NEWS 05 | BUILD & PROJECTS 09 | SCIENCE & TECHNOLOGY 11 | DOWNSTREAM DATA 30 | FACE TO FACE 32
NEWS, DATA AND ANALYSIS FOR THE REFINING AND PETROCHEMICAL INDUSTRIES
MAY 2010
BAHRAIN’S VISION OPPORTUNITIES FOR BUSINESS WITH SITRA REFINERY EXPANSION
REACTION BOOSTERS CATALYST QUALITY AND COST UNDER THE MICROSCOPE
REFINED AMBITION
At the launch of the Laffan Refinery, Faisal Al-Suwaidi, CEO of Qatargas says his next priority is to double output by 2015 An ITP Business Publication, licensed by Dubai Media City
Contents 1
16
05
10
14
20
24
32
IN PRINT
20 CATALYST MARKET ANALYSIS Catalyst purchasing and licensing deals have come under increased scrutiny as producers try to drive down operational costs.
May 2010 Volume 03 Issue 05
24 PETROTECH 2010 OVERVIEW
5 REGIONAL NEWS
More than 3000 delegates and 100 companies from 20 countries will flock to Bahrain for May’s Petrotech event. Dow Chemical and Hyperion Systems engineering speak to RPME ahead of the event.
SABIC’s profit swings to $1.4bn • Qatar attacks EU taxes • CONOCO exits Yanbu deal • Syria scraps refinery deal
10 MIDDLE EAST MARKET UPDATE Build & Projects • Operations & Maintenance • Science & Technology • Equipment & Machinery • Sales & Shipments
14 BAHRAIN COUNTRY PROFILE Despite a small feedstock and resource base, Bahrain is boosting investment across its downstream industries.
16 LAFFAN REFINERY UNVEILED Exclusive: The CEO of Qatargas, Faisal Al-Suwaidi, says the newly inaugurated Laffan Refinery is key to Qatar’s growth.
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26 CAPEX CORNER Following the second year of higher than average spending plans, Contax Group Partners ask: Are we ready for the next peak?
30 NUMBER CRUNCHER Refining and Petrochemicals Middle East provides market data and analysis for the region’s listed downstream companies
32 FACE TO FACE Meet Ruya Bayegan, board member of Bayegan Group.
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Refining & Petrochemicals Middle East May 2010
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12 missing in Gulf of Mexico offshore rig blaze 2 Iran hoarding up to 38m barrels on supertankers 3 Conoco withdraws from Saudi Aramco’s Yanbu project 4 GE awarded $100M contract by Petrofac in Algeria 5 Schlumberger JV nets Chevron service contract
EDITOR’S CHOICE
An Eye on LNG16
APIC Coverage
Arabianoilandgas.com picture gallery takes you behind the scenes of LNG16 Conference, the mega energy conference dedicated to the LNG, held in Oran, Algeria.
Arabianoilandgas.com reporters and photographers will be present in Mumbai, India to cover Asia Petrochemical Industry Conference (APIC).
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BREAKING NEWS AND VIEWS FIRST
KUWAIT REVIEWS GAS PRICING METHODOLOGY
SAUDI AND VIETNAM MULL OIL REFINING DEALS
Kuwait is set to review gas and condensates pricing methodology due to the increase of demand and limited availability.
Vietnam will sign an agreement with Saudi Arabia to encourage Saudi Aramco to invest in two refineries to be built in the Asian country.
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ARAMCO, SUMITOMO JV MAKES Q1 PROFIT AFTER LAUNCH
Major issues facing the downstream industry thrashed in Abu Dhabi. arabianoilandgas.com
WEB FORUM
LINKING OIL AND GAS PRICES TOPS GECF AGENDA
Higher margins and one off income helped Saudi based Rabigh Refining and Petrochemical Co (PetroRabigh) post its first quarterly net profit after starting operations at its $10.1 billion complex.
Linking gas prices with oil prices topped the agenda of the tenth ministerial meeting of the gas exporting countries forum (GECF) held in Oran, Algeria, on the sidelines of the LNG 16 conference
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Refining & Petrochemicals Middle East May 2010
DOWNSTREAM WEEK
E JOIN TH DEBATE
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4 Comment
Registered at Dubai Media City PO Box 500024, Dubai, UAE Tel: 00 971 4 210 8000, Fax: 00 971 4 210 8080 Web: www.itp.com Offices in Dubai & London ITP Business Publishing CEO Walid Akawi Managing Director Neil Davies Managing Director ITP Business Karam Awad Deputy Managing Director Matthew Southwell Editorial Director David Ingham VP Sales Wayne Lowery Publishing Director Jason Bowman Editorial Energy Group Editor Daniel Canty Tel: +971 4 210 8255 / daniel.canty@itp.com Editor Abdelghani Henni Tel: +971 4 210 8661 / abdelghani.henni@itp.com Contributors Florian Neuhof, Contax. Advertising Commercial Director Jude Slann Tel: +971 4 210 8693 / judith.slann@itp.com Studio Group Art Editor Daniel Prescott Art Editor Simon Cobon Design Team Angela Ravi, Lucy McMurray Photography Director of Photography: Sevag Davidian Chief Photographer: Nemanja Seslija Senior Photographers: Efraim Evidor, Khatuna Khutsishvili Staff Photographers: Thanos Lazopoulos, Khaled Termanini, Jovana Obradovic, Rajesh Raghav, Ruel Pableo, Lyubov Galushko Production & Distribution Group Production Manager Kyle Smith Deputy Production Manager Matthew Grant Production Coordinator Devaprakash Managing Picture Editor Patrick Littlejohn Image Editor Emmalyn Robles Distribution Manager Karima Ashwell Distribution Executive Nada Al Alami Circulation Head of Circulation & Database Gaurav Gulati Marketing Head of Marketing Daniel Fewtrell ITP Digital Director Peter Conmy ITP Group Chairman Andrew Neil Managing Director Robert Serafin Finance Director Toby Jay Spencer-Davies Board of Directors K.M. Jamieson, Mike Bayman, Walid Akawi, Neil Davies, Rob Corder, Mary Serafin
Is there a quick fix for KSA’s refining sector?
S
audi Arabian refining has suffered a lot since the beginning of this year. Three major development projects face an unclear future that may lead the government to review its generous subsidies for the sector. In January, plans to privatise the Jizzan Refinery were scrapped, in favour of Saudi Aramco carrying out the project without any international partners. Because of this procrastination, the refinery is expected to be delayed by up to two years. Then, in March this year, Dow and Aramco revealed that they were considering shifting their integrated project from Ras Tanura to somewhere else – while some sources have speculated that they are thinking of shelving it altogether. In April, ConocoPhillips sent a formal written notice to Aramco announcing its withdrawal from the new export refinery project in Yanbu, on the western coast. While Saudi Arabia aims to meet the increasing demand on refined products, mainly diesel, the exit of ConocoPhillips is a blow for the Kingdom’s efforts. There is no doubt in my mind that Saudi Arabia will execute all the announced projects, in spite of the challenges it faces. However, significantly increasing the price of gasoline and diesel and thereby decreasing local consumption, could be a quick fix for this critical issue. Fuel prices in Saudi Arabia remain among the lowest in the world at 15 US cents a litre. This subsidised price encourages wasteful consumption, as well as smuggling to neighbouring countries. Increasing prices would force people to rationalise fuel consumption. The coming weeks will be critical for industrial drivers in Saudi Arabia, as a decision to increase prices looms on the horizon. That would be the quickest fix for the issue.
Abdelghani Henni, editor
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Refining & Petrochemicals Middle East May 2010
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News 5
News
MAY 2010
SABIC’s profit surges to US$1.4bn
All subsidiaries are profitable in first quarter of 2010, but not everyone is impressed Saudi Basic Industries Corporation (SABIC) net profits surged to US$1.44bn in the first quarter of 2010, compared to a net loss of $258m during the same period in 2009, the company said. Operating profit for the quarter reached US$2.58bn, compared to US$101m for the same period a year earlier. Earnings per share for the first quarter stood at US$0.48, versus a loss of US$0.085 per share recorded for the same period in 2009. Improved prices and new production helped SABIC recover from its loss a year earlier, caused by a slump in the automotive, construction and consumer industries. Prices for olefins and chemical intermediates have advanced on greater demand. SABIC vice chairman and CEO Mohamed Al-Mady noted that the rise of net profits in the first quarter can be attributed to the rise of both production and sales volumes, as well as a remarkable improvement in the prices of most petrochemical products and plastics. Al-Mady added that future profitabiliy of SABIC’s petrochemical and iron products largely depended on the extent the global economy will grow, and how fast it will recover from the crisis of the last two years. “We are overcoming the impacts of the global financial crisis, as well as continuing our strategy of growth
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The future profitability of SABIC’s petrochemical and iron products is largely dependant on the extent of recovery and growth of the global economy.
and investment in new industrial plant,” he said. He also pointed out that the current year is seeing more productive capacity added through the completion of projects at SHARQ, YANSAB and the joint-venture petrochemical complex in Tianjin, China. “As economies strengthen this will also positively affect the company’s performance and production,” Al-Mady observed. Al-Mady also said that all of SABIC’s subsidiaries have contributed to the profit, including GE Plastics. Even the subsidiary Yanbu National Petrochemical Company (Yansab), which was only launched in the first quarter, was already profitable, recording
earnings of US$69.2m. In addition, SABIC benefited from improved earnings at other local units, as Saudi Arabian Fertilizer Company’s first-quarter profit rose 33% to US$168m. The company is also expanding its iron capacity. SABIC is currently constructing an iron plant which will have an annual capacity of one million tonnes, Al-Mady said. Together with the expansion of existing plants, its
output will help meet growing domestic demand. Not all observers were impressed with the result. “Excluding SAFCO and Yansab additional quarter on quarter earnings impact, SABIC net income rose US$159m, which is not impressive,” said Laurent-Patrick Gally, vice-president of SHUAA Capital Research. “The steel division Hadeed spoiled what could have been a strong quarter.”
SABIC profits per sector (in billion US$) Sector
Petrochemicals
Fertilisers
Steel
Consolidation adjustments
Total
1st Quarter 2010
1.60
0.269
0.037
- 0.618
1.44
1st Quarter 2009
- 0.637
0.178
- 0.053
0.253
-0.258
Source: Argaam.com
Refining & Petrochemicals Middle East May 2010
6 News
Al Attiyah attacks EU taxes Qatari energy minister raps EU taxes on GCC petrochemicals
The Qatari deputy prime minister and minister of energy and industry Abdullah Al Attiyah has lashed out at the taxes levied by the European Union (EU) on petrochemical imports from the Gulf Cooperation Council (GCC) states.
Speaking at the inauguration ceremony of the Qatalum Melting Plant, Al-Attiyah said that the European Union manipulates the GCC countries in the worst way and invent pretexts in order to impose protectionist taxes.
“This is absolutely an unfair approach. The GCC have to adopt a collective measure in response to this treatment because a strong reaction could force the Europeans into taking our demands into account,” the minister urged.
SAFCO posts 33% profit increase in Q1 2010 The Saudi Arabian Fertilizer Company (SAFCO) has posted a 33% profit increase to US$186.1m during the first quarter of 2010, compared to $139.8m during the same period 2009, the company said in statement. The company attributed this profit increase to rising urea and ammonia prices in the the three first months of 2010, in addition to increasing sales. SAFCO is the world’s largest producer urea and ammonia. It produces 2.2m t/y of urea, and 2.09m t/y of ammonia, through its four subsidiaries. Ammonia and urea prices roseto a one year high in February.
Iran to privatize refineries
Qatar is taking the lead in adding value to its huge gas reserves, and fears any protective measurments would impact its exports.
Orascom buys fertiliser activities of DSM Dutch’s Royal DSM and Orascom Construction Industries (OCI) from Egypte announced they have reached an agreement for the sale of DSM Agro and DSM Melamine to OCI for US$415.5 million on a cash and debt-free basis with effect from 1 January 2010. The intended sale is expected to close in Q2 2010, subject to regulatory and other customary approvals and notifications. “For DSM the intended sale of both business groups is an
important step forward in the realization of its Vision 2010 ambitions to focus on life sciences and materials sciences,” DSM said in statement. “The transformation of DSM’s portfolio is an important prerequisite for achieving these ambitions. As announced in September 2007, DSM Agro and DSM Melamine do not fit with this focus,” it added. With the acquisition of DSM Agro, the OCI Fertilizer Group expands its customer base in
Refining & Petrochemicals Middle East May 2010
key European markets to which the group will be able to offer a wider range of products including urea, ammonia, calcium ammonium nitrate (CAN), urea ammonium nitrate (UAN), and ammonium sulphate (AS). “OCI believes that healthy synergies exist through a wider product portfolio and distribution infrastructure in Europe. OCI will assume responsibility for the business results of DSM Agro and DSM Melamine from the first half 2010 onwards.
Iran plans to privatize all its refineries and petrochemical plants, according to Iranian Oil Minister Massoud Mirkazemi. “Work on the privatization of oil companies has begun. All petrochemical units and refineries will be ceded to private sector, including service, drilling and support companies,” he said. Iran, the world’s fifth-largest crude exporter, is speeding up the sale of state holdings to encourage private investment. The government recently transferred shares in six petrochemical plants and power stations to a social welfare investment organization of the armed forces as a means of repaying debts to the organization. Almost 300 000 widely used oil byproducts will get the Iran code stickers by the end of the Iranian fiscal year, the minister also said, adding that the distribution of the products will also be mechanized.
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News 7
Conoco bails on Yanbu deal
Saudi Aramco evaluating options to develop the refinery project
Yanbu Export Refinery is a full-conversion refinery designed to process Arabian heavy crude and will produce high-quality refined products.
Saudi Aramco confirmed that it had received a formal written notice from ConocoPhillips announcing its withdrawal from the new export refinery project to be built at Y anbu on Saudi Arabia’s western Red Sea coast. Saudi Aramco said that, while regretting ConocoPhillips’ departure from the project, it was evaluating its options to develop
Ynbu. The company is optimisa tic about the project. “The project is anticipated to generate strong returns due to attractive capital costs, a best in class operating cost structure, and an ideal location for serving local and globalmarkets,” said Khalid Al-Buainain, senior vice president of refining and marketing at Saudi Aramco. “The Y anbu Export Re finery
is a full-conversion refinery designed to process Arabian heavy crude. It will produce high-quality, ultra-low sulfur refined products, including about 265 000 b/d of diesel and 90 000 b/d of gasoline. These products will meet the strictest international specifications, and can be sold globally to the highest valued markets.” he added.
Syrian government scraps refinery deal The Syrian government has canceled a deal with Kuwait’s Noor inancial to build a 140 000 barF rel per day refinery in eastern Syria, Oil Minister Sufian Alao has said. “This project is no longer among our current plans,” Alao told Reuters. The announcement is another setback to government efforts to attract investment in the ail-
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ing refining sector and meet domestic demand, with the country relying on two old refineries that have a combined capacity of 240 000 bpd. Noor and the Syrian government signed a memorandum of understanding in 2007 to construct the US$1.7 billion refinery. Consultancy firm o Wod McKenzie was hired to undertake a feasibility study last year.
Alao did not give a reason for ending the deal. H e said the government remained in talks with other foreign investors to finance two refineries that could double Syria’s capacity. Noor is a division of the National Industries H olding Group, a Kuwaiti conglomerate linked to the Kharafis, a Gulf business and political family, which also aims to invest in Algeria and Egypt.
Briefs Saudi International Petrochemicals Company (Sipchem) posted a US$21.6m profit in the first quarter 2010, compared to $7.78m a year ago. The increase was due to the improvement of chemical prices and an increase in profits margins of the company’s main products, including methanol and butanediol. Abu Dhabi National Chemicals Company (Chemaweyaat) is set to award front end, engineering and design (FEED) works in the summer. The multi billion dollar project is located in the Taweel area in Abu Dhabi, and owned by IPIC which controls 80% and ADNOC, and holds 20% of the project. Five OAPEC members dominate more than 70% of energy investments in the Arab world, with a total estimate of US$470 billion, the Organization of the Arab Petroleum Exporting Countries (OAPEC) said. The countries are Algeria, Kuwait, Saudi Arabia, Qatar, and the UAE. LyondellBasell announced that the company has emerged from Chapter 11 bankruptcy protection. The company’s plan of reorganisation was confirmed by the United States Bankruptcy Court for the Southern District of New York with the approval of a majority of the voting creditors.
Refining & Petrochemicals Middle East May 2010
8
BUILD&PROJECTS
PetroRabigh is seeking contractors
Phase II of the project will add 17 new products, with an estimated cost of US$6.67bn Rabigh Refining and Petrochemical Company (PetroRabigh) is looking for contractors to start work on the second phase of its giant petrochemicals complex, located in Rabigh, on the red sea coast of the Kingdom. “They have just issued the solicitation of interest, there are seven construction packages. Contractors are requested to respond by the end of this month,” said one source. Phase II of the project will add about 17 new products, and is estimated to cost US$6.67bn. A final investment decision on the project will be taken once the study is completed and reviewed, during the second half 2010. Japan’s JGC Corporation is currently conducting a feasibility study on Phase II which is due to be completed by the third
The first phase of the $10.3bn integrated project was inaugurated last November, and produce 2.4m t/y of petrochemical products.
quarter this year. “Each package consists of several process units,” one contractor said. As part of the expansion, Petro Rabigh will consider increasing the capacity of the existing ethane cracker to take in an additional 30 million cubic feet per
day (cfd) of ethane feedstock. The PetroRabigh is also considering to build a new aromatics complex using around 3m t/y of naphtha as feedstock. It will also look at constructing various petrochemical units within the existing complex.
PetroRabigh, is a joint venture between Saudi Aramco and Sumitomo, with 25% of the company is listed in the Saudi stock exchange. It can process 400 000 barrels of crude per day, accounting for about 19% of Saudi Arabia’s total refining capacity.
Daelim scoops US$426m LDPE contract in KSA
SABIC and Celanese announce polyacetal expansion project
Daelim Industrial Company said it received a US$426 million EPC contract from Saudi Kayan Petrochemical to construct an LDPE plant in the Kingdom. The contract is for the construction of a low-density polyethylene (LDPE) plant with an annual capacity of 300 000 tonne in Saudi Arabia’s AlJubail Industrial City, Daelim said in a filing to the Korean stock exchange. The company expects to complete the EPC works within the first half 2012, according to the filing.
Celanese Corporation and Saudi Arabia Basic Industries Corporation (SABIC) announced that their National Methanol joint venture company (Ibn Sina) will construct a 50 000 tonne polyacetal (POM) production facility in Saudi Arabia. Construction of the facility is part of an extension of the Ibn Sina joint venture. “Engineering and construction of the facility is expected to begin later this year,” accoding to Ibn Sina. The total cost of the project will be around US$400 million.
Refining & Petrochemicals Middle East May 2010
Ibn Sina produces methanol, a key feedstock for POM production, as well as methyl tertiarybutyl ether (MTBE). Once the exansion has been completed, Celanese will increase its stake in the JV. “Upon successful startup of the POM facility, Celanese’s economic interest in Ibn Sina will increase from 25% to a total of 32.5%, providing further financial benefits for Celanese,” the company said in a statement. Celanese, SABIC and Duke Energy Corporation entered into the Ibn Sina joint venture
in 1981. Celanese and Duke Energy currently each hold a 25% interest in the venture, with the remaining 50% held by SABIC. “SABIC’s economic interest will remain unchanged. Over the past three years, Celanese has received approximately $238 million in dividends from the venture,” Celanese added.
US$400m The cost of the new polyacetal (POM) project Source: Celanese
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10
OPERATIONS&MAINTENANCE
Sharq starts commercial operation
The third expansion project has increased the capacity of its MEG plant to 1.38m t/y Saudi Arabia Basic Industries Corporation (SABIC) said that its subsidiary Eastern Petrochemical Co. (Sharq) has started commercial operation at its expanded petrochemical complex at Al ubail industrial city. J In a statement to the Saudi stock exchange, SABIC said that commercial production started on April 1st. The third expansion has increased the capacity of its MEG plant to 1.38 m t/y from 700 000 t/y. The project will consolidate Sharq’s position as the largest single MEG producer in the world.
The new expansion also doubled the company’s polyethylene capacity to 1.5 5 m t/y. With the new 1.3 m t/y cracker in operation, cracking capacity at the complex has more than doubled to 2.4 6 m t/y. The company started the commissioning of its third expansion project in November. Sharq is a 5 0:5 0 joint venture between Saudi Arabia Basic Industries Corp (SABIC) and Saudi Petrochemical Development Corporation (SPDC), a Japanese consortium led by the Mitsubishi group.
The expansion doubled Sharq’s polyethylene capacity to 1.55m tonnes per year.
OPP resumes production APC plant back in business Oman Polypropylene (OPP) has restarted its polypropylene plant which is located at Sohar, Oman, after conducting maintenance work. The maintenance tasks, which lasted several weeks, started with mandatory internal cleaning and inspection of static pressure vessels, heat exchangers, process filters, periodic testing and calibration of safety valves, critical
manual valves and control valves. In addition to priority plant modifications, the turnaround period was also used to replace the two existing stainless steel powder discharge vessels with new carbon steel vessels, using a 0 80-tonne capacity wheel mounted crane. OPP is a joint venture the between Ministry of Finance (4 0)%, Oman Oil Company (4 0)% and LGi Corporation (20% ).
OPP’ maintenance work was done by an inhouse engineering team.
Refining & Petrochemicals Middle East May 2010
Saudi Arabia’s Advanced Petrochemical Company (APC) has restarted its 0 5 4 000 t/y polypropylene (PP) plant at Al-J ubail industrial city after completing maintenance works, the company said in statement. The plant was shut down for three weeks for maintenance and a catalyst change. The company’s 0 5 4 000 t/y propane de-hydrogenation (PDH)
unit at Al u J bail, which provides feedstock to the PP plant, remained shut during the maintenance period. Despite the shutdown, the company posted a 23% pro fit increase during the first quarter 2010 to US$ 1.402m, compared to 1$1.4 3m for the same period in 2009 . The increase was a consequence of rising polypropylene prices, said the company.
Advanced Petrochemical Company posted a 23% profit increase during Q1.
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11
SCIENCE&TECHNOLOGY
SABIC develops advanced PP catalyst The new catalyst can be used in several applications including packaging and pipes Saudi Arabia Basic Industries Corporation (SABIC) has developed an new catalyst for producing polypropylene. This catalyst has already contributed to increased productivity, enhanced quality and new product development. There is potential for its future use in different applications, said the company. The new catalyst has been applied commercially by the Saudi European Petrochemical Company (Ibn Zahr), a SABIC affiliate, and has been proven superior to the catalyst previously used by the company. The fourth generation catalyst is the first of its kind developed in the
Borouge presents new technologies at Wire 2010 Abu Dhabi Polymers Company (Borouge) and Austrian’s Borealis are expected to present their new technology for high voltage (HV), extra high voltage (EHV), and direct current (DC) applications solutions for the wire and cable industry at Wire Dusseldorf 2010, Borealis said. Advances in Supercure XLPE cable insulation technology will be showcased alongside low voltage Visico /Ambicat insulation, and the complete line of insulation and jacketing products from the Borcell, Borstar and Casico ranges. The event will be an opporutinty to both partners to showcase their cutting edge technologies.
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Gulf and Middle East. By using the catalyst, production reached nearly 30 000 tonne of polypropylene at the end of March 2010. The product was sold to local and international markets. The catalyst can also be used in several vital applications, the most important of which are packaging, carpets, piping, and automotive parts. Investing in R&D is part of SABIC’s ambitious growth plans. “Our efforts have yielded this milestone, which is in line with the corporate goals and strategic plans of strengthening our position among the world’s leading petrochemical companies,” said
The new catalyst has been applied commercially at the Ibn Zahr affiliate to produce PP.
Mohamed Al-Mady, SABIC vice chairman and CEO. “I can assure you that SABIC continues to improve its working
SIP launches new tech SABIC Innovative Plastics (SIP) launched a new Lexan polycarbonate (PC) film technology – Lexan EFR film – that delivers non-brominated, non-chlorinated flame retardance (FR) at thinner gauges than flame-retardant polypropylene (FRPP). This new material enables electrical/electronics (E/E) OEMs to create flatter, lighter-weight notebook computers and other electronic devices while significantly
The new material is used in different fields.
environment in order to advance innovation and creativity in all the company’s sites around the world,” he added.
Dow expands catalyst offering
reducing material costs, giving them a competitive advantage. The new Lexan EFR film enables global E/E manufacturers to go beyond current environmental directives by voluntarily eliminating halogenated additives in their products. “As E/E OEMs step up to meet anticipated and ever-tightening environmental requirements, we are taking the initiative in engineering precisely targeted materials technologies to help proactively address these changes,” said Lennard Markestein, global marketing director for specialty film and sheet at SABIC Innovative Plastics. “We are very serious about furthering our leadership position by delivering superior environmentally progressive solutions that allow customers to distance their competition.”
Dow Chemical Company has expanded its catalyst system offering with CONSISTATM D7000 Donor, designed specifically for high melt flow (HMF) applications. The first product in Dow’s new CONSISTA portfolio of advanced catalyst systems, CONSISTA D7000 enables polypropylene manufacturers to achieve the performance differentiation needed to enter premium markets, while realizing the benefits of better on-stream time, better plant operability and reduced production costs. “CONSISTA D7000 helps polypropylene producers differentiate their products and seize profitable market opportunities,” said Cherie Holliman Wrenn, product market manager at Dow Basic Plastics Licensing and Catalyst, a business unit that licenses UNIPOL Polypropylene Process Technology.
Refining & Petrochemicals Middle East May 2010
12 News
EQUIPMENT&MACHINERY
Tendeka launches monitoring system
The upgraded model has a sensing range of 12km and better measurement performance Tendeka has launched its Sensor- vide a temperature resolution as net Oryx-X R Distributed Temfine as 0.010C,” said Dan aW tley, perature Sensing (DTS) system, Tendeka’s vice president for Digital designed for use in harsh enviMonitoring. ronments. The autonomous, The Oryx-X R is an enlow powered device hanced version of the provides temperaoriginal Oryx system, ture samples every which was launched in metre along a fibre, 2009. “The upgraded and has a wide opmodel has an extended erating temperature sensing range, increased window of between from 4km to 12km, -50C to 650C. It can and an improved be operated by solar or measurement wind power. The performance, permanant Dan Watley, Tendeka VP. which can prostandalone unit
Refining & Petrochemicals Middle East May 2010
contains the sensing optoelectronics and operates remotely with an intuitive, user-friendly software interface, making it a simple-to-use and easily transportable system. The Oryx-X R features an inbuilt multiplexing module with either two or four channels, enabling it to make up to four single-ended measurements, or two doubleended measurements. It provides data back to the client’s office by any available satellite, radio or fibre communications link, making it a powerful remote logging DTS unit. The system has been designed to complement the performance
of Tendeka’s existing range of Sentinel DTS units, making it suitable for the toughest monitoring challenges and enviroment, such as horizontal well activity. The Oryx-X R is a natural progression of the original system. Technology developments mean it can now provide monitoring across greater lengths and even smaller temperature differences. Operators are increasingly targeting harder to reach reserves with increasingly complex wells and the Oryx-X R technology is ideally suited to monitoring for these challenging applications, says aW tley.
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13
SALES&SHIPMENTS
ADNOC meets Asian naphtha clients
Client list includes Taiwan’s Formosa, Japan’s Marubeni and Itochu, and Korea's Honam Abu Dhabi National Oil company (ADNOC) met Asian naphtha customers in Singapore to discuss supplies for July 2010-June 2011 delivery, unusually early for any contract negotiations. But traders said the face-toface talks held between April 1921 were unlike their usual negotiations via fax. They were aimed at enabling ADNOC to get a feel of the volumes needed by buyers at a time prices are still holding firm before sliding in the coming months, the traders added. The term buyers involved in the one-year contract include Taiwan’s Formosa, Japan’s Marubeni and Itochu and South Korea’s Honam, which last month dropped its contract for supplies to be lifted during April 2010-March 2011. ADNOC has three contracts, spanning from January to De-
Sabic fixes MEG prices at $1050 Saudi Arabia Basic Industries Corporation (Sabic) has fixed Asian Contract Prices (APC) of mono ethylene glycol at US$US1 050 per tonne, for the third month in row. Meanwhile, Shell lowered its May Asian Contract Price nominations by US$50/tonne to US$1 050/tonne CFR Asia, while MEGlobal rolled over May ACP from its April levels at $1 050 CFR Asia. In the spot market, MEG is currently traded at around US$950/tonne.
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cember, April to March and July to June. “ADNOC wants to discuss volumes and market sentiment. I think price negotiation will take place in May,” a trader told Reuters. But others said that Abu Dhabi’s ADNOC may be attempting to secure better buying notions before the market heads south from May, as increased ethylene supplies will hit naphtha cracking margins. On top of this, traders expect ADNOC to have at least 2 million tonnes a year of new naphtha supplies from July after repeated delays. ADNOC was supposed to have more condensates early this year to feed its splitters. This would increase its naphtha yield, but up till now, it has not been able to ramp up its naphtha production, according to a trader.
“A softer market ahead may be the only reason why they want to have a discussion this early, even if buyers are not likely to give any buying ideas,” another trader told Reuters. “Their term
negotiation is likely to drag like the last time.” Term suppliers usually start negotiations a month, or at the most two months, before shipment takes place.
ADNOC's Takreer is doubling its throughput capacity for refined products by 2013.
Cristal hikes TiO2 prices
Dow Increases Emulsion prices
Cristal Global (Cristal) announced that, effective from May 1st, or as permitted by contract, it will increase prices on all of its anatase and rutile Tiona and Cristal titanium dioxide (TiO2) products sold in Latin America to US$200 per metric tonne in all countries across the region. “This price increase is in addition to previously announced price increases,” it said. Cristal is a subsidiary of Saudi Tasnee, which acquired the company in 2007 for US$1.3bn. Cristal Global is the world’s second-largest producer of titanium dioxide and a leading producer of
Emulsion Polymers, a business unit of Dow’s Styron division, is increasing the prices of all styrene butadiene latex products and styrene acrylic latex products sold into the paper industry in Europe, India, Middle East and Africa by US$306 per tonne (dry). The company will implement the new price from May 1. Dow said that the continuing escalation in feedstock costs were the primary driver for this increase. This hike in feedstock costs was in turn driven by the limited availability of many raw materials, the company added.
titanium chemicals. Cristal Global operates eight manufacturing plants in six countries on five continents and employs nearly 4,000 people worldwide.
Saleh Al-Nazha, Tasnee Petchem president.
Refining & Petrochemicals Middle East May 2010
14 Bahrain Profile
BUSINESS FRIENDLY
Bahrain has a shortage of its own feedstock, but as a gateway to Saudi Arabia’s downstream heartland it is a great hub with its own petrochemicals credentials
U
nlike other GCC countries, Bahrain doesn’t have feedstock resources to help attract investment from petrochemical companies and technology owners. Instead, it depends mainly on Saudi Arabia in securing its oil and gas requirements, and can barely get enough to crude to secure the need for existing industries. Instead, its business friendly attitude continues to make Bahrain a destination of choice for many services providers. The petrochemicals and refining sector in Bahrain faces many obstacles that hamper any development, despite it being the first GCC country to discover oil in 19 36 and to build a refinery in 19 0. “Limited reserves 4 and production of oil along with a limited and lean domestic natural gas supply are the main obstacles facing the industry,” says Osama Al Khaja, CPA, head of project development at Kuwait Finance House Bahrain. “The lack of clear industrial strategies and plans, as well as limited industrial space and infrastructure are also an issue,” he adds. The bulk of the petrochemical industry in the Kingdom of Bahrain is made up by the Gulf Petrochemicals Industries Company (GPIC), a joint venture established in 19 0. 8 It is owned in equal parts by the Saudi Arabia Basic Industries Corporation (SABIC), the government of Bahrain, and
Refining & Petrochemicals Middle East May 2010
GPIC is the only petrochemical company in the Kingdom.
the Petrochemical Industries Company (PIC), a Kuwait firm. The company produces mainly fertilizers including urea, ammonia and methanol. GPIC consumes 8 0m cubic feet of natural gas per day, sourced from a domestic field. “W e use Khuf gas from the Bahrain field,” says Z uhair Taw fiqi, manager at GPIC. Beside the Bahrain field, which is operated by Bahrain Petroleum Company (Bapco) and produces 32,000bpd of crude oil, Bahrain also draws crude from the Abu Saafa field. This field lies between Bahrain and Saudi Arabia, and is operated by Saudi Aramco. Bahrain’s share from the field was 150 000bpd in 2009 , representing 8 2% of the country’s oil production. Bahrain also imports crude oil from Saudi Arabia through a pipeline linking the two GCC countries from Abqaiq in Saudi Arabia
via Dhahran to the Bahrain refinery in the Sitra region, located south east of the capital Manama. It currently imports some 230 000 barrels per day (bpd), and it aims to increase the capacity to 350 000bpd as Bahrain intends to increase the refining capacity of its refinery in Sitra to handle the extra oil exported from Saudi Arabia. The current refining capacity of the Bahrain refinery is 267000 bpd according to data of the National Oil and Gas Authority of Bahrain (NOGA), and it processes 8 5% of the oil imported from Saudi Arabia. 25 000 barrel of processed oil is consumed domestically while the rest in destined for export to international markets. “More than 0% 9 of our products are destined to for exports,” says Mohamed Hassan Mezal, manager of the refinery operations planning at Bapco.
GPIC has recently launched a carbon recovery plant.
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Bahrain Profile 15
According to NOGA, Bahrain exported 223 000 bpd during 2009 . Bapco completed a major seven-year upgrade of its refinery in 2008 , which was designed to increase the proportion of clean products and which saw the installation of various new conversion units, including a 100 000 bpd low sulfur diesel plant (LSDP) and a 60 000 bpd hydrocracker, as well as revamping the hydrocracker. The LSDP was completed in une 2007and produces ultra low sulfur J diesel oil with a sulfur content of less than 0.001% , a major reduction on the previous 0.65% . Another company active in the downstream sector in Bahrain is National Chemical Industries Corporation (NACIC), which produces sodium sulfite and sodium metabisulfite, which are primarily used in the paper and pulp industry. “W e produce 18000 tonne per year of sodium sulfite and sodium metabisulfite,” says Shetty Sudakar, marketing manager at NACIC. “W e are planning to increase the production capacity to 35 000 tonne per year in the next year,” he adds. Sudakar says that his company sources its feedstock from the Bapco refinery, and targets Asian and the GCC markets.
In an attempt to boost the downstream sector, Bahrain launched the Lubricant Basic Oil Lubrication Holding Company Limited, a joint venture between Neste Oil, Bapco and Oil and Gas Holding. The new venture is developing a plant in Sitra with a capacity of 4 00 000 tonnes per year of very high viscosity index (V HIV) base oil, which is expected to cost US$ 30 4 million. The plant is being built by Samsung Engineering under a US$ 314 m EPC contract awarded in August 2008and scheduled for completion in 2011. In addition, the private Kuwait Finance House (KFH) has been promoting a project
Seena Dashty, engineer at Haldor Topsoe.
Petrochemical projects in Bahrain have been struggling to secure additional gas feedstock against rising demand for power.
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to preduce low density polyethylene at Sitra. The plant, which would be provided with 1.5m t/y of naphtha from the Bahrain refinery, would produce 4 09000 t/y of low density polyethylene and 379000 t/y of poly propylene. However, the project hasn’t progressed since its announcement in 2005.
Service Hub
GPIC will raise production once the needed gas is secured.
Future Plans
Despite the fact that Bahrain doesn’t have natural resources, many service providers have chosen to set up regional headquarters in Bahrain, mainly to serve the Saudi Arabian market. “There is easy access to the Saudi market via the causeway, and it is easy to establish a foreign branch in Bahrain,” says Seena Dashty, technical sales and services engineer at Haldor Topsoe. Moreover, Bahrain is known a hub of many international financial firms. “Along with an increasing large banking sector, especially for offshore banking, Bahrain has gained a good reputation in the fields of oil refining, petrochemical and aluminum industries,” he adds. ith petrochemical production set ot W expand, Bahrain will be able to boost its exports of refined products, and also attract more service providers to the country.
Refining & Petrochemicals Middle East May 2010
16 Laffan Refinery 16
LAFFAN REFINERY UNVEILED
Faisal Al Suwaidi, chairman and CEO of Qatargas,reveals how w extracted Qatar is monetizing the large amount of condensates extract ted along l with i h naturall gas from f the h giant i North N h Field Fi ld reserves
Q
atar’s Laffan Refinery Refinery is one of the world’s largest condensate refineries and was formally inaugurated in early April, in Ras Laffan Industrial City, 8 0km from Doha, Qatar, allowing the state of Qatar to consolidate its investments in the downstream sector. Significantly, the refinery will process sufficient quantities of condensate to enable Qatar to meet all of its gasoil, LPG and Kerojet needs domestically for the first time, and move into export market as well. “The initial concept of the Laffan Refinery began eight years ago when discussions were held about implementing measures to help diversify Qatar’s energy sector,” Faisal Al Suwaidi, chairman and
Refining & Petrochemicals Middle East May 2010
CEO of Qatargas, told Refi Refining ning and Petrochemicals Middle East. “It was realised that it would be beneficial for the state of Qatar to capitalise on the synergies at Ras Laffan City created by the development of the North field,” he adds. Construction of the US$ 9 00m re finery project was completed in J uly 2009by a GS Engineering /Daewoo (GSDW ) consortium (on a 62:38share basis) from South Korea who had been awarded a lump sum engineering, procurement, supply, construction and commissioning (EPSCC) contract in April 2005. The refinery will add value to the condensate produced by Qatargas and RasGas facilities. “Once the condensate arrives into the refinery, it is heated into
furnace to over 300 degrees Celsius and then transferred to the distillation column where it is separated into products like LPG and Kerojet,” he explains. The Laffan refinery has a process capacity of 14 6 000 barrels per stream day (bpsd) and uses the field condensates
5.6m
The tank farm has a storage capacity of 5.6 million barrels of condensate which is the equivalent of 356 Olympic sized swimming pools.
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Laffan Refinery 17
“THE NEW EXPANSION PROJECT WILL DOUBLE THE CAPACITY OF LAFFAN REFINERY TO 296 000 BARRELS PER DAY BY 2015” FAISAL AL SUWAIDI, CHAIRMAN AND CEO OF QATARGAS.
produced from the Qatargas and RasGas facilities. The production capacity of the refinery will be 52 000 bpsd of kerojet, 24000 bpsd of gasoil, 9000 bpsd of LPG and 61 000 bpsd of naphtha. “The naphtha will be used as a feedstock for the aromatic complex,” reveals Al Suwaidi.
Qatargas operates the refinery on behalf of the shareholders which include Qatar Petroleum, Total, ExxonMobil, Cosmo, Idemitsu, Mitsui and Marubeni. “Due to Qatargas’s strong reputation in executing projects safely and on time, we were assigned the project management and operation of the refinery on behalf of the shareholders,” he adds. Michael Corke, senior vice president at the Dubai based refining consultancy Purvin and Gertz says: “Laffan Refinery certainly makes strategic sense for Qatar to process some of its condensate at source and the economics of a well-executed project of this type should be positive. Qatar currently produces 4 76 000 b/d of condensate, which will rise to 78000 b/d by 2014 , becoming the world’s largest condensate seller, producing 15-18 % of global condensate exports. Al Troner, president of the Huston based Asia Pacific Energy Consulting (Apec) says: “Unlike Saudi Arabia, which is also ramping up production (together they will add more than 600 000 b/d output by 2013), Qatar doesn’t have enough crude to spike condensates into, so export is its only option,” he says. W hat characterises the Laffan re finery is the fact that it only processes condensates. “Processing condensate in a specialized facility will give better margins than processing it in oil refinery,” says Corke.
Laffan Refinery consists of process units including utility systems, distillation units, naphtha and kerosene hydrotreaters, a hydrogen unit and a saturated gas plant producing naphtha, kerojet, gasoil and liquefied petroleum gas (LPG). The refinery has been planned as an environmentally-friendly facility and built in line with stringent environmental standards to reflect this concept in every detail. “The refinery is designed for zero flaring during normal operations,” says Al Suwaidi. “In rare cases when there is excess flaring, the refinery has a recovery gas compressor which is designed to capture any excess gas and recycles it back into the refinery rather than it being released into the environment,” he adds.
Taking the lead Qatar’s next wave of condensate production this year will come from the two final LNG mega trains - Qatargas 6 led by ConocoPhillips, and Qatargas 7 , led by Shell Company
Stake in the project
QP
51%
Total
10%
ExxonMobil
10%
Cosmo
10%
Idemitsu
10%
Mitsui
4.5%
Marubeni
4.5%
Project timeline NOVEMBER 2006
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FEBRUARY 2007
OCTOBER 2007
MARCH 2008
Refining & Petrochemicals Middle East May 2010
18 Laffan Refinery
Qatar is doubling the capacity of Laffan Refinery by 2015.
Energy minister Abdullah Al-Attiyah (left) and Faisal Al Suwaidi (right) at the inauguration press conference in Ras Laffan.
- due on stream by the year end. Each will produce 4 2 000b/d of condensate. At the beginning of 2011 Shell will start producing 65 000 b/d condensates and 36 000 b/d LPG from the gas feedstock for its $ 1b 9n gas-to-liquids (GTL) plant, which is being commissioned. To utilise the condensates coming from these projects, Qatar is building a second 14 6 000 b/d condensate splitter at Ras
Laffan for 2015 start up. “W e expect to award the front end, engineering and design (FEED) contract for the expansion project in the coming few weeks,” AlSuwaidi says. “The new expansion project will double the capacity of the refinery to 29 6 000bpd by 2015,” he adds. Energy minister Abdullah Al-Attiyah, says the second Ras Laffan splitter will allow Qatar to become a net exporter of diesel, instead of an importer. Al Attiyah said Qatar will target Asia and Europe with the splitter products, “Markets across Southeast Asia and Europe in particular rely on these commercially valuable products for their petrochemical industry and to run their vehicles and jets,” Al Attiyah says.
Key Contractors Contractor
Job
Technip
FEED Study
GS Engineering/ Daewoo
EPC Contractor
Invensys Process Systems
Automation systems
Kentz
Construction of a receiving and loading facility
Qatar’s large condensate output is often forgotten, but the light liquid is allowing the state of Qatar to remain rather immune to global gas price fluctuations, while at the same time not being included in OPEC production quotas, giving it something of a central role in Qatar’s new energy mix, and in its 2030 vision.
146 000
barrels of condensate or 23 million litres are processed per day, which is enough to continuously fly 14 jumbo jets or keep 6000 trucks and 43 000 cars on road every day.
Project timeline MAY 2008
JANUARY 2009
Refining & Petrochemicals Middle East May 2010
APRIL 2009
NOVEMBER 2009
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MEP10_Ad_265x200.pdf
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20 Technology Focus: Catalysts Market
REACTION BOOSTERS After stringent regulation was introduced to regulate the production of refined and petrochemicals products, catalyst quality and cost has come to the fore
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atalysts are a crucial component in the processing of highly valued petrochemicals, gasoline, diesel and other refined products. Processing feedstock in refineries and petrochemicals plants means converting highboiling, high-molecular weight hydrocarbon fractions of crude or condensate feedstocks to more valuable gasoline, olefinic gases
$7.5b Global market for chemical processing catalysts by 2015. Source: GIA Report
Refining & Petrochemicals Middle East May 2010
and other petrochemicals and refined products. This important conversion is generally achieved through a process of fluid catalytic cracking, or hydrocracking, where catalysts are used to set off reactions in chemical mixtures. ith more stringent local speci fications W and a real incentive to produce cleaner fuel and petrochemical products for the export market, the role of catalysts play in reaching strict international requirements and specifications is very important. In a fast-changing marketplace, the right catalytic solution can help boost refinery profitability. “There are many different catalysts used in refineries and petrochemical plants. Most of these catalysts are solid, but some are liquid,” says Yassir Ghiyati, sales manager for the
Yassir Ghiyati, sales manager, Haldor Topsøe.
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Technology Focus: Catalysts Market 21
“THE HYDROCRACKING CATALYSTS AIM TO CRACK LARGE HYDROCARBONS TO SMALLER MOLECULES IN DIESEL AND KEROSENE RANGE” YASSIR GHIYATI, HYDROPROCESSING TECHNOLOGY AT HALDOR TOPSØE
Holliman Wrenn, product market manager, Dow Chemical.
hydroprocessing technology division at Haldor Topsø e. In the refining and petrochemicals industry, catalysts are used in different processes. “W e find catalysts in the hydrotreating process, hydrogen production, isomerisation and reforming,” says Ghiyati. “It is also used in catalytic cracking, hydrocracking, sulphur or sulphuric acid production,” he adds. Catalysts are also present in the dimethyl ether production (DME), methanol production and in many other processes. Many different catalysts are also used in the petrochemical process. “Our catalyst portfolio can be broken down into four main categories including ethylene oxide catalysts, styrene catalysts, hydrogenation catalysts for steam cracker and associated units as well as environmental catalysts,” says Kelvin Halliwell, licensing manager at Shell. Moreover, every petrochemical product has its specific catalyst. “W e provide a family of polypropylene polymerization catalyst systems,” says Holliman W renn, product market manager at Dow Basic Plastics Licensing and Catalyst. “Our catalyst and donor technologies enable producers to manufacture more than 160 different products,” she says. Each process uses a system comprising of different catalysts. “In a hydrocracking unit,
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the catalyst system will typically comprise of grading catalysts, hydrotreating catalysts and hydrocracking catalysts,” says Ghiyati. Grading catalysts are used to invoke a stepwise increase in activity and size, so as to minimise pressure drop problems, while the hydrotreating catalysts aims to remove sulphur and nitrogen from the feed. The material in this catalyst is typically Nickel on Molybdenum (NiMo) or Cobalt on Molybdenum (CoMo). “The hydrocracking catalysts aim to crack large hydrocarbons into smaller molecules in the diesel and kerosene range,” explains Ghiyati. The choice of catalysts used during the process depends on different factors related to the type of the process itself. “Some of the main factors are: feed density, boiling range, aromatic content in addition to hydrogen availability and desired product specifications,” says Ghiyati. Meanwhile, the catalyst charge is changed depending on the feed property and operation conditions,
usually two years to eight years. More than ever before, efficiency is the operator’s primary concern. “A good way for a refinery to reduce global catalyst expenses is to maximize the catalyst’s multiple uses, which is possible for a number of applications,” says Dr Saleh Abotten, general manager of Al Bilad Catayst. “The technique of ex situ regeneration gives the best chance to recover the maximum performance, with the lowest chance for pressure drop build up in the reactor beds as well as improper liquid distribution,” he explains.
Market forecast The refining and petrochemicals industries are currently undergoing its most serious challenge in recent times, since cleaner fuels with lower sulfur content are gradually introduced in many markets. “Middle East countries still have less history than western countries when it comes to clean fuels, but the trend is there, with more
Catalysts are a crucial component in the processing of highly valued petrochemicals, gasoline, diesel and other fuels.
Refining & Petrochemicals Middle East May 2010
22 Technology Focus: Catalysts Market
“THE GLOBAL MARKET FOR CHEMICAL PROCESSING CATALYSTS IS PROJECTED TO REACH US$7.5 BILLION BY 2015, DRIVEN BY THE INCREASED USE OF CATALYSTS FOR COMMODITY CHEMICALS”
Most of catalysts are solid, but some are liquid, they are used in different downstream processes including hydrotreating process , hydrogen production, isomerisation and reforming.
stringent local specification and a real incentive to produce cleaner fuel for the export market,” says Dr Francois Locatelli, deputy general manager, Al Bilad Catalyst. “This increases the demand for hydroprocessing catalysts in the region,” he adds. China and Middle East are expected to be the major centers of growth for the overall catalyst market, as stated in a recent reports published by Global Industry Analysts, a market research publisher. This growth in the worldwide catalysts market is driven by the ever-increasing demand from polymer manufacturers, and refining and petrochemicals industries. The global market for chemical processing catalysts is projected to reach US$ 7.5 billion by 2015, driven by the increased use of catalysts for commodity chemicals and rising prices for catalysts on the back of more expensive precious metals.
$3.8b World market for petroleum refining catalysts by 2015. Source: GIA Report
Refining & Petrochemicals Middle East May 2010
Meanwhile, world market for petroleum refining catalysts is poised to reach $ 3.8 billion by 2012. Global Industry Analysts believe that other primary growth drivers include the rapid rise in consumption of petroleum based derivatives and petrochemical products, the deteriorating quality of crude oil and refiners’ growing use of heavier and dirtier feedstocks. Growing demand for transportation fuels, and the ongoing transition from heavier petroleum components to smaller and lighter fractions also play a part. In a buoyant downstream sector in the Middle East, catalyst providers need to be able to provide regional producers with the catalysts necessary to operate efficiently. And, even more importantly, they need to help producers face the challenge of meeting international standards.
Kelvin Halliwell, licensing manager at Shell.
“MIDDLE EAST COUNTRIES STILL HAVE LESS HISTORY THAN WESTERN COUNTRIES WHEN IT COMES TO CLEAN FUELS, BUT THE TREND IS THERE WITH MORE STRINGENT LOCAL SPECIFICATION AND A REAL INCENTIVE” DR FRANCOIS LOCATELLI, DEPUTY GENERAL MANAGER, AL BILAD CATALYST
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24 Petrotech 2010
PETROTECH 2010 The seventh Petrotech conference is set to draw more than 3000 delegates and 100 companies from 20 countries to Bahrain’s capital
O
ver 3 000 downstream professionals are set to converge on Bahrain between the 23rd and the 26th of May for the seventh Middle East International Refining and Petrochemicals Conference and Exhibition (Middle East Petrotech 2010). Set against a backdrop of ongoing refinery expansion projects in the region, the event has attracted highly respected members of the industry and companies from around the world, all active in increasing capacity as global demand for energy continues to rise. “The 5,200 square metre exhibition of products and services at the Bahrain International Exhibition and Convention Centre showcases over 100 companies from 20 countries,” says Natasha Coelho, from Arabian Exhibition Management, the conference organisers. Major exhibitors include the Bahrain Petroleum Company (Bapco), the Kuwait National Petroleum Company (KNPC), the Rabigh Refining and Petrochemical Company (Petro Rabigh), the Saudi Arabian Oil Company (Saudi Aramco) and Qatar Petroleum (QP), all of which are taking flagship stands in the four days event. International petrochemical and refining companies as well as service industry majors also maintain a strong presence at Petrotech 2010 with ABB, Air Liquide, Dow, ExxonMobil and Yokogawa
3000
The number of downstream professionals who are expected to converge Bahrain to attened the event.
The 5 200 square metre exhibition of products and services will showcase the cream of the downstream industry.
occupying significant exhibition space. Smaller specialist companies and a dedicated UK pavilion complete the line up. More than a hundred paper’s by leading professionals will deal with the conference’s theme: Downstream Challenges: Financing, Market Changes and Technology. The packed schedule also includes a series of sessions, in which top level speakers will focus on the challenges, as well as the extensive opportunities, the Middle East faces in managing the world’s most important energy reserves. “The conference will open with a keynote speech by Petrotech 2010
chairman Ali Hassan Al-Sidiky, director of downstream ventures, Qatar Petroleum,” revealed Coelho. Dr. Abdulhussain bin Ali Mirza, Bahrain’s Minister of Oil and Gas Affairs and chairman of the National Oil and Gas Authority (NOGA), will also address the delegates. Abdullah bin Hamad Al-Attiyah, Qatar’s deputy prime minister and minister of Energy and Industry, will also deliver a speech during the inauguration session. Other high level guest speakers featuring during the course of the conference at the Bahrain International Exhibition Centre include CEO’s and
“MORE THAN 100 PAPERS WILL BE DELIVERED DURING THE COURSE OF THE CONFERENCE BY LEADING PROFESSIONALS UNDER THIS YEAR’S DIFFERENT THEME” NATASHA COELHO, ARABIAN EXHIBITION MANAGEMENT.
Refining & Petrochemicals Middle East May 2010
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Petrotech 2010 25
“WE HAVE DECIDED TO COME OUT WITH A REINFORCED PRESENCE BY PARTICIPATING IN THE EXHIBITION AS WELL AS THE CONFERENCE, AS WE HAVE AN IMPORTANT MESSAGE TO CONVEY TO OUR CLIENTS” NILE AL RUSHAID, HYPERION SYSTEMS. senior executives of major regional petrochemicals producers, international financial firms and the major service providers. Middle East Petrotech 2010 is organised by Bahrain-based Arabian Exhibition Management and London-based Overseas Exhibition Services, both members of Allworld Exhibitions. The event is held every two years, and in 2008 attracted 2,705 senior downstream oil industry professionals from 156 companies.
HYPERION SYSTEMS ENGINEERING Nile Al Rushaid, Manager, Saudi Arabia Is this your first Petrotech conference and exhibition? Yes, this is the first time we are participating in the Petrotech Exhibition with our own stand, although in the past our company has often participated in the Petrotech conference presenting, mostly in conjunction with one of our customers, papers based on successfully completed projects that also had an innovative angle (such as this year’s paper that we are presenting jointly with Saudi Aramco on web-based operator training simulation). Why is your company participating in Petrotech 2010? Hyperion Systems Engineering Ltd, is one of the leading (and the only truly independent) provider of systems engineering solutions and services to the oil & gas and petrochemical industries. This year, we have decided to come out with a reinforced presence by participating in the exhibition as well as the conference, as we feel we have an
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DOW CHEMICAL
Over 100 companies from 20 countries will be exihibiting.
important message to convey by showcasing an array of products and services, all helping our customers drive down their costs and dramatically increase their operational efficiency. Last but not least, our participation is a way to celebrate completing our first year of successful operation of our Saudi Arabia subsidiary, who is leading our participation. What do you hope to get out of Petrotech 2010? Our company is consistently executing our strategy of becoming a leading force in providing process engineering solutions in the Kingdom of Saudi Arabia and the Gulf region in general. Our participation in the exhibition does not focus on a specific solution, rather we intend to showcase a number of solutions with material and live demos, including our Operator Training Simulators, our Production Scheduling and Multi-Blend Optimisation solutions for refining and petrochemicals, Advanced Process Control, as well as our Laboratory Information Management Solutions. We would be happy to see you at Stand 011.
Margaret Walker, vice president for engineering solutions, technology centers and manufacturing & engineering. Is this your first Petrotech conference and exhibition? This will be the second time Dow participates in PETROTECH, and Dow believes this to be a strategic opportunity to engage with highlevel decision-makers and network with key stakeholders in the petrochemicals industry. Why is your company participating in Petrotech 2010? Among our many participation objectives, Dow will promote cutting-edge technologies and market solutions that connect chemistry and innovation with the principles of sustainability to help address some of the most challenging problems our customers face in the oil and gas, water, construction and coatings industry, among others. In addition to having a stand at the PETROTECH Exhibition area, we will be represented at the Conference session; as I will deliver a keynote speech. Also, Dow will deliver two technical presentations by leaders within Dow’s manufacturing and engineering function.
Refining & Petrochemicals Middle East May 2010
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Market Analysis 27
Contax’s Capex Corner Second year of higher than average spending plans…are you ready for the next peak?
2
009 saw the award of $95bn worth of energy and energy related projects in the GCC. This figure was c.53% higher than the level awarded in 2008, despite the economic downturn and was largely driven by the region’s strategic energy production targets to ensure a solid position for the future upturns in demand, relaxation in the contracting market and increased gas demand from the regions power and petrochemical sectors. At the beginning of 2010, it was clear that the region had high spending hopes, with c.$230bn worth of projects planned for award in the year. Each taking nearly 25% share of this were the power and refining sectors with Oil and Gas Production spending following suit with c.17%. However, as has been the trend for the past few years, there is always a considerable difference between the planned and actual spending. This is due to a number of reasons; projects are not considered to be essential in terms of a country’s strategic master plan, there is a heavy dependency on international project financing, lack of feedstock availability or due to the depressed demand and prices for certain products resulting in, the attractiveness of certain projects from a ROI perspective being less attractive.
Kathleen Bury is Director of Market Analysis.
Nora Ismagilova, Business Analyst, Contax Partners
On a quarterly basis, Contax Partners conducts an analysis all of the energy and energy related projects in the region to tier them in terms of their likelihood of progressing, thus allowing for the generation of a more realistic view of the project award landscape. With the Tier 1 category representing a greater than 70% likelihood of proceeding in the current market, Tier 2 between 40 and 70% and Tier 3 less than 40%, the majority of planned 2010 projects at
the beginning of the year fell into the Tier 1 category, 40%. Following closely was Tier 2 with 32%, thus giving a total of 72% of projects with a greater than 40% of proceeding within the year. Interestingly, on a quarterly basis, the forecast total spending levels across the tiers between Q1 and Q3 was relatively steady, between c.$46bn and c.$54bn. However, in Q4, the expected spending levels increased to c.$88bn, representing c.38% of the total yearly
GCC Energy Capex 2010 US $ Billion 100 90 80 70 60 50 40 30 20 10 0
Q1 2010 Q2 2010 Q3 2010 Q4 2010 Planned Capex Jan ‘10
Planned Capex Mar‘10
Source: Contax Partners, MEED-Projects March 2010
www.arabianoilandgas.com
Saudi Arabia’s PetroRabigh integrated refinery and petrochemical project was completed in 2009.
Refining & Petrochemicals Middle East May 2010
28 Market Analysis
The UAE’s Borouge will inaugurate its polyethylene expansion project in June this year.
amount, although it was expected that some of this planned spending would spill over into 2011. For the Tier 1 projects, specifically however, the scenario was slightly different, with over 60% of projects being awarded in the first half of the year. Given these forecasts, it is interesting to note that as we near the end of Q1, fewer than
20% of the projects planned for award in Q1 have actually been awarded. The majority of these awards took place within the petrochemical and power sectors, c.30% and c.19% respectively, although the forecast at the beginning of the year was that the majority of spending would be found within the power, water and waste and oil and gas
Total GCC EPC Workload 2007 - 2012 US $ Billion
40 35 30 25
production sectors. Coupled with the c.$185bn worth of projects still on the table and planned for award this year, the total planned expenditure for 2010 has decreased by c.16% from the levels forecast three months ago. Nevertheless, looking forward to the remainder of the year, c.55% of the planned projects due for award is in Saudi Arabia, followed by the UAE which accounts for c.22%. From a sector perspective, the power sector continues to dominate the region’s spending plans with c.33%, followed by oil and gas production and petrochemicals, c.17% and c.15% respectively. Looking again to develop a more realistic picture, Tier 1 projects account for over c.40% of the planned Capex expenditure, c.$75bn. With this in mind, it is expected that the final level of spending at the end of the year will be in line with or just below that of 2009 and once again considerably higher than that in 2007 and 2008. Given this, under a realistic scenario where only Tier 1 and 2 projects go ahead, future projects will sustain the GCC energy workload at high levels. Looking briefly beyond 2010, should all of these Tier 1 and 2 projects go ahead as scheduled, the GCC is expected to witness another energy workload peak throughout 2011, which would be even higher than the stretched conditions of the construction boom during 2007 and 2008. If this occurs, it would result in similarly severe challenges in project planning and execution. The question is: have we learnt from the past to ensure that we are properly prepared for this next cycle and have we developed robust mitigation strategies to ensure that we minimize the associated risks?
20 15 10 5 0 Q1 2007
Q1 2008
Q1 2009
Residual workload
Q1 2010
Future Tier 1
Q1 2011
Future Tier 2
Q1 2012
Future Tier 3
To further discuss how the Business Advisory Team can help you understand the changing market dynamics, the full set of opportunities open to you and the best strategy/approach to ensure the opportunities are successfully secured, please contact Ann-Marie Carbery Antoun at AnnMarie.Carbery@ contaxpartners.com. We look forward to speaking with you!
Source: Contax Partners, March 2010
Refining & Petrochemicals Middle East May 2010
www.arabianoilandgas.com
30 Number Cruncher
Downstream Data
Most listed petrochemical companies saw share prices improve through April. Regional listed companies led the charge, with TASNEE posting the largest gains. LISTED COMPANIES IN THE SAUDI STOCK MARKET Price on Mar,19th (US$ per share)
Price on Apr,19th (US$ per share)
Change %
Saudi Basic Industries Corporation (SABIC)
25.80
27.07
4.68
Saudi Arabian Fertilizer Company (SAFCO)
38.33
37.20
-3.05
Saudi Kayan Petrochemical Company (Kayan)
5.05
5.84
13.47
Rabigh ReďŹ ning and Petrochemical Company (Petrorabigh)
9.33
9.76
4.37
Yanbu National Petrochemical Company (YANSAB)
9.47
9.47
0.00
National Industialization Company (TASNEE)
7.71
9.33
17.43
Saudi Industrial Investment Group (SIIG)
5.81
6.56
11.38
Saudi International Petrochemical Company (SIPCHEM)
6.33
12.56
49.58
Sahara Petrochemical Company (SAHARA)
5.89
6.80
13.33
Advanced Petrochemicals Company (Advanced)
6.03
6.48
7.00
Nama Chemicals Group (NAMA)
2.79
2.83
1.42
Alujain Corporation (ALUJAIN)
4.59
4.95
7.28
Methanol Chemicals Company (CHEMANOL)
4.23
4.39
3.65
Petrochem
4.08
5.17
21.13
LISTED COMPANIES IN THE KUWAITI STOCK MARKET Price on Mar,19th (US$ per share)
Price on Apr,19th (US$ per share)
Change %
Qurain Petrochemical Industries Company (AL-QURAIN)
0.70
0.75
6.54
Boubyan Petrochemical Company (BOUBYAN)
1.96
1.82
-7.69
Ikarus Petroleum Industries (IKARUS)
0.51
0.55
7.59
LISTED COMPANIES IN THE QATARI STOCK MARKET Price on Mar,19th (US$ per share) Industries Qatar
30.74
Price on Apr,19th (US$ per share) 31.21
Change % 1.50
LISTED COMPANIES IN THE OMANI STOCK MARKET Price on Mar,19th (US$ per share) Oman Chlorine S.A.O.G. (CHLORINE)
1.02
Price on Apr,19th (US$ per share) 0.93
Change % -8.73
LISTED COMPANIES IN THE EGYPTIAN STOCK MARKET Price on Mar,19th (US$ per share)
Price on Apr,19th (US$ per share)
Change %
Abu qir Fertilizers
40.00
40.40
0.99
Sidi Kerir Petrochemicals Company
2.44
2.49
1.85
Refining & Petrochemicals Middle East May 2010
www.arabianoilandgas.com
Number Cruncher 31
1100
1400
BENZENE (FOB FAR EAST)
1000
1300 1200
900
1100 US$/tonne
800 700 600
1000 900
CFR: Cost and Freight
1400
11/04/10
06/03/10
30/01/10
26/12/09
14/11/09
11/10/09
06/09/09
03/08/09
29/06/09
27/05/09
22/04/09
18/03/09
11/02/09
11/04/10
06/03/10
30/01/10
26/12/09
14/11/09
11/10/09
06/09/09
03/08/09
29/06/09
27/05/09
500
22/04/09
600
300
18/03/09
400 11/02/09
700
07/01/09
800
500
07/01/09
US$/tonne
Benzene prices reached US$1005 per tonne, as crude values hovered around $83 bpd, as well as improvement of demand from key downstream segments.
ETHYLENE (FOB FAR EAST)
FOB: Freight On Board
1400
PPF (CFR FAR EAST)
PROPYLENE (FOB FAR EAST)
1300
1300
MEG prices have
1200 1200
stabilised for the second week in row around $940 per tonne, following improvement of crude prices during the last two weeks and also to tight supplies.
US$/tonne
US$/tonne
1100
1100 1000
1000 900 800
900
NAPTHA
11/04/10
06/03/10
30/01/10
26/12/09
14/11/09
11/10/09
06/09/09
03/08/09
29/06/09
27/05/09
22/04/09
18/03/09
11/02/09
11/04/10
06/03/10
30/01/10
26/12/09
14/11/09
11/10/09
06/09/09
29/06/09
27/05/09
22/04/09
03/08/09
900
PVC (CFR FAR EAST)
(CRF FAR EAST)
800
US$/tonne
700
US$/tonne
600 500
11/04/10
06/03/10
30/01/10
26/12/09
14/11/09
11/10/09
06/09/09
03/08/09
29/06/09
27/05/09
22/04/09
18/03/09
11/02/09
300
11/04/10
06/03/10
30/01/10
26/12/09
14/11/09
11/10/09
06/09/09
03/08/09
29/06/09
27/05/09
22/04/09
18/03/09
11/02/09
07/01/09
400 07/01/09
1100 1050 1000 950 900 850 800 750 700 650 600
18/03/09
500
11/02/09
700
07/01/09
600 07/01/09
700 800
Ethylene prices jumped to US$1210 per tonne, reaching its highest level in 8 weeks, underpinned by tight supply and improved demand from key Asian markets.
Propylene prices edged to its highest level in 2010, reaching $1350 per tonne due to the high demand and amid uncertainty over the outlook for the market. Polyethylene prices rose to $1250 per tonne on the back of strengthening sentiment due to high crude and ethylene feedstock values. Polypropylene prices
1100 1000
1200
900
700
(HDPE Injection)
www.arabianoilandgas.com
11/04/10
06/03/10
30/01/10
26/12/09
14/11/09
11/10/09
06/09/09
03/08/09
PVC prices stablised at
29/06/09
11/04/10
06/03/10
30/01/10
26/12/09
14/11/09
11/10/09
06/09/09
03/08/09
29/06/09
400
27/05/09
700
22/04/09
500 18/03/09
800 11/02/09
600
07/01/09
900
27/05/09
1000
800
22/04/09
US$/tonne
1100
18/03/09
US$/tonne
1300
rose to $1250 per tonne in the two last week of April, supported by snug supply and strengthening demand from key markets.
MEG
11/02/09
HDPE (CFR FAR EAST)
07/01/09
1400
around $1030 per tonne due to decline of demand from key markets and sectors. Source: www.argaam.com
Refining & Petrochemicals Middle East May 2010
32 Face to Face
GLOBAL DISTRIBUTION BUSINESS Ruya Bayegan, board member of Bayegan Group, discusses the petrochemicals distribution business.
RUYA BAYEGAN We are a family company, established in 1940, and I am part of the third generation running the business. The Bayegan Group initially focussed on the Turkish market, and then started serving Asia, the Middle East, Europe, the CIS and Africa. We are very well established in Turkey, where we make 60% of our turnover. But we are aiming to generate 70% of our turnover outside Turkey in future. We have three business units: the oil and derivatives business, the petrochemicals business and the fertilizer business. The petrochemicals unit operates three different departments: solvents, polymers and intermediates. We have a market share of 10% in polymer distribution in Turkey, but are looking to increase this to 20%. One of our strengths is our logistics infrastructure, as we are used to dealing with a diverse range of products.
We source our products from different parts of the world, from the US, Europe, the Middle East and Asia, and sell them in the markets where we can get the best profit margins. For each product we deal with, we have built a solid partnership with producers, as we have been dealing with the same sources for a long time and on a regular basis. This is very important as it allows us to be regular and reliable source to our customers, and enables us to establish a
Refining & Petrochemicals Middle East May 2010
long term relation with them. We have exclusive partnerships with ExxonMobil Chemical, Du Pont, Evonik, Lukoil.
Our primary sales focus is the Turkish market, Asian represents 27% of our sales, followed by the Middle East which accounts for 23% of sales. The African and European markets account for another 19% of our sales each.
“TURKEY IS SECOND BIGGEST BUYER OF PETROCHEMICAL PRODUCTS IN THE WORLD, WE ARE PURELY IMPORTER” We distribute for Saudi Arabian and Iranian producers in Turkey. These companies also distribute in Turkey themselves, yet we have maintained excellent relationships with them. Despite the competition, I think that all parties are happy with this model. Turkey is the second biggest buyer of petrochemical products in the world, as we don’t have production facilities like in India or China, with the exception of the Petkim refinery. So Turkey is purely an importer. Iran and Saudi Arabia benefit
MEMBER OF BOARD, BAYEGAN GROUP
from low production costs which allow them to compete easily with other producing countries.
Surviving the downturn is the main challenge, as some customers want to postpone their payments because they couldn’t secure the necessary funds on time. Another big challenge is doing business in Iran, due to the embargo. Iran is a big import and export market for us, so we have to be ready to cope with any changes to the US sanctions regime.
The credit crunch has had a huge impact on us, as the market volatility it caused made it difficult to make forward price estimations. Before the credit crunch, we could predict prices based on seasonal patterns. But now, it is difficult to predict the direction of the market.
I graduated from Boston university with a management degree. I have been with the company for 12 years. After graduation, I joined my father’s company where I was in the textile business and then moved to the petrochemicals distribution business, where I am in charge of the international markets.
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