ExxonMobil Chemical
MISSION CRITICAL VALVES YOU SHOULD KNOW ABOUT
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In Print February 2010
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12 16
4 EDITOR’S LETTER The WFES provided an excellent platform for companies to showcase green technologies.
6 REGIONAL NEWS QP and Exxon join forces, SABIC issues $3.7bn bond, Satorp awards a contract to Elliott, Aramco to construct Jizan refinery.
12 COVER STORY Steve Pryor, president of ExxonMobil Chemical talks exclusively to PME and says that his company is targeting the East.
16 TECHNOLOGY FOCUS Licensed technology and cheap feedstock are pushing Middle East petrochemicals producers to new highs.
22 FLOW CONTROL Valves are critical for petrochemicals plants, so which different aspects should buyers look closer at? PME investigates.
30 DOWNSTREAM DATA The most important petrochemical products and share prices from the Middle East’s leading listed companies.
22 www.arabianoilandgas.com
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32 FACE TO FACE Meet Mounir Ajam, CEO of SUKAD.
Petrochemicals Middle East February 2010
2 Online
The online home of:
TOP 10 MIDDLE EAST ENERGY EVENTS
JANUARY EVENTS ROUNDUP NDUP P
MOST POPULAR NEWS
1 Sonatrach corruption suspects go to court 2 Multi-billion dollars Jizan will be built by Saudi Aramco 3 Oil & gas industry to spend $798bn in 2010 4 Schlumberger rakes in $22.7 billion in tough 2009 5 Elliot Co awarded Jubail compressors contract
EDITOR’S CHOICE
Top 10 industry events
World Future Energy Summit
ArabianOilandGas.com brings you the top ten Middle East energy industry events of 2010. The list includes all the major shows which are expected to attract bumper footfall this year.
ArabianOilandGas.com reporters and photographers made a full sweep of January’s biggest industry event, the World Future Energy Summit in Abu Dhabi.
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FEEDSTOCK SWITCHING Winter crunch forces the Iranian government to reduce ethane gas allocations to producers.
BREAKING NEWS AND VIEWS FIRST
PLASTIC STILL FANTASTIC - SURVEY
ENOC’S REFINERY TO START IN APRIL
A survey of six countries of the GCC has shown that people in the region have a strong favourable attitude to the plastic industry.
The CEO of ENOC announced that his company is planning to start the Jebel Ali re nery in April after carrying out an upgrade.
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DAELIM SCOOPS SAHARA CONTRACT
WEB FORUM
TAIWAN’S CTCI WINS KAYAN DEAL
Sahara Petrochemicals Company has awarded a contract to the South Korean rm Daelim Industrial to construct a caustic soda plant.
Taiwanese contractor CTCI is the surprise winner of the contract to build a major amines plant for Saudi Kayan Petrochemical.
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Petrochemicals Middle East February 2010
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E JOIN TH DEBATE
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4 Editorial
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Petro’s green credentials
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Petrochemicals Middle East February 2010
he World Future Energy Summit (WFES) held in Abu Dhabi in January, provided a rare but welcome platform for the region’s re ning and petrochemical equipment and service providers to showcase their environmental message and ethos. Although the event was dominated by the renewable energy providers, such a gathering brought home the important issues of water management and ef cient re ning operations which have come to the fore of an increasingly energy conscious industry in the Middle East. The running costs of a plant, and the environmental footprint petrochemical and plastics manufacturing create are weighty issues that every responsible CEO will have close to his heart. Petrochemicals producers are often portrayed as a villains and eco-nightmares, but important steps are being taken by the industry across the region. Indeed, in January the Gulf Petrochemicals and Chemicals Association (GPCA) unveiled industry veteran Tahir Jamal Qadir as the Lead Responsible Care Coordinator for the Association. This is an excellent step in the right direction. The appointment follows the recent signing of an agreement between the GPCA and the American Chemistry Council (ACC) to establish a Responsible Care program for the region’s petrochemical and chemical industry. The deal marks a major step forward in implementing GPCA’s ambitious plans to ensure that the regional industry adopts uniform world-class environment, health and safety practices. The Responsible Care ethic is the petrochemicals industry’s foundation for a sustainable future. WFES was also a place for local producers to show that they are willing to adopt new technologies and commit to greener operations. So, my golden rule for those who are serving the petrochemical industry is to intensify your investments in driving energy ef ciency products, as it will no doubt become the goose that lays the golden egg.
T
Abdelghani Henni, editor e-mail: abdelghani.henni@itp.com
SPOT POLL
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40% Maybe. Money is not as freely available as it was two years ago. 33.3% No. Not until the petrochemicals industry starts to pick up. 26.7% Yes. There’s always money for a good project. SUBSCRIBE NOW Visit www.itp.com/subscriptions www.arabianoilandgas.com
News 5
NEWS
FEBRUARY 2010
SABIC profits decline 59% in 2009 Downstream giant sees output rise 4% and sales volume up 5% compared to 2008 Saudi Basic Industries Corporation (SABIC) announced pro ts of US$2.43 billion for the year 2009, a decline of 59% compared to the $5.86bn it earned in the year 2008. SABIC said its fourth quarter pro ts were $1.22 billion, up from $82.6 million for the corresponding period of 2008. Production across SABIC’s facilities actually increased by 4% in 2009 to 59 million tonnes and sales totalled 46 million tonnes, an increase of 5% compared to 2008. The company said that the decrease in net incomes during 2009 can be attributed to the sharp fall in prices for most petrochemical products, especially in the rst two quarters in 2009. “As new production from SABIC’s projects at SHARQ, YANSAB and our petrochemical complex in China come on-stream during 2010, this will add to total company production and sales going forward,” SABIC chairman Prince Saud bin Abdullah bin Thenayan Al Saud said. “Also, as the global economy improves during the year, we expect to see demand for our products increase.” “SABIC has performed admirably this year in the face of unusual market conditions and has the nancial strength and strategy to take advantage of opportunities that emerge during economic turbulence,” he added.
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Al-Mady is not concerned about economists’ forecasts of a weak global recovery, as he believes that SABIC a has strong foundation.
The chairman also said that his company is continuing to make strategic investments and expansion plans across the company. “We recognise the efforts and dedication of our management group and employees and credit them for increasing production and sales quantities year on year,” Prince Saud said. “This is very encouraging because the sales volumes were solid and increased, and every incremental increase in global demand brings an improvement in pro tability,” he added. Meanwhile, the CEO, Mohammed Al-Mady said that he was
not concerned about some economists’ forecasts of a weak global recovery this year. “We are very happy where we are today,” he told journalists in Riyadh as the company detailed its 2009 results. “The company has a strong foundation in its production costs. We are in a very good condition because we are in Saudi Arabia, where the company’s key raw materials, crude oil and natural gas, are cheap,” he said. On the topic of the global economic dif culties and recovery AlMady said: “You cannot talk to two people and get the same answer.” “We stand to gain a lot of momen-
tum from the cost-reduction programs in the past.” Al-Mady also said Asian markets, especially China, are leading demand growth. “We view 2010 positively, on an improvement in both prices and increased output capacities,” AlMady said. He did not give a pro t forecast for 2010.
$1.36bn The profits of SABIC’s petrochemicals division
Petrochemicals Middle East January 2010
6 News
QP and Exxon join forces Partnership to include world’s largest MEG plant in Ras Laffan Qatar Petroleum (QP) and ExxonMobil Chemical Qatar announced that they have signed an agreement to progress the joint development of a worldscale petrochemical complex in Ras Laffan Industrial City, Qatar, with a budget of US$6 billion.
The two companies said that the proposed complex would include the world’s largest steam cracker and polyethylene plants, and one of the world’s largest ethylene glycol plants. “Teams from Qatar Petroleum and ExxonMobil have worked
Chemanol posts 42% profits decline in 2009 Methanol Chemicals Company, Chemanol, (former Saudi Formaldehyde Chemical Company Limited), has posted US$5.9 million pro ts during 2009, representing a 42% decline compared to $10.18 million in 2008. In a statement published in the Saudi stock market (Tadawul), the company said that fourth quarter pro ts were equal to the third quarter when the company posted $1.5 million. The company didn’t disclose the reason behind this decline, but weak products prices due to the credit crunch are believed to be the reason. Chemanol started up its methanol plant, which provides the main feedstock for the rm’s entire product range, in early October 2009, raising production capacity from an initial 420 000 metric tonnes per annum (mtpa) to nearly 1 million mtpa. The cost of the expansion projects amount to $600 million.
The new project will increase Qatar‘s petrochemicals production capacity.
together to develop a leadingedge project that will meet the growing global demand for petrochemical products,” Steve Pryor, president, ExxonMobil Chemical Company said. The proposed petrochemical complex would include a 1.6 m t/y steam cracker, two 650 000 t/y gas phase polyethylene plants, and a 700 000 t/y ethylene glycol plant. “The project will employ ExxonMobil’s proprietary steam cracking and polyethylene process, and product technologies,” the statement said. “It will utilise feedstock from gas development projects in Qatar’s North Field and produce a range of premium products to serve global petrochemical demand, with a particular focus on the growing Asian markets,” it added. Start-up of the project will be in 2015. ExxonMobil is the biggest foreign investor in Qatar.
Saudi Arabia scraps first private refinery plans
SAFCO reveals profits plummet of 57% in 2009
The head of the Saudi Arabian oil industry said that plans to build the rst private re nery in the KSA have been scrapped and that Saudi Aramco will now take over the construction and subsequent operation of the facility. The Saudi press agency (SPA) reported that Ali Al-Naimi said that while eight Saudi and 42 foreign contractors had been pre-approved by Saudi Aramco to bid for the tender, none of the bids have been successful. Al-Naimi also said that his Ministry appreciates and values the
Saudi Arabian Fertilizer Company (SAFCO) has posted pro ts of US$490.6 million pro ts for 2009 compared to $1.14 billion in 2008, a drop of a 57%. The company said that the decline in pro ts was due to the drop in fertilisers prices in the international markets during the last 12 months. Fourth quarter pro ts declined 19% to $95.9 million compared to $123 million in the third quarter 2009, due to the maintenance period the company undertook during the last quarter of the year.
companies that made a serious attempt to compete vigorously for the license of the project, but that Aramco was now going to implement the project itself. The Jizan Re nery will have a capacity of between 250 000 and 400 000 barrels per day when completed. It will be built in the south of the country near the border with Yemen. The project has been delayed several times due to cost issues, but of cials had indicated that nancial assistance would be made available to the winning bidder.
Petrochemicals Middle East February 2010
“The closing of four main plants for maintenance was the reason behind this result,” said Mohamed Al-Mady, CEO of the company. SAFCO produces 5.3m t/y of urea and ammonia through four production units located in AlJubail Industrial city. It started SAFCO 4 in April 2007, with production capacity of 1.1m t/y of urea and 1.1m t/y of ammonia. SABIC owns 42.99% of the shares of the company with 57.01% being listed in the Saudi stock market (Tadawul).
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News 7
SABIC issues $3.7bn bond
Briefs
The bonds will carry maturity for seven years from the date of issue Saudi Basic Industries Corporation (SABIC) announced that it has signed a deal with the Public Investment Fund (PIF) to issue bonds through a special offering. The agreement calls for several issues to raise the total amount of US$3.7bn (SR10 billion). Proceeds from the bonds will carry maturities for seven years from the date of each issue and will nance part of SABIC’s projects. PIF controls 70% of the shares of the giant petrochemicals player.
SABIC said in statement that it aims to expand and grow. “In this case, we expect that the company will launch new projects or acquire new companies in the near future,” said Mohammed Al Omran, president of the Riyadh based Gulf Financial Advisory Center. The company also mentioned that it wants to raise the level of nancial performance. “This is the most probable case, as it posseses many credits and loans with high costs.” said Al Omran.
“It seems that SABIC want to restructure its loans portfolio, by taking advantage of the current low interest rates, as it will help the company to reduce the cost of lending through introducing the notion of mezzanine nancing,” he revealed. Mezzanine nancing is a debt capital that gives the lender the rights to convert to an ownership or equity interest in the company, if the loan is not paid back on time and in full.
Qatar’s Ras Laffan Olefins Complex (RLOC) is expected to start the Ras Laffan cracker by the end of January. RLOC will crack ethane supplied from the Al Khaleej and Dolphin gas projects to feed the sponsor’s downstream derivative units. RLOC will produce 1.3 million metric tonnes per annum of ethylene and transport it to Mesaieed via a 120kilometer pipeline to feed Q-Chem and Qapco projects in Messaid. Iran’s state owned National Petrochemical Company (NPC) have taken offstream two crackers operated by Arya Sasol polymer (Olefin-9) and Jam Petrochemical (Olefin -10), due to ethane feedstock shortages and electricity problems. Olefin-9 has an ethylene producion capacity of 1m t/y while Olefin -10 has a porduction capacity of 1.32m t/y.
SABIC aims to raise the level of financial performance, boost competitiveness and contribute to the company’s strategy to expand and grow.
Sharq’s cracker ramps up production Eastern Petrochemical Company (Sharq) has been ramping up production at its new 1.3m tonne/year cracker in Al Jubail, Saudi Arabia since achieving onspec production at the facility at the end of December. The cracker achieved on-spec production on 30 December.
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The cracker’s new downstream polyole n facilities, consisting of a 400 000t/y high density polyethylene (HDPE) plant and a linear low density PE (LLDPE) plant with the same capacity, were also ramping up operating rates. The cracker and the PE plants are all running at low rates.
The exact production rates of the new cracker and PE plants were not disclosed. Sharq is a joint venture between Saudi Basic Industries Corp (SABIC) and Saudi Petrochemical Development Corp (SPDC), a consortium of Japanese companies led by the Mitsubishi Group.
Saudi International Petrochemical Company (Sipchem) has announced the export of its first vinyl acetate monomer (VAM) shipment to European markets through King Fahd Industrial Port. This shipment was produced by the International Vinyl Acetate Company (IVC), a Sipchem affiliate. LyondellBasell Industries will increase prices in Europe by $168 per tonne on all of its polypropylene grades and $140 per tonne on polyethylene.
Petrochemicals Middle East February 2010
8 News
Snapshot SABIC inks $2.68bn deal for SSTPC Saudi Basic Industries Corporation (SABIC) announced the signing of nancing agreements by its af liate SINOPEC SABIC Tianjin Petrochemical Company totalling US$2.68 billion, including $1.8 billion long-term nancing, plus an additional $880 million in working capital facilities to nance its petrochemical complex in Tianjin, owned by SABIC and SINOPEC.
Al Bayroni reduces output at its 2EH plant SABIC subsidiary Al Bayroni, has lowered output rates at its 150 000 t/y 2EH plant from 100% rates in December, down to 90% rates in January. The reduced runs are due to reduced propylene supplies. Al Bayroni sources its propylene requirements from SABIC, however recently there has been a shortage in propylene.
$2bn aromatics complex started up in Kuwait A subsidiary of the EQUATE Petrochemical Company has announced that it has started commercial operations of its US$2 billion aromatics complex. Kuwait Paraxylene Production Company (KPPC) said that the new complex, located in Kuwait’s Shuaiba Industrial Area, will produce more than 1.2m t/y of aromatics including 829 000 t/y of paraxylene and 393 000 t/y of benzene.
Hanwah set for Q4 launch The contracts will be awarded by the end of 2010 and early 2011 The CEO of Saudi International Petrochemicals Company (Sipchem) said that the company is expected to award the contract for its $1.1 billion joint venture project with the South Korean company Hanwah Chemical by the end 2010 or in early 2011. Al Ohali also said that Sipchem are con dent of securing loans from Saudi lenders to fund the project. “The projects being considered with Hanwah are targeted to be awarded in late 2010 or early 2011,” Al Ohali said. “Other projects under consideration could be awarded in a similar time frame. The projects are progressing as per plan with engineering work and preparation for tendering the EPC work,” he added. The project is expected to produce 200 000 t/y of ethylene vinyl acetate and 125 000 t/y of polyvinyl products and is expected to start commercial production during the fourth quarter 2013.
“Financing the project is targeted to procure senior debt commitments from the SIDF (Saudi Industrial Development Fund), PIF (Public Industrial Fund), ECA’s, and/or commercial banks. The nancing plan is being developed,” Al Ohali said. Al Ohali also said that some funding was already in place
Al-Ohali is confident that his company will not face difficulties to secure the loan.
Saudi Kayan awards LDPE plant contract to Daelim Saudi Kayan Petrochemicals Company (Saudi Kayan) has announced that it has signed a letter of intent for an engineering, procurements and construction (EPC) contract with the South Korean contractor Korean Daelim for the construction of a low density polyethylene plant (LDPE) at its complex in Al Jubail Industrial City, Saudi Arabia. “The duration of the letter of intent are three months, and further procedures regarding
Petrochemicals Middle East February 2010
after being procured in a March 2008 rights issue. “The amount of funding required as equity for Phase III projects is expected to be nalised in the rst half of this year as the projects being considered are approved by the Sipchem board of directors,” reaveled Al-Ohali.
this letter will be announced in the mean time,” the company said in statement. The value of the contract to build the 300,000 tonnes per annum plant was not disclosed. The rst plants of the complex are due to go on stream in 2010.
300 000
Capacity in t/y of the new LDPE of Kayan
Don’t miss 9- 11 February Petrochemicals Conference (Vienna- Austria) 21- 24 March Dubai Plast Pro’ 2010, Annual Congress. Dubai. UAE. 22- 25 March The Middle East Downstream Week, Abu Dhabi, UAE 24th- 26th May Petrotech, Bahrain
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News 9
Elliott nets KSA compressors contract Japanese company will build 17 compressor trains for the Jubail export refinery The turbo machinery specialist Elliott Company has announced that it has been awarded a contract to provide all seventeen compressor trains for the new Saudi Aramco Total Re ning and Petrochemical Co. (Satorp) export re nery in Jubail. In a statement released on the company’s website, the rm said that the new re nery has a variety of compression applications, including sour service, hydrogen service, and refrigeration. “We coordinated technical input from our of ces in Japan, the United States and the UK to
provide proposals for 17 strings of equipment, from small compressors to large, multi-body machines, to axial and single-stage machines,” David Baker, Elliott’s regional director for engineered products said. The value of the contract wasn’t disclosed. The Jubail Export Re nery project will process Arabian Heavy Crude and have a capacity of 400,000 barrels per day. Elliott Company is a wholly owned subsidiary of Ebara Corporation, a major industrial conglomerate headquartered in Tokyo, Japan.
Global Digest $174m The cost of the order that Gulf Navigation will cancel.
The JV between Total and Aramco will produce paraxylene, benzene and polymer-grade propylene.
$95
per tonne, increase of MEG prices by SABIC to $1020 per tonne for February contracts
4.5%
19m tonnes
China’s taxes on butanediol imports instead of 20.9%
-74%
$1.2bn
Sipchem profits down to $37.57m in 2009 due to the decline of demand
Fourth quarter profits of ConocoPhillips
$33.8
m Profits of Advanced Petrochemical Company in 2009
564 000 MEG imports of China in December (tonnes)
Qatar’s petrochemicals output by 2012
142 million tonnes The world’s yearly production capacity of ethylene by 2012
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Petrochemicals Middle East February 2010
89 News Interview 10
The seawater cooling tower and pumps at the Dow-PIC Olefins II project.
PIC’S NEW ERA Kuwait’s PIC is spreading its wings and is ready to embark on an aggressive new business strategy, says Maha Mulla Husain, PIC’s chairman and managing director
F
ollowing the lead of Saudi Aramco and SABIC, Kuwait’s Petrochemicals Industries Company (PIC) is entering Asian production markets, heralding a new era for the Gulf rm. PIC is also embarking on a new business strategy based on a focus on the petrochemicals industry and privatising its fertiliser production and marketing. Speaking to PME, Maha Mulla Husain, chairman and managing director of the company revealed the nal decision on its new project in China, which will include a re nery and petrochemical complex, will be made before the end of the rst half of 2010. PIC expects to complete the feasibility studies of the project early in 2010, according to Husain. “Economic feasibility studies are being prepared and will be handed to
Petrochemicals Middle East February 2010
specialised Chinese bodies during the rst quarter of 2010,” said the chairman and managing director. Sources close to the deal revealed that Dow Chemical is expected to be the partner with PIC in its China project. This comes after the withdrawal of Royal Dutch Shell last December, with the Anglo-Dutch super major citing “strategic reasons.” “PIC and DOW have several joint venture projects such as MEGlobal, Equipolymer and Equate. These joint ventures are governed by agreements,” said Husain. “They are also our potential partner in our project in China,” Husain added. The managing director declined to comment on the cancellation of the K-Dow joint venture in December 2009. “Negotiation
with Dow to settle the K-Dow dispute is still ongoing,” said Husain. Moving east represents a big challenge for the company according to the managing director. “We need to understand the culture and the way of doing business in China,” revealed Husain. “It is a real challenge for us,” she observed. The company has another project in Vietnam which will also include a re nery and petrochemicals complex. But the role of the company in this project differs from that in China. “The complex in Vietnam will focus on the production of paraxylene and the polypropylene,” she said. “Our role in the project will be based in the marketing side only, not like in China where we are a partner in production and marketing,” she added.
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90 News Interview 11
PIC has also completed the initial studies for the third ole ns complex in Kuwait, following the successful start of the second ole n project, in a joint venture with Dow Chemical in 2008 which produces ethylene, MEG and styrene monomer. The project is expected to cost US$5bn and will employ about 800 employees. The feedstock for the project may include mixed feedstock like methane and propane. “We are in discussion with Kuwait Petroleum Corporation (KPC) to choose suitable feedstock, but de nitively, it will need ethane gas,” she revealed. The managing director stressed that PIC did not plan to use any imported gas in the complex, but to focus on investing in Kuwaiti gas. Media reports said that PIC may rely on gas imported from Qatar for its new projects.
US$2.9
bn
Cost of the second olefins project, constructed by Fluor.
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Husain also revealed that Kuwait Petroleum Corporation (KPC), the parent company of PIC, plans to privatise the fertilisers sector as part of KPC’s strategy and to focus on the petrochemicals production. “Nothing will be implemented till the approval of the privatisation law by the Kuwait National Assembly,” she revealed. The general manager of PIC feels that the performance of the industry is improving. “We have seen some positive recovery of the industry and we have better margin in some of the products such as the polyole n,” said Husain. “Demand is picking up and, of course, we are waiting for it to get better and looking forward to that,” she added. Continuing expansion in petrochemicals is the key strategic plan of the company. “We will continue our growth, whether via acquisitions or through establishing new projects,” she said. “We study the opportunities we receive case by case,” revealed the managing director.
Maha Mulla Husain, chairman and managing director of Petrochemical Industries Co.
12 ExxonMobil
Steve Pryor, president of ExxonMobil Chemical.
Petrochemicals Middle East February 2010
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ExxonMobil 13
MOVING EAST As opportunities in North America and Europe dry up, the Middle East and Asia are the new focus fo for ExxonMobil, Steve Pryor, president ExxonMobil Chemical e foc E o Mobil says a Ste eP o p e ide t of E o Mobil Che ical uccessful petrochemical companies require a marriage of technological know-how and access to cheap and readily available feedstocks. For this reason major technology providers are ocking to the Middle East. PME met Steve Pryor, president of ExxonMobil Chemical, who discusses the experiences of his company in the region. ExxonMobil has successful downstream joint ventures in Saudi Arabia with SABIC and in Qatar with Qatar Petroleum. “We have two joint ventures in Saudi Arabia, Yanpet and Kemya, both with SABIC, they produce ethylene and its derivatives,” explains Pryor. The company has had a regional presence for more than 60 years, as it also invests in the upstream sector in Saudi Arabia, Qatar and the UAE. “We initiated our partnership with SABIC 25 years ago,” says Pryor. “So,
S
LOCAL PROJECTS: • Exxon and QP: The proposed petrochemical complex would include a 1.6 MTA steam cracker, two 650 000 t/y gas phase polyethylene plants, and a 700 000 t/y ethylene glycol plant. • YANPET: Saudi Yanbu Petrochemical Company is 50/ 50 joint venture between SABIC and ExxonMobil, established in 1985, and it produces ethylene, polyethylene and ethylene glycol using ethane, LPG and light Naphtha as feedstock. The plant is located in Yanbu. • KEMYA: Al-Jubail Petrochemical Company is 50/ 50 joint venture between SABIC and ExxonMobil, established in 1985, it produces linear low density polyethylene (LLDPE) and ethylene glycol using ethylene as feedstock. It is located in Al-Jubai industrial city.
“60% OF THE WORLD GROWTH WILL BE ASIA, MAINLY FROM CHINA” STEPHEN PRYOR, PRESIDENT OF EXXONMOBIL CHEMICAL we are no stranger to this region, and we discovered the power of partnership with governmental and national companies and companies like us,” he adds. Though the feedstock cost advantage was the main motive behind the company presence in the region, other big factors have strengthened the decision. “All our plants with SABIC are world class facilities in all aspects, such as scale, performance, safety and in every aspect of competitiveness. This is along with favourable logistics to supply both Europe and Asia Pacific region from this region, mainly from the Kingdom, along with very supportive governmental policies as well,” Pryor notes.
Gulf activities The company’s petrochemical activities in the region are currently focused on Saudi Arabia and Qatar, in the upstream and in the downstream sectors. “We have an excellent partnership with Qatar Petroleum, where we have an LNG project and other oil related projects. Also we are working with QP on the concept of developing new world class petrochemicals complex including a world class ethane cracker,” reveals the president of ExxonMobil Chemical. In Saudi Arabia, its elastomers project with SABIC going up for development. “Over the next few months, we will be releasing more of the FEED contracts,” says Pryor. “In the months to come we and our partner will evaluate the economics of these ventures, and therefore we will go for the signature of the venture agreement. The sleeves are rolled up, we are in the project development phase,” he observes. Speculation in media about the cost of the project is rife, some sources estimated the cost of the project would be at around
The company has had a presence in the Middle East region’s downstream sector for more than 25 years.
www.arabianoilandgas.com
Petrochemicals Middle East February 2010
14 ExxonMobil
The two joint venture projects with SABIC are involved in the production of olefins and their derivatives.
$5bn, but the president says such guess work is unfounded. “We haven’t announced the cost or start up,” says Pryor. “But they are significant projects and we are not in position to talk about the cost. The important thing is that the concept is good and we are busy trying to shape the project to deliver what we are looking for,” he adds. The elastomers joint venture will have a combined capacity of 400 000 t/y and produce carbon black, as well as rubber and thermoplastic specialty polymers such as ethylene propylene diene monomer, thermoplastic olefins, styrene butadiene rubber, polybutadiene rubber as well as butyl rubber. The butyl rubber plant is expected to be based within Kemya’s Al Jubail complex. Other planned units will be located at the partners’ Yanpet facility.
Global presence The future strategy of ExxonMobil’s chemical business is based on moving east
to serve the increasing demand from the region. “The footprint is gradually shifting from North America and Europe to Asia, and therefore we are shifting gradually to serve these regions, though we are still remaining strong in mature markets, however, all our new major investments are targeting the East, whether the Middle East which is well advantaged to serve the Asia Paci c and Europe, or in Asia Paci c itself,” says Pryor. “The fastest demand will be in the Asia Paci c, mainly China, which is expected to be the engine of the growth, almost 60% of world growth is anticipated to be in the region,” he reveals. The company has recently inaugurated a new re nery in China in joint venture with Saudi Aramco and China’s Sinopec. “The other big piece of the new wave of eastern expansion is Singapore which is best placed to serve the Asia and Paci c.” says Pryor. “So the strategy for this business is to be best in place in every part of our business,” he explains.
With its global presence, Pryor reveals that his company faces many challenges. “The issues we face in the region are really no different to the challenges we face worldwide. In the short term, we have the cost of recession and for the rst time since the early 80’s, we have weak demand,” he adds. “A drop of demand and a lot of supply will make an even more challenging environment,” he explains. “We take a long term view of the business which is very positive as it will grow about 2% faster than GDP for the long term,” reveals Pryor. “We see a short term economic challenge but we see a bright long term future,” he observes. Other challenges in the region are the growing barriers to free trade, especially in the target markets. “Our industry has been based on a positive history of trade and open access to the market and that’s been part the success story of the industry,” Pryor says. “When I talk about the future of the business, the Middle East will be the main player of export in this business, but anti dumping charges will certainly affect the industry,” he observes. Coupling technology and innovation is the winning mix for the industry according to the president. “With the new technology comes new products, and I think it’s a big opportunity for regional producers to increasingly produce speciality products, that can help consumers to save energy and that contribute to suitable performance,” he explains. “In times like this, if you can offer products that help consumers save energy, you will be very successful,” Pryor concludes.
“ALL OUR NEW MAJOR INVESTMENTS ARE TARGETING THE EAST” STEPHEN PRYOR, PRESIDENT OF EXXONMOBIL CHEMICAL
Petrochemicals Middle East February 2010
SABIC is the main partner of ExxonMobil in the region.
www.arabianoilandgas.com
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16 Technology Focus
CRACKING MOLECULES
Licensed technology and cheap feedstock are pushing Middle East petrochemicals producers to new highs
echnology licensing for downstream companies is prospering in the Middle East region, as the newly established petrochemical plants include advanced process units, which require cutting edge process technologies. All local producers have access to low cost feedstock, but licensed technology in essence is commercialising the know-how which is the main ingredient for petrochemical producers to be prominent on the world scale. Various market changes, ranging from increased product demand to alterations in product legislation and emission standards, can trigger project opportunities. “We can offer technologies to upgrade the capacity and performance of operating plants, integrate new process units into existing re neries and petrochemical complexes, incorporate advanced catalyst systems and reactor
T
Petrochemicals Middle East February 2010
internals and build grass-roots re neries,” says Kelvin Halliwell, licensing manager at Shell projects and technology. A technology license agreement grants the user the right to use speci c technologies, patents, software, and product designs. In a typical agreement, a running royalty fee based on licensed product sales revenue is paid to the licensor on a periodic basis. Though the majority of licenses are available for open licensing, some of technology owners license their technologies only under partnership agreement. “LyondellBasell’s propylene oxide and metathesis technologies are only licensed in joint venture partnerships,” says Kaspar Evertz, responsible for global licensing business, at LyondellBasel Industries. “But all our polyole n technologies are available for open licensing,” he adds.
Moreover, due to the magnitude of the investment required, as well as the nancing constraints, often owners are reluctant to commercialise the new cutting edge technologies. “Lummus has tried to meet this challenge by forming partner relationships with major producers. For the industry challenges to be continually met, these relationships must continue to expand,” says
28.0 million tonnes
Annual ethylene production of Middle East countries by 2012.
www.arabianoilandgas.com
Technology Focus 17
Stephen Stanley, vice president of ole ns technology business group at Lummus Technology. CBI Lummus is one of ve major players that provide technology to develop ethane facilities. The list also includes Linde, Technip, Stone & Webster and KBR. Major technology licensors offer support to their clients throughout the different phases of the projects. “With every license, we can offer a process design package (as opposed to basic design package), detailed support to engineering, procurement and construction (EPC) contractors, and extended training and start-up services,” says Halliwell. “We also offer a differentiated technical assistance and optimisation during the rst and subsequent cycles; and decision-making support,” he adds. However, each licensed technology has speci c features that differentiate it from the competitors. “Lummus have a leading market share in the majority of the technologies we license. In general, this position is the result of superior process performance and minimum capital costs, leading to the best internal rate of return (IRR) for each project,” explains Stanley.
Kaspar Evertz, global licensing business, LyondellBasel.
development programmes that focused on changing the process chemistry downstream of the pyrolysis module (i.e., the ethylene plant reactor system) and on a fundamental recon guration of the steam cracker ow sheet. “Our programme has led to 16 improvements that represent the rst fundamental changes in ethylene technology in more than 25 years,” explains Stanley
“These innovations include several in the pyrolysis module that lower NOx (oxides of nitrogen), reduce greenhouse gas emissions, and extend the time between heater decokings. One key innovation is providing the combustion air by using a gas turbine exhaust. “This integration reduces the overall energy consumption 25% by improving the cycle ef ciency,” he explains. Moreover, for the ethylene process technology, the ethylene ow sheet innovations include the replacement of the three separate refrigeration systems used in the conventional ow sheet with a single system. “This reduces the number of rotating equipment casings by half, thereby lowering investment while reducing maintenance costs and increasing reliability,” observes Stanley.
Technology Shift As downstream product demand shifts, the product mix from the petrochemical complex will need to also shift. As the amount of ethylene produced from ethane and propane is expected to increase, the co- production of propylene will drop. This drop, coupled with a higher growth rate for propylene derivatives,
Olefins Technology “The production of ole ns (which includes ethylene and propylene) by steam cracking is a fairly mature technology. While improvements in the con guration of the pyrolysis module and the product recovery sections continue to increase the ef ciency of the process, the process chemistry and fundamental ow sheet con guration has remained relatively unchanged,” says Stanley. With rising global warming concerns, ole ns producers face a number of challenges. “One is to reduce greenhouse gas emissions by reducing the fuel red in the thermal cracking of feedstocks and by lowering the energy consumption of the product recovery section,” says Stanley. “Another challenge is to lower the signi cant level of investment associated with new steam cracking facilities. A third challenge is to improve the IRR on these investments by enhancing the product slate produced from thermal cracking, thereby improving the operating margins,” he adds. To help meet these challenges, technology providers have invested in research and
www.arabianoilandgas.com
Technology owners license their technologies only under partnership agreement as it is more beneficial for them.
Petrochemicals Middle East February 2010
18 Technology Focus
Massive potential of the petrochemicals industry in the Middle East led major technology licensors to look of joint venture opportunities with local petrochemical companies.
will increase the demand for on-purpose propylene production. “This on-purpose demand will be met in part by technologies licensed by Lummus, including Ole ns Conversion Technology (OCT) and Ethylene Dimerisation), as well as CATOFIN propane dehydrogenation and Methanol-to-ole ns (MTO),” explains Stanley.
the foreseeable future. “We have demonstrated single-train propane dehydrogenation units with capacities up to 650 000 t/y and single train OCT units with capacities up to 800 000t/y. The capacities of these units will also be increasing to meet this investment minimisation challenge,” Stanley reveals.
“THIS INTEGRATION REDUCES THE OVERALL ENERGY CONSUMPTION 25% BY IMPROVING THE CYCLE EFFICIENCY” STEPHEN STANLEY, LUMMUS TECHNOLOGY One approach to minimise the capital investment associated with a petrochemical complex is to increase economies of scale. Ethylene plants today can produce 1.5 to 1.6 million tonnes per annum in a single train. Developments under way will increase the single-train capacity to over 2million t/y in
Kelvin Halliwell, licensing manager, Shell.
Petrochemicals Middle East February 2010
Feedstock issue The are some differences in the process coming from the type of feedstock used. “Ethane-feed crackers can be less complex than propane and heavier feed crackers due to the production of fewer by-products. That is, the ethane cracker produces 80% ethylene with the other two principal by-products being hydrogen and methane,” says Heinz Zimmermann, vice president of business development at Linde Engineering. “Generally, the C3 and heavier products are not produced in suf cient quantities to justify product recovery. On larger scale ethane crackers, the recovery of propylene is typically justi ed; however, all other by-products are used as fuel. This can signi cantly simplify the recovery section of the cracker,” he adds. With oxymoron of ethane feedstock, feed exibility is becoming increasingly important. “If more than 10-15% propane or heavier feed is added to the cracker, by-product recovery is usually justi ed and the ow scheme becomes similar to the
naphtha-feed plant. While the equipment is smaller, the process con guration remains the same,” explains Stanley.
Local Technology Recently, SABIC has entered the arena of technology providers, announced the successful commercialising of the Linear Alpha Ole ns (LAO).using its -SABLIN technology developed jointly by Linde. “This rst commercialisation of LAOs at Jubail is very much in keeping with SABIC’s continuous search for innovative technologies that can be employed to bring new and better product solutions to the marketplace,” said Dr Abdulrahman Al-Ubaid, SABIC’s vicepresident technology and innovation. “The commercialisation of this technology is a big success for SABIC and Linde, by using this technology in new commercial solutions and applications in global markets. The SABLIN process is the rst and only commercially proven LAO technology which is available for licensing to third parties,” said Dr Markus Raab, managing director of Linde’s engineering division. In the looming future, regional producers are expected to focus on technology research and development programmes. Now its SABIC who entered the domain, but in the future more companies may come.
Major Ethylene technology providers: Linde Technip Stone & Webster and KBR, CBI Lummus
www.arabianoilandgas.com
Interview 21
Technology Upgrade
Command and control Emerson’s new Delta V system will reduce capital expenditure and slash installation costs Introducing new technology and improving existing infrastructure is the key element for competition between process control providers. This task alone represents a major challenge especially in the era where every client looks at the cost and the simplicity of usage before taking the decision of introducing the new technology. “Process control technologies have come a long way in the past 40 years,” said David Kraft, sales director at Emerson Process Management, Process Systems and Solutions in the Middle East and Africa. “But the industry has invested almost exclusively on feature and technology enhancement, instead of designing around
how people actually use the technology. We believe it’s time technology began serving people, instead of the other way around,” Kraft explains. With this in mind, Emerson process management has introduced the new Delta V S-series platform featuring ‘I/O on demand’ and electronic marshalling. “Whether you want to use conventional 4-20, bused or wireless I/O, DeltaV reduces the work required throughout the lifecycle of the project,” said Kraft. The DeltaV has been around since the mid 1990’s, and was launched on the M-Series platform. “What we presented and demonstrated recently in Abu Dhabi was the
David Kraft, sales director at Emerson Process Management, Process Systems and Solutions in the ME & Africa.
www.arabianoilandgas.com
Fingertip Facts C Company: Emerson E Headquarters: St. Louis, Missouri. USA Sales: $24.8bn Rank: 94th out of 500 America’s largest companies
launch of the S-Series platform that enables ‘IO on Demand’,” says Kraft. “The DeltaV v11 software that enables the DeltaV system will run on both the M-Series and S-Series platforms. In fact, you can have both hardware series running within the same system,” he revealed. The new products will help petrochemicals companies achieve a number of bene ts. “It will reduce capital expenditure by elimination of work and cabinets, reduced schedule by reduction of work,” said Kraft. “It will also reduce operational expense with I/O exibility and improved human interaction with the operations environment,” he adds. Whether the company chooses a wireless or bused solution, the new technology is designed to help the user. “If you are implementing a bused solution, we eliminate the need for separate power conditioners and their cabinetry. If you are implementing wireless, you eliminate the need for wiring and cabinets all together,” reveals Kraft. “If you are using electronic marshalling 4-20ma we eliminate the need for the cross-wiring, or if you use the electronically marshalled junction boxes, this eliminates the marshalling cabinets completely,” he adds. Cost represents a major factor in any purchase decision, so Kraft says installation costs can be slashed. “Studies have shown a 30% reduction in total installed cost using DeltaV’s I/O on demand. Many factors like documentation, test requirements and process will have a large impact on the cost of a system,” he concludes.
Petrochemicals Middle East February 2010
22 Valves
FLOW CONTROL
Due to the importance of valves at any petrochemicals plant, buyers should make sure all aspects are covered before making a final decision
n an industry where the smallest leakages could cause a disaster, ow control plays a critical role in safeguarding plants from disaster and in maximising production of the different products. Key to this process is valves. The rst step in the production of petrochemical is cracking the feedstock, whether ethane or any other heavier feed like naphtha, into ethylene and propylene. This cracking process take place in a furnace, and it is called pyrolysis which is the thermal cracking of petroleum hydrocarbons with steam, also called steam cracking. “Valves in the furnace section play a critical role in maximising ethylene production and throughput,” says Ian Turner, general manager of IMTEX Controls. “There are three critical control valve applications in the furnace area including dilution steam ratio control, feed gas control, and fuel gas control,” he explains.
I
Precise control of the steam dilution valve is necessary to maintain the proper steam ratio, which can greatly affect the ef ciency of the furnace, while the feed gas control valve controls the ow of feedstock used in the ethylene plant. Tight control of the valve is critical in the steam dilution valve so that the proper reaction ratio can be maintained within the furnace, and thus avoids wastage. Fuel gas regulates the temperature of the furnace by controlling the fuel to the burners. “Due to the nature of the fuel, many plants use emissions control packing to limit the emissions of the fuel gas. This is for environmental concerns as well as general safety reasons,” says Turner. “As with the other valves in the furnace area, due to location, the fuel gas valve may also see high ambient temperatures. Depending upon on the ambient temperatures for each particular application, special care may need to be taken in selecting the actuator and accessories,” Turner explains.
Buyer’s Guide Purchase managers should look at various aspects before taking the decision on which valve should be used in their plants. “Operational effectiveness in today’s plants is critical. Today’s Fisher Control valves are high performance engineered solutions designed to achieve this goal 100%,” says Jose Mathew, sales director, Middle East and Africa, Fisher Valve Division at Emerson Process Management. “Reliability of the control valve assembly is a key in achieving a
Christophe Melinette, managing director Tyco ME.
high standard of operational effectiveness,” Mathew adds. “The buyer of control valves today is looking for a reputable supplier with the technology to support the products, and it also has the necessary local support and expertise to meet their plant needs over the life cycle,” says Christophe Melinette, managing director Tyco Flow Control Middle East. “The supplier should have all the necessary international type of approvals, industry standards and quality certi cation to back up his products,” he adds. There are a broad range of valve speci cations and standards in use today. These include international standards and regulations as well as customer speci cations. “Valves speci cations are
“VALVES IN THE FURNACE SECTION PLAY A CRITICAL ROLE IN MAXIMIZING ETHYLENE PRODUCTION AND THROUGHPUT” Vanessa Triple Offset valves under Cryogenic testing.
Petrochemicals Middle East February 2010
IAN TURNER, IMTEX CONTROLS
www.arabianoilandgas.com
Valves 23
determined by the end user and the engineering contracting houses that design and build the plants,” reveals Melinette. Common standards are developed by international agencies. “These standards are in-depth and highly diverse, while customer standards are often dependant on the criticality of the application in the process or other customer needs. A control valve supplier should be able to provide a broad array of products, services, and test capabilities to comply with these needs,” explains Mathew.
nickel alloys, as you would expect the price of the control valve is highly dependent on these factors. A common control valve can range from around $1000 to over $250 000,”says Mathew. Control valves are truly a long term investment for a customer and their operation, not a commodity. Though the prices of these valves can’t be determined easily, demand from petrochemicals producers in the Middle East can be noticed easily giving the fact of the huge downstream projects launched in the region. “There is strong demand within the region for petrochemicals. In the past there has been a great deal of investment in new plants in and around the Gulf Region,” says Melinette. “Looking at investor reports and independent surveys there are also future investments waiting for the green light to proceed,” he concludes.
Not a Commodity Whether it is a gas feedstock or a liquid, each process has a unique set of operating pressures, temperatures, ow rates, material
The Fisher control valve solution from Emerson.
Ian Turner, general manager of IMTEX Controls.
www.arabianoilandgas.com
requirements, and many others speci c parameters or requirements. The type and con guration of a control valve is dependant on all of these. Therefore, it is very dif cult to identify an average price of a valve for a plant as it is also dependent upon what the plant is manufacturing and the size of the plant. Today’s control valves come in multiple con gurations, sizes, and types. “They can generally range from under 1 inch in size to over 72 inches in size. Materials can be simple carbon steel to exotic high
US ANSI - American National Standards Institute ASME - American Society Of Mechanical Engineers API – American Petroleum Institute NACE - National Association of Corrosion Engineers
EU IEC – International Electrotechnical Commission ISA - International Society of Automation
Petrochemicals Middle East February 2010
24 ATEX STANDARDS
Proper equipment certification for explosive atmospheres (ATEX) is critical says Okazaki’s Chris Chant
I
t is crucial that companies understand the ATEX harmonised standards, and which supplier equipment is properly certified for the selected hazardous area and protection concept,” says Chris Chant, business development manager, Okazaki. When it comes to installing temperature sensors such as thermocouples or resistance thermometers [RTDs] in hazardous areas, many companies are still making mistakes with regard to equipment certification requirements. “Some of our customers, for example, do not fully understand or are not aware of product certification requirements based on their zone and classification choice.
Petrochemicals Middle East February 2010
Also they are unaware of the new ATEX harmonised standards and how these standards affect equipment being sourced,” explains Chris Chant, business development manager at Okazaki Manufacturing Company (OMC). “It is crucial that companies understand the ATEX harmonised standards, and which supplier equipment is properly certified for the selected hazardous area and protection concept that they have selected, otherwise safety of installations cannot be guaranteed,” he adds. Petrochemicals firm in the region use temperature measurement products such as
thermocouples and RTDs installed in potentially explosive atmospheres need to ensure that the sensor assembly (sensor, enclosure and terminal glands) actually meets the overall area classification requirements for each specific installation. “In Europe, this is covered by the ATEX Directives, including the new ATEX harmonised standards,” he says. Directive 94/9/EC covers equipment that is intended for use in potentially explosive atmospheres. The CE mark on equipment such as this represents the manufacturer’s declaration of compliance to this directive and to the EN standards that are harmonised
www.arabianoilandgas.com
ATEX STANDARDS 25
to it. “All equipment should be supplied with a declaration of conformity stating compliance with these standards and issued with product certification provided by a notified body such as BASEEFA or SIRA in the UK,” says Chant. If the chosen certification classification is Exia (Intrinsic safety) for use in zone 0, 1 or 2 then there is no need for product certification in the case of thermocouples or RTD sensors, but care must be taken to ensure the correct installation, with selection of an appropriate barrier, and to ensure that the IP rating of the termination is correct and that there is appropriate terminal clearance. Product certification is 100% required in cases where thermocouples or RTD sensors are designated for Exd (flameproof ). Care should be taken when using a terminal housing – the sensor should be terminated in a suitable Exd-certified enclosure. “A standard temperature assembly such as this normally requires a spring-loaded sensor to ensure good contact is made with the tip of the thermowell. The base of the housing is therefore fitted with a flame path-controlled bore or collar that provides a flame path seal into the base of the housing, enabling free movement of the sensor via spring loading,” Chant explains. However, Chant warns that this can lead to certification problems. “Although the enclosure rating is not affected, the inclusion of the sensor introduces a possible fault condition, which requires additional certification.”
Solution OMC has overcome these challenges by having the complete assembly (sensor and
Okazaki’s range sensors of sensors are zone 1 rated.
www.arabianoilandgas.com
Some Middle East operators are unaware of the new ATEX harmonised standards says Okazaki’s Chris Chant.
enclosure) certified as Exde IIC T6, which provides Exd certification for the enclosure and Exe (increased safety) certification for the sensor. “This means that the user can install the assembly in a zone 1 hazardous area without requiring additional thermocouple or RTD IS safety barriers. If, for example, a head mounted, hockey puck style transmitter is installed, no extra certification is needed for the electronics module,” explains Chant. For many years, the EN50014 series of standards has been the backbone of ATEX compliance. However, by the end of 2008, most of the series was superseded by standards from the EN60079 series and has been withdrawn. “This presents a potential problem for holders of ATEX EC type examination certificates to these withdrawn standards. To help customers, all OMC products have now been upgraded and are fully certified to the latest ATEX harmonised standards,” he adds. Other scenarios also require careful consideration. “For example, if companies install the latest Hart and digital fieldbus transmitters (such as a Yokogawa YTA 110 and YTA 320 or an Emerson 3144P), care should be taken to ensure that approval of the complete assembly is certified, not just the transmitter. First, the integral transmitter and housing should carry its own certification, then the temperature sensor coupled to this transmitter should
also carry its own certification or be glanded to the unit using an approved terminal gland.” Observes Chant. To simplify installation, OMC has developed its FPN (flameproof nipple) range of thermocouple or RTD sensors. “These units, which are pressure tested to 1000psi, can be fitted to other manufacturers’ temperature transmitters, while still maintaining the spring loading feature and an IP66/67 rating, without requiring any compression glands to be fitted that would restrict movement of the sensor. Again, by working with BASEEFA, OMC has achieved Exde IIC T6 certification for the FPN range,” he explains. When terminating mineral-insulated (MI) thermocouples and RTD sensors into suitably certified Exd or Exe enclosures, engineers also need to ensure that the terminal glands carry the appropriate certification. The glands themselves need to be approved for use with sensors rather than just for cables. “This is because, unlike cables, a temperature sensor is not terminated at each end and so can have different fault conditions. We offer a comprehensive range of thermocouples and RTDs that are certified as combined units with their own range of termination glands, giving an overall certification of Exde IIC T6. This greatly simplifies the whole compliance process for the customer,” Chant concludes.
Petrochemicals Middle East Fenruary 2010
Project Report 27
Contax Project Snapshot:
Ras Laffan Olefins Complex
$6ben ct proj
Kathleen Bury, director of market analysis, at Contax Partners, looks at the Ras Laffan Olefins Complex (RLOC) in Qatar GCC Context
KATHLEEN BURY, DIRECTOR MARKET ANALYSIS, CONTAX PARTNERS With eight years of experience in strategy development and implementation, project management, EPC contracting, strategy implementation and knowledge management, Kathleen is direc-
Despite the current economic climate, the total planned GCC energy Capex landscape for 2010 to 2012 continues to show promise with c.$394bn worth of investments on the table. The dominant sectors continue to include the petrochemical and refining sectors, with estimated Capex of c.$76bn and c.$74bn respectively, already planned for award by the end of 2012. Qatar continues to support a project Capex position of c.10% worth of the investment planned within the GCC energy space by 2012. Contax Partners’ robust and regular analysis of the ‘Impact of the Financial Situation on GCC Energy Project Workload’ indicates that the project postponement trend seen over the past few years has resulted in a considerable amount of award and execution schedule slippages. Despite the high level of project awards in 2009, this trend looks set to continue in the near future. Nevertheless, given the GCC’s commitment to solidifying its global ‘petrochemical and refining hub’ position and developing its downstream presence, it is anticipated that a number of key strategic projects will be realised in the long run. A major project that is expected to help Qatar achieve this goal is the Ras Laffan Olefins Complex (RLOC).
on the northeast coast of Qatar. During 2009, as forecast by Contax Partners, the project faced heavy delays as a result of the uncertainty around feedstock allocation and the rising project costs. Nevertheless, in January 2010, the JV signed an agreement to progress with the development of the complex as result of the decrease in EPC costs during 2009, certainty around feedstock allocation and the increase in demand for ethylene derivatives from countries such as China, India and other Asian markets. The US$6bn petrochemical complex, which includes a world-scale 1.6 million metric tonnes per annum (MTA) mixed gas cracker and associated derivatives units, is expected to begin operations in 2015, three years after the original completion date. ExxonMobil’s steam cracking furnace and LDPE technologies will be employed to produce approximately 2 million MTA of commercial products; monoethylene glycol, ethylene, LDPE and LLDPE. Ras Laffan’s coastal location is of GCC Energy Project Capex Split by Sector 2010-2012
tor of market analysis at Contax Partners. She has worked with FTSE 100 and other international
Background and Strategic Importance
companies in the United Kingdom, Middle East
In 2006, QP and ExxonMobil Chemical Qatar (a subsidiary of ExxonMobil) agreed on a 51:49 JV to build a world-scale petrochemical complex at Ras Laffan Industrial City located
and Africa. Kathleen has a strong background in the energy, utilities and construction sectors.
www.arabianoilandgas.com
2010 - 2012 Other energy sectors
Refining
Petrochemicals
Source: Contax Partners, MEED Projects, January 2010
Petrochemicals Middle East February 2010
28 Project Report
Getty Images
RLOC will produce olefins and polyolefins.
Challenges
The initiative will bring foreign expertise and innovative chemicals into Qatar’s petrochemicals mix.
strategic importance to the JV, allowing an easy export route to Asian and European markets where premium products are in demand in these two areas. Development of the RLOC project looks set to satisfy a number of key strategic objectives: • The investment will utilise feedstock from gas development projects in Qatar’s North Field to capitalise on the surging demand for ethylene derivatives in rapidly developing nations like India and China
Timeline and Status Project activity
Proposed timeline/status
EPC ITB Issue
Q1 2011
EPC Award
Q4 2011
Completion Date
Q1 2015
Source: Contax Partners, January 2010
Key Project Details: Project Name:
Ras Laffan Olefins Complex
Project Owners:
Qatar Petroleum 51%: ExxonMobil 49%
Status:
Front End Engineering Design (FEED)
Location:
Ras Laffan, Qatar
Feedstock
Ethane and Propane
Contractors
PMS: Foster Wheeler FEED: Foster Wheeler
EPC Award Date:
Q4 2011
Completion Date:
Q1 2015
Source: Contax Partners, January 2010
Petrochemicals Middle East February 2010
• RLOC is part of Qatar’s investment programme to build its petrochemicals output capacity and be recognised as a leading petrochemical producer in the region with a diversified and carefully balanced portfolio • The initiative will bring foreign expertise and innovative chemicals production into Qatar’s petrochemical industry and give it access to ExxonMobil’s global marketing network • RLOC will enable ExxonMobil to capitalise on its core competencies whilst utilizing Qatar’s competitive feedstock prices. This will provide ExxonMobil with a competitive advantage and a platform for further growth in the Middle East • The complex will produce mono-ethylene glycol, ethylene, LDPE and LLDPE which in turn will provide raw materials and many investment opportunities, creating more jobs for Qatari nationals and helping the Qatari government with its Qatarisation initiative.
Economic and market dynamics continue to question the validity and schedules of many of the energy projects within the GCC. With the continued recession in buyer economies, desire for project owners to take advantage of perceived lower critical input costs by driving down EPC bid prices and project financing issues; projects are being postponed and cancelled on a weekly basis. Contax Partners’ continuous analysis of the impact of the current market dynamics on GCC Energy Project Workload provides clients with clarity around which projects have a greater than 70%, between 40-70% and less than 40% probability of proceeding within the current economic climate and thus which sectors and countries will present the greatest opportunities. Following the recent signing of an agreement to progress with the development of the project and thus the renewed commitment from the JV parties, Contax Partners believes that the RLOC project has a high probability of going ahead as planned.
Contax Opinion: Likelihood of Project Realisation Low Medium High
Scope of Work The RLOC scope comprises of four main packages: o Mixed Gas Cracker o Offsites & Utilities o MEG Units o LDPE/EVA Units
Contax offers a unique portfolio of fact based market and project reports which provide in-depth project information and market analysis to help you make informed decisions. For more information and access to these reports, contact marketing@contaxgroup.com
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30 Number Cruncher
Downstream Data
Petrochemical companies saw share prices improve through January. Regional listed companies led the charge, with SABIC posting the largest gains. LISTED COMPANIES IN THE SAUDI STOCK MARKET Price on Dec,19th (US$ per share)
Price on Jan,19th (US$ per share)
Change %
Saudi Basic Industries Corporation (SABIC)
21.60
23.93
9.75
Saudi Arabian Fertilizer Company (SAFCO)
32.93
33.73
2.37
Saudi Kayan Petrochemical Company (Kayan)
4.79
5.05
5.28
Rabigh ReďŹ ning and Petrochemical Company (Petrorabigh)
9.33
9.31
-0.29
Yanbu National Petrochemical Company (YANSAB)
7.92
9.47
16.34
National Industialization Company (TASNEE)
7.01
7.52
6.74
Saudi Industrial Investment Group (SIIG)
5.87
5.92
0.90
Saudi International Petrochemical Company (SIPCHEM)
5.97
6.37
6.28
Sahara Petrochemical Company (SAHARA)
5.31
5.68
6.57
Advanced Petrochemicals Company (Advanced)
6.37
6.56
2.85
Nama Chemicals Group (NAMA)
2.96
2.81
-5.21
Alujain Corporation (ALUJAIN)
4.45
4.92
9.49
Methanol Chemicals Company (CHEMANOL)
4.07
4.15
1.93
Petrochem
4.29
4.13
-3.87
LISTED COMPANIES IN THE KUWAITI STOCK MARKET Price on Dec,19th (US$ per share)
Price on Jan,19th (US$ per share)
Change %
Qurain Petrochemical Industries Company (AL-QURAIN)
0.63
0.67
6.25
Boubyan Petrochemical Company (BOUBYAN)
1.51
1.49
-1.18
Ikarus Petroleum Industries (IKARUS)
0.42
0.47
10.45
LISTED COMPANIES IN THE QATARI STOCK MARKET Price on Dec,19th (US$ per share) Industries Qatar
31.87
Price on Jan,19th (US$ per share) 30.33
Change % -5.07
LISTED COMPANIES IN THE OMANI STOCK MARKET Price on Dec,19th (US$ per share) Oman Chlorine S.A.O.G. (CHLORINE)
0.92
Price on Jan,19th (US$ per share) 1.01
Change % 8.83
LISTED COMPANIES IN THE EGYPTIAN STOCK MARKET Price on Dec,19th (US$ per share)
Price on Jan,19th (US$ per share)
Change %
Abu qir Fertilizers
41.06
40.92
-0.33
Sidi Kerir Petrochemicals Company
1.87
2.09
10.45
Petrochemicals Middle East February 2010
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Number Cruncher 31
1250 1150
800
1050
CFR: Cost and Freight
1250
PPF (CFR FAR EAST)
1150
1250
US$/tonne
950
800 750 650
1100 1000
1250
12/12/09
09/01/10 09/01/10
12/12/09
07/11/09
11/10/09
15/09/09
17/08/09
20/07/09
23/06/09
29/04/09
01/04/09
04/03/09
04/02/09
27/05/09
09/01/10
12/12/09
07/11/09
11/10/09
15/09/09
17/08/09
20/07/09
23/06/09
27/05/09
09/01/10
12/12/09
07/11/09
11/10/09
15/09/09
17/08/09
20/07/09
23/06/09
27/05/09
29/04/09
350
01/04/09
400
600
04/03/09
450
650 04/02/09
500
700
HDPE (CFR FAR EAST)
07/01/09
550
750
Propylene prices have reached $1200 per tonne supported by the strong demand from users in Asian markets. Polyethylene prices rose by $60 to $1310 per tonne, on the back of tight supply and rising feedstock ethylene costs.
600
29/04/09
800
(CRF FAR EAST)
01/04/09
850
04/03/09
US$/tonne
700
900
NAPTHA
04/02/09
PVC (CFR FAR EAST)
07/01/09
09/01/10
12/12/09
07/11/09
11/10/09
15/09/09
17/08/09
20/07/09
23/06/09
27/05/09
29/04/09
01/04/09
04/03/09
04/02/09
07/01/09
550
950
MEG
Polypropylene prices reached $1290 per tonne, the highest level in 13 months, due to limited supply of the product to the market.
900 US$/tonne
1150 1050 950
800 700
09/01/10
12/12/09
07/11/09
11/10/09
15/09/09
17/08/09
20/07/09
23/06/09
27/05/09
29/04/09
09/01/10
12/12/09
07/11/09
11/10/09
15/09/09
17/08/09
20/07/09
23/06/09
27/05/09
29/04/09
01/04/09
04/03/09
400
04/02/09
750
07/01/09
500 01/04/09
600
850
04/03/09
1350
US$/tonne
850
650
07/01/09
US$/tonne
1000
950
750
850
1050
MEG prices rangebound between $900 and $980 per tonne, the highest level in 12 months, mainly boosted by speculative buying which have already resulted in price bubbles.
04/02/09
US$/tonne
1050
Ethylene prices are currently hovering at a 17-month high at $1240 per tonne backed by the increased demand from the Asian clients.
PROPYLENE (FOB FAR EAST)
1050
1150
750
07/11/09
FOB: Freight On Board
07/01/09
1350
11/10/09
15/09/09
17/08/09
20/07/09
23/06/09
27/05/09
09/01/10
12/12/09
07/11/09
11/10/09
15/09/09
17/08/09
20/07/09
23/06/09
550
27/05/09
300
29/04/09
650 01/04/09
400 04/03/09
750
04/02/09
500
29/04/09
850
01/04/09
600
950
04/03/09
700
Benzene prices have reached the highest level in 12 months and breached US$1000 per tonne, supported by the climb of crude oil during the ďŹ rst weeks of January.
ETHYLENE (FOB FAR EAST)
04/02/09
US$/tonne
900
07/01/09
US$/tonne
1000
1350
BENZENE (FOB FAR EAST)
07/01/09
1100
PVC prices are currently hovering near $1000 per tonne, on the back of rising feedstock costs in the market, and the increased demand from the main Asia markets.
(HDPE Injection)
Source: www.argaam.com
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Petrochemicals Middle East February 2010
32 Face to Face
PROJECT MANAGEMENT CONUNDRUM Mounir Ajam, CEO of SUKAD discusses the best practices of project management in the petrochemicals industry
How good are local project management practices in the petrochemicals industry? Project management practices in the region are good and there is no question about it. But when competing on a global scale, where things are different, part of the competitiveness is in delivering the project successfully and that’s very important, but unfortunately there is a lot of work to be done before reaching an international level. If I look at project practices in SABIC, it is much more mature compared to other companies in other industrial elds, because petrochemical companies deal with mega projects. The smallest project would be considered as a mega project for other industries so the amount of money invested is huge and therefore petrochemicals companies want to have good system to run their projects. However, they are still a long way away from being able to compete on the world scale.
Why is that? Because it is new in the region and there is a lot of misunderstanding about what project management is. Companies know about project management, but they don’t understand what they need. They spend a lot of money in consultancy training, they don’t spend it in the right place. But we were able, with our presence in the region. to provide an excellent model in practical project management right here.
“THERE IS A LOT OF WORK TO BE DONE BEFORE REACHING AN INTERNATIONAL LEVEL.” How do you define a good project management practices? If I want to simplify project management into a few words I would call it ‘discipline of approach’. The rst thing that I would look at is; does this company have a systematic approach to manage the project? Do they have the standards, procedures and guidelines which are considered the most basic level of project management? Do they have the fundamental knowledge and ability to manage the project or does everybody do it in their way? The other thing we can look for is whether they are willing to share data and their project performance; how are they doing with the project? What percentage of their projects are nished within their objectives? Success in project management is the ability to deliver projects with consistency. In the downstream sector, the rst step is that there should be a proper project management system in place. There also should be best practice to get involved in spot management and change control. The process also includes safety, plus many other best practise techniques which are set by international organisations.
MOUNIR AJAM CEO OF SUKAD
What are the difficulties that projects managers face? Senior management sometimes set a deadline without referring to the project managers, who are the only people who can determine the termination date. Also, senior management set time, dates and targets without being realistic in their agenda, and this represents a real challenge. Project managers are rarely even part of setting these objectives. So they have to deliver to somebody else’s expectations, which may not be proper or practical.
What is your downstream pedigree? I have managed small and multiple projects and worked on mega projects with many of the world’s leading organisations, such as: Exxon, BASF, and Saudi Aramco. My experience also includes projects in remote and multiple locations, major modularisation, joint ventures and alliances, multi-cultural and multi-national teams. I have extensive experience working on reimbursable cost incentive based projects as well as xed price contracts, prior to joining SUKAD. Besides my current position with SUKAD, I am also the co-founder and the chairman of the board for the Global Project and Process Management Association (GPPMA), based in Dubai. My educational background is a masters degree in engineering and construction management from the top ranked university of California Berkeley in the USA.