Refining & Petrochemicals ME - August 2010 by ITP Business Publishing

NEWS 05 | BUILD & PROJECTS 09 | PROCESS OPTIMISATION 20 | DOWNSTREAM LOGISTICS 28 | VIP INTERVIEW 34

NEWS, S, DATA AND ANALYSIS FOR THE REFINING AND PETRO PETROCHEMICAL OC CH HE EM MIC CA ALL IINDUSTRIES ND N DUSTR US U STR TRIIE ES

AUGUST 2010

REBRAND TO RECOVER ALGERIA’S CORRUPTION INFESTED NOC IS OVERHAULING ITS IMAGE

WORLD CUP FLAVOUR

Salem Shaheen, president and CEO of SATORP

SABIC PLASTICS SHINE AT WORLD CUP IN SOUTH AFRICA

PETRO TICS S I G O L T REPOR

TIME TO

BUILD CEO: Delaying EPC awards slashed 20% off SATORP construction costs

An ITP Business Publication, licensed by Dubai Media City

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Contents 1

20 24

IN PRINT

28 34

24 MARINE SHIPPING AND LOGISTICS Getting your product to market in a cost effective manner needs joined-up logistics and shipping planning.

August 2010 Volume 03 Issue 08

28 ALGERIA COUNTRY PROFILE

5 REGIONAL NEWS

With $28bn allocated to the development of a downstream industry, Algeria must overhaul its inefficient and corrupt image.

Borouge inks $2.6bn contracts for its third expansion • Kayan seeks $2.4bn for rising plant costs • KPC to invest $8bn in Asia

32 MANAGEMENT INTERVIEW

8 MIDDLE EAST MARKET UPDATE

RPME meets The Dow Chemical Company’s outgoing manufacturing and engineering guru, Margaret Walker.

Build & Projects • Operations & Maintenance • Science & Technology • Equipment & Machinery • Sales & Shipments

38 NUMBER CRUNCHER

14 TIME TO BUILD

Refining and Petrochemicals Middle East provides market data and analysis for the region’s listed downstream companies.

Salem Shaheen, president and chief executive of Saudi Aramco and Total joint venture SATORP, talks exclusively to RPME.

40 THE BIG PICTURE

20 PROCESS OPTIMISATION

Eye in the sky: See QAFCO’s first melamine export to European markets from a bird’s eye view.

Reducing production costs requires the adoption of intelligent process optimisation tools and technologies.

To subscribe visit www.itp.com/subscriptions

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Refining & Petrochemicals Middle East August 2010

2 WEB HIGHLIGHTS

The online home of:

SPECIAL REPORT

ONLINE GALLERY

MOST POPULAR NEWS

1 Iraq eases visa procedures for oil workers 2 Fabtech and NOV begin new life with JV 3 QP & Maersk lift 1bn barrels of Al Shaheen oil 4 Shipping companies allowed to steer clear of Iran 5 GE Oil & Gas grants licence to BHEL

EDITOR’S CHOICE

Sonatrach In Pictures

N. Africa Upstream Profile

Arabianoilandgas.com picture gallery takes you behind the scenes of Sonatrach, with brand new photographs of the energy giant’s different sites and activities.

Arabianoilandgas.com brings you a special report on the upstream outlook for the oil and gas producing states of North Africa.

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BREAKING NEWS AND VIEWS FIRST

IRAQ EASES VISA PROCEDURES FOR OIL WORKERS

ROBERT DUDLEY NEW BP CEO AS HAYWARD STEPS DOWN

The Iraqi government has eased the visa process for oil industry professionals, removing some of the obstacles to the launch of work on the big oil projects in the south of the country.

BP announced that Tony Hayward is to step down as group CEO with effect from October 1, 2010. He will be succeeded by fellow executive director Robert Dudley.

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KSA TO SUPPLY 39.4% OF MIDDLE EAST OIL DEMAND BY 2014

Equate Petrochemical Company rakes in over 80% of the nation’s non-oil revenues. arabianoilandgas.com

WEB FORUM

CB&I NETS $190 MILLION ASIAN LNG EPC CONTRACT

Saudi Arabia will account for 23.12% of Middle Eastern regional oil demand by 2014, while providing a dominant 39.37% of supply.

CB&I announced that it has been awarded a contract, valued in excess of US$190 million, for two LNG storage tanks associated in the Asia Pacific region.

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Refining & Petrochemicals Middle East August 2010

KUWAIT’S EXPORT EARNER

E JOIN TH E T A B DE

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GPCA Fertilizer Convention Working towards Global Food Security FORECASTING FERTILIZER DEMAND – STRATEGIES FOR SUPPLY

29-30 September 2010, Dubai www.gpca.org.ae/fertilizerconvention The Gulf Petrochemical and Chemicals Association (GPCA) is delighted to announce the inaugural GPCA FERTILIZER CONVENTION taking place on 29-30 September 2010 in Dubai. GPCA Fertilizer Committee member companies: • GPIC – Gulf Petrochemical Industries Co. • FERTIL– Ruwais Fertilizer Industries • MA’ADEN – Saudi Arabian Mining Company • OMIFCO – Oman India Fertilizer Company • PIC – Petrochemical Industries Company • QAFCO – Qatar Fertilizer Company • SABIC – Saudi Basic Industries Corporation Co-organised by:

Ofﬁcial Publications:

China Partner:

• Hear fertilizer demand forecasts from industry experts • Overview of key consumer regions • Network with key fertilizer producers

Media Partners:

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 Southwello Editorial Director David Ingham

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 Neuhoff, Emran Hussain Advertising Commercial Director Jude Slann Tel: +971 4 210 8693 / judith.slann@itp.com Sales Manager Stephen Hamer Tel: +971 4 2108771 / stephen.hamer@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 Marketing Manager Annie Chinoy 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

Algeria’s Affliction

he recent embezzlement cases that have hit Algeria’s state controlled energy company, Sonatrach, has obliged the government to react and to take serious measurements to avoid any repetition. The internal strife has caused the cancellation of many contracts which had been awarded in an over-thecounter (OTC) trading basis without tenders. The whole process of reviewing the tendering process and the award of packages is now being completely revamped. The Sonatrach corruption scandal showed how a national energy company was effectively being run as a family business. Senior executives were creating companies for their sons and sometimes their wives, and then awarding them multimillion dollar contracts. There was no transparency and the swathes of red tape bureaucracy made even legitimate bidders look complicit. Two years ago, I met one of the vice presidents of Sonatrach when he was in Paris, and asked him about the bureaucratic procedure that characterizes Sonatrach, and whether foreign partners are complaining about this. He smiled and said if these companies want to work and get business with our company, they should be patient as there is no precise time frame to reply them. This situation, thinly veiled as bureaucratic procedure, opened the door for endemic corruption in the company. The new measures the government has announced include the cancellation of the shady R15 clause, which dictates the procedures to be followed before a contract, and replacing it with the R16, which bans the award of the contract on OTC basis. These policies aim to fight irregularities which have distorted the image of the company. I think there is a strong will from the government to avoid previous mistakes, and to change the way of doing business in the country. The government has recently publicly committed to a development plan of US$286bn for the next five years, so if the clean regime can be maintained, is your company positioned for a slice of that action?

Abdelghani Henni, editor e-mail: abdelghani.henni@itp.com

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Refining & Petrochemicals Middle East August 2010

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News 5

News

AUGUST 2010

Borouge inks US$2.6bn contracts

Samsung and Tecnimont jointly bag $1.26bn contract to build two PE and PP plants Abu Dhabi Polymers Company (Borouge) has signed three major engineering, procurement and construction (EPC) contracts valued at approximately US$ 2.6 billion for its Borouge 3 strategic expansion in Ruwais, Abu Dhabi. Two contracts were signed with a joint venture consortium between Maire Tecnimont of Italy and Samsung Engineering of South Korea, on a lump sum turnkey basis. The first of the two contracts, worth $1.26bn, was signed for the construction of two polyethylene and two polypropylene units, with an annual capacity of 1 080 000 tonnes/year and 960 000 tonnes/year respectively, while the second contract, worth $400m, was agreed for the construction of a 350 000 tonnes/year low density polyethylene (LDPE) unit. A third contract for the utilities and off-site facilities for the expanded plant was signed with South Korea’s Hyundai Engineering and Construction and was worth $935m. “Signing these contracts represents an important milestone in the fulfilment of Borouge’s growth strategy in the Middle East and Asia. In addition to the pipe, automotive and advanced packaging markets that we serve today, our investment in lowdensity polyethylene production

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The signing ceremony took place at the Sheikh Khalifa Energy Complex in Abu Dhabi in the presence of Borouge’s CEO, Abdulaziz Alhajri.

will spearhead our ability to manufacture innovative solutions for the global wire and cable market.” said Abdulaziz Alhajri, CEO of Borouge at the signing. “In addition to the pipe, automotive and advanced packaging markets that we serve today, our investment in low-density polyethylene production will spearhead

our ability to manufacture innovative solutions for the global wire and cable market,” he added. The signing ceremony took place at the Sheikh Khalifa Energy Complex in Abu Dhabi in the presence of Abu Dhabi Polymers Company’s (Borouge) CEO, Abdulaziz Alhajri; Roberto Bertocco, managing director of Tecnimont;

The investment will quadruple Borouge’s production capacity to over 4.5 million tonnes per year.

Kiseok Park, CEO and president of Samsung Engineering; and Jung Kyum Kim, president and CEO of Hyundai Engineering and Construction, the company said. Borouge has previously awarded a $1.075 billion contract to Linde Engineering for the construction of the Borouge 3 ethane cracker, while Al Asab General Transportations and Contracting Establishment of Abu Dhabi are executing the Borouge 3 site preparation. These significant investments will quadruple Borouge’s production capacity to over 4.5 million tonnes per year by 2013, making it the largest integrated polyolefins site in the world. Borouge is a joint venture between the Abu Dhabi National Oil Company (ADNOC) and Borealis.

Refining & Petrochemicals Middle East August 2010

6 News

SABIC Q2 profits up 177% New production units coming on line boost platics sales volumes

SIIG announces new conversion projects in Jubail

Saudi Basic Industries Corporation (SABIC) said second quarter net profit grew 177% from a year earlier to $1.34 billion, but down 7.6% from the first quarter of 2010. The company said in a statement on the bourse website that the result was driven by new production units coming on line. The Gulf’s largest listed company and one of the world’s top petrochemicals producers, blamed the drop from the first quarter on the lower prices of its products compared to high raw material costs. Gross profit for the second quarter was $3.16 billion, 91% up from $1.66 billion a year earlier, the company said in a statement to the Tadawul stock exchange. Net profit in the first half of 2010 totaled $2.79 billion, compared

Saudi Industrial Investment Group (SIIG) and Arabian Chevron Phillips (ACP) announced they will start some conversion projects in Jubail Industrial city, on the Eastern coast of the Kingdom of Saudi Arabia, the company said in statement published on the Saudi stock exchange. One of the projects will be the first project in the Kingdom to produce Nylon 6.6. The estimated cost of these projects is US$480 million, contributed by each partner equally. These projects will depend mainly on the products produced in the current project of the two companies in Al-Jubail for raw materials, the company said. These projects will provide products for a number of consumer needs in the Kingdom.

Gross profit for the second quarter was $3.16bn, 91% up from $1.66bn a year earlier.

to $221.3 million in the first six months of last year. SABIC attributed the year-onyear growth to higher prices and higher sales volumes for its petrochemical, plastic and steel products.

However, it said, “the decrease in net profits compared to the first quarter stem from lower prices for most products and the high cost of feedstock and high iron ore prices during the period.”

GCC Maintenance Society established in Bahrain

Saudi Kayan seeks $2.4bn to cover soaring plant costs

The Gulf Society of Maintenance Professionals (GSMP) has been recently formed in Bahrain, GSMP said in statement. The independent, non-profit organisation was founded by professionals from major companies in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE to promote maintenance professionalism in the Gulf region. “The mission of the GSMP is to provide a forum for the exchange of ideas, experiences, knowledge, and best practices among maintenance professionals and all who are interested in the field of maintenance,” said Hussain Ali Mattar, a founder member of the GSMP. “The society provides its members at all stages of their career with

Saudi Kayan said it was seeking bank financing with the help of main shareholder SABIC to cover a US$2.4bn rise in the building costs for a production complex. Kayan has said that up to the end of March it had spent $9.4 bn on the construction of the Jubail based giant complex, which it projects will have an annual production capacity of more than 4 million t/y. In a statement to the Saudi bourse, Kayan said: “It is expected that the gross cost of the project will rise by approximately 24% or around $2.4 bn.” “The company is working on necessary arrangements to obtain financing from one or several banks to cover the increase in costs

Hussain Ali Mattar, founder member GSMP.

valuable resources, and keeps them updated and informed about the constantly evolving trends, technologies, products, and solutions to the daily challenges of managing maintenance in complex industrial environments,” he added.

Petrochemicals Middle East August 2010

and support from the main shareholders to ensure the completion of all plants in the complex within the fixed deadline.” Kayan chairman Mutlaq al Morished told Reuters the company would organise a loan with help from its shareholders. He said: “They (the shareholders) can either guarantee the loan for Kayan or they can borrow and pass on the funds to Kayan.” SABIC, which holds a 35% stake in Kayan, said in late July, it had no plans for a bond issue in the medium term as it had raised $2.19bn through two loans in June from state run National Commercial Bank and Alinma Bank. It made the announcement after delaying a planned dollar bond in May.

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News 7

KPC to invest $9bn in Asia

New refinery will be built in Indonesia and will process 300 000 bpd Kuwait Petroleum Corp will invest US$9 billion in a new 300 000 barrels per day (bpd) oil refinery on Indonesia’s Java island, Indonesian Industry Minister MS Hidayat said. Hidayat said Kuwait Petroleum Corp and Indonesia’s state energy firm Pertamina will sign an MOU at the end of this month for a refinery in Balongan in western Java. However no timeframe was given for the Kuwaiti project, and previous plans to build new refineries have failed. “A joint venture will be formed within six months,” he said. “The crude oil will be supplied from KPC at a discount price,” Reuters reported. Indonesia’s state oil firm Pertamina has said previously it planned to build a new refineries in west and east Java in joint ventures with foreign investors, and to boost capacity at its refineries in

No timeframe was given for the new Kuwaiti project which is expected to cost US$8bn.

Balikpapan, Dumai and Balongan. Pertamina has asked the government for tax incentives for new refinery projects to attract investors. Indonesia’s investment chief Gita Wirjawan said the government will consider giving a tax holiday to refinery investors.

“I have talked with the finance minister and he responded positively about giving tax incentives for new refinery projects,” Wirjawan told reporters on Thursday. Indonesia has not build new refineries because of the high cost of projects and low margins in a country where fuel is subsidised.

OCTAL appoints new chief financial officer Oman-based OCTAL Petrochemicals announced the appointment of Nadeem Fayyaz as its chief financial officer (CFO). Nadeem brings with him over 20 years of experience in corporate and investment banking, having spent most of his career at Chase Manhattan Bank in New York and London in various client related roles and specialising in the commodity and petroleum industries. In addition, he has substantial experience in investment management having worked at UBS Financial Services as an investment advisor and at Pound Capital Ltd., New York as a private equity manager.

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As CFO, Nadeem will look at opportunities in the global and regional financial markets offering OCTAL the means to attain attractive sources of financing and to access advanced risk management tools. Commenting on his new role, Nadeem said, “I am pleased to have the opportunity to join a promising company such as OCTAL and to make a contribution towards its goal of PET industry leadership.” “We are excited to have Nadeem on board,” stated OCTAL’s Chairman, Saad Suhail Bahwan. “We believe his background and solid financial experience will further strengthen OCTAL and add to our capabilities going forward”.

Nadeem Fayyaz is the new CFO of OCTAL.

OCTAL is one of the largest integrated PET sheet manufacturers in the world and the Middle East’s largest producer of PET resin. OCTAL has a second plant in full production and a third one under construction to increase capacity to 927,000 tonnes per annum in early 2012.

Briefs SABIC is reported to have signed a number of MoUs on the sidelines of the Saudi Arabia pavillion at the Shanghai World Expo 2010, with a total value of US$884 million. According to Chinese news reports, SABIC will provide eight mainland Chinese companies with 600 000 tonnes of plastic products. Four people were killed in an explosion which hit the Khark petrochemical plant in southern Iran‘s Bushehr province on the 24th July, the IRNA news agency reported. Gholamreza Keshtkar, a provincial official, confirmed the explosion and said the cause of the incident was high pressure in a central boiler, according to IRNA’s report. The Najaf Refinery has achieved an increase in its production during the first half of 2010 compared to the same period of 2009. “Kerosene production was increased by seven million litres, gasoil by 16 million litres, and naphtha by 32 million litres,” the refinery said in a statement, according to Aswat al-Iraq news agency. Iran is investing US$46 billion in building new oil refineries and upgrading its existing facilities, Deputy Oil Minister Alireza Zeighami said. More than half of this investment, around $26 billion, is solely for building new refineries by 2014.

Petrochemicals Middle East August 2010

BUILD&PROJECTS

Aramco awards Yanbu’s contracts

Newly incorporated Red Sea Refining Company to execute and operate the project Saudi Aramco has awarded seven engineering, procurement and construction contracts for the development of Yanbu’ Export Refinery Project, and has established a project company called Red Sea Refining Company responsible for the execution and operation of the landmark project. The list of winners included four international contractors and three local contractors. South Korea’s Daelim Industrial won two contracts to build a gasoline unit and a hydrocracker. South Korea’s SK Engineering won a contract to build a crude unit. Spain’s Tecnicas Reunidas won a contract to build a new coking unit. India’s Punj Lloyd also won a deal to build some offsite infrastructure

Aramco decided to go ahead with the project after the exit of the US ConocoPhillips.

and pipelines while Egypt’s Engineering for the Petroleum and Process Industries (ENPPI) would build a tank farm, Aramco confirmed. Local contractors Saudi Services won the high

Aramco to award Jizan’s FEED and PMS contracts Saudi Aramco is expected to announce the winner of the front-end engineering and design (FEED) and project management services (PMS) of Jizan Refinery in the next few weeks. “We expect the award of the PMS and FEED contracts of Jizan refinery by the end of July and early August,” local sources said. The cost of the refinery is around US$7bn. The refinery, with a planned capacity of 250 000-400 000 bpd is among new plants Saudi Arabia is planning to build as it looks to boost domestic refining capacity.

Last January, Saudi Arabia said state-owned Aramco would build the Jizan refinery located on underdeveloped province of Jizan, rather than private firms as only two bids were finally submitted for the project among initial 42, one from a consortium of Saudi Arabian companies: Tasnee, Advanced Refining and Petrochemicals Co (ARPC) and Nama Chemicals Group; and the other from Swedish-registered Corral Petroleum - which is owned by Saudi businessman Mohammed al-Amoudi. The refinery now is expected to go on stream by 2015 instead of 2013.

Refining & Petrochemicals Middle East August 2010

voltage electrical package while Rajeh H Al-Marri won the onsite pipeline relocation package. The project management team advised that several remaining packages will be awarded over the

next few months, the company said in the statement. Early this year, the project management team awarded the Site preparation contract to Abdulrahman Al-Shalawi Establishment to ensure that the site would be ready for EPC contractors in the construction phase. “We have taken many steps along the way to ensure the Yanbu Project will pioneer many firsts for the Kingdom in the areas of detailed engineering, human resources development, and support of local equipment and material manufacturers. Approximately, 70% of the total project value will be spent within the Kingdom,” said Fahad Al-Helal, president and CEO of the Red Sea Refining Company.

CB&I to provide propylene storage tanks for Takreer refinery CB&I have been awarded a contract valued in excess of US$70 million by Daewoo Engineering and Construction Company for its project in Abu Dhabi, the company announced in July. The company said that it will provide the propylene storage tanks for the Ruwais Refinery expansion project in Abu Dhabi, which belongs to Abu Dhabi Refining Company (Takreer). CB&I’s scope of the project is expected to be completed by the first half 2013. Takreer has signed EPC agreements in March worth US$9.6bn for five main packages of the Ruwais Refinery Expansion Project. Daewoo Engineering & Construction won the tankage and associated interconnecting piping package.

The Ruwais refinery expansion project will increase Takreer’s refining capacity of crude oil by 417 000 barrels per day and nearly double its production of transportation fuels; gasoline, jet fuel and diesel. Takreer operates today at 490 000 barrels per day name plate capacity at its two sites in Ruwais. The process configuration consists of 21 major Process Units with supporting Offsite and Utilities Units. Takreer claims it has deployed the latest technology to reduce its carbon footprint, which makes it a pacesetter across the regional and global industry. The centrepiece of the project is the residue fluidised catalytic cracking unit; at 127 000 barrels per day, the largest of its kind under construction.

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If the list is too long to remember, donâ&#x20AC;&#x2122;t forget one name:

Your gateway to the Petrochemicals and Chemicals Industry in the Middle East. Gulf Petrochemicals & Chemicals Association Tel: +971 4 321 74 44 Fax: +971 4 321 76 77 P.O.Box: 123055 Dubai-UAE

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OPERATIONS&MAINTENANCE

IVC to start production in August The company started commissioning its 300 000 t/y VAM plant in Jubail in December 2009 Saudi International Methanol Company (Sipchem) is set to start commercial production of vinyl acetate monomer (VAM) from its subsidiary International Vinyl Acetate Company (IVC) in early August, the company said. The company started commissioning 33 0000 t/y of VAM in December 2009, and was expecting to start commercial production in July. The company did not disclose the reason behind the delay. “The feedstock, acetic acid, will be provided internally by other Sipchem affiliates, namely International Acetyl Company (IAC) thus ensuring an uninterrupted supply of feedstock,” the company said.

The carbon monoxide and the acetic acid plants started commercial production in June, and the new VAM plant is due in early August.

The VAM is part of the acetyls complex which represents the second phase of the company’s development; it also includes a carbon monoxide plant with an

Chemanol ramps up commercial production Methanol Chemicals Company (Chemanol), has started the commercial productions of its projects in Jubail Industrial city, on the Eastern coast of Saudi Arabia in July. The company announced last November the start of commissioning production from its 231 000 t/y methanol plant, which provides the main feedstock for the firm’s entire product range. Meanwhile, the commissioning production of its 60 000 t/y di-methyl formamide and 20 000 t/y pentaerythritol plant was in late December 2009. “We have successfully completed several expansion projects, raising pro-

Chemanol’s methanol plant in Jubail, KSA.

duction capacity from an initial 420 000t/y to nearly 1 million t/y, so our final products have a very competitive price on a global level,” said Khalid Ibrahim Al-Rabiah, chief executive officer of Chemanol. The expansion projects will allow the company to slash production costs by around 30%, as it will be capable of producing its own feedstock.

Refining & Petrochemicals Middle East August 2010

annual production capacity of 345 000 t/y and 450 000t/y acetic acid plant. The carbon monoxide and the acetic acid plants started commercial production last June.

International Vinyl Acetate (IVC) is a joint venture between Sipchem which owns 87%, 10% by Helm Arabia and 3% by Ministry of Endowments.

SIIG resumes operations in Jubail Saudi Industrial Investment Group (SIIG) has resumed operation after conducting one month scheduled maintenance at its plants in Jubail Industrial City, the company said in statement. The maintenance included the change of catalysts as well as general maintenance work. SIIG operates three companies in joint venture with Chevron Phillips Petrochemical including Saudi Chevron Phillips Company (SCP), Jubail Chevron Phillips Company (JCP) and Saudi Polymers Company (SPCo). Collectively, these projects are known as S-Chem. SCP began operations in December 1999 and produces benzene, cyclohexane and gasoline blend stocks. JCP is another Saudi project located in the Eastern Province city

of Al-Jubail. This facility produces benzene, ethylbenzene, styrene, and propylene, and began commercial production during the second half of 2008. JCP is owned 50 percent by Arabian Chevron Phillips Petrochemical Company Ltd. and 50 percent by the Saudi Industrial Investment Group. SPCo is currently developing and constructing the NCP project. The NCP project represents the next major strategic investment to build on successes thus far in the region. Once complete, Saudi Polymers’ NCP project will include a worldclass olefins cracker and will produce olefins and polyolefins. SPCo began construction in January 2008, with mechanical completion expected in early 2011. Commercial production is scheduled to begin in 4th Quarter 2011.

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SCIENCE&TECHNOLOGY

SABIC funds degree training in KSA

New programmes at KAU to cover petrochemicals, polymers and catalyst applications SABIC has announced that it has provided funding towards developing research capabilities at King Abdulaziz University, as part of a cutting-edge program that entails numerous initiatives such as establishing a catalysis chair, delivering grants and research projects, and facilitating faculty members’ participation in conferences and scientific seminars. Strengthening cooperation with universities and research centers in Saudi Arabia is a key element of SABIC’s social commitment and dedication towards building a learning and knowledge based society. This ongoing support is part of SABIC’s wider program to enrich Saudi Arabia’s research and technology capabilities,

SABIC is focusing more on research and development sector as part of its 2020 vision.

which will ultimately enable the country to realize its ambitious goals for industrial and economic development. SABIC’s programs to support research at universities have evolved significantly over time

and cover a wide range of areas such as chemicals, petrochemicals, metals, fertilizers, polymers and industrial catalyst applications. These programs have now expanded even further to also support research on safety, en-

vironment, health, pollution and the recycling of industrial waste through scientific methods. It is a key part of SABIC’s strategy to strengthen cooperation with Saudi universities and research centers. The company is currently exploring various channels through which it can support research, such as through grants, funding, encouraging faculty members to participate in scientific forums, and by undergoing research projects that are directly related to its line of operations. SABIC also assists faculty members of universities in registering patents and backs other initiatives that contribute towards building a technology and knowledge based society or that help develop the research skills of Saudis.

Emerson donates PlantWeb to JIC

Shell launches new polyol product

Emerson Process Management has donated a PlantWeb Cruiser valued at US$165 000 to Jubail Industrial College (JIC), Saudi Arabia’s largest and most sophisticated handson technical institute. The Emerson PlantWeb Cruiser was officially donated at a Memorandum of Understanding (MoU) signing ceremony held at the College . The MoU underscores Emerson’s contribution to enhancing the capabilities of the students at Jubail Industrial College and the commitment from the college to ensuring the integration of the PlantWeb Cruiser and training material into their curriculum.

Shell Chemicals announced that it has broadened its CARADOL polyols product range by launching CARADOL MD 25010. This new additive polyol enhances the polymerisation level in foam and improves foam stability and hardness. CARADOL MD 250-10 has been developed to boost hardness in low-density foam applications without having to increase Toluene diisocyanate (TDI) in the formulation. Alternatively, it can be used to reduce TDI in formulations to Shell Chemicals launches new polyol product produce foam of the same hardness. The material reduction in TDI can help foam producers decrease formulation costs and im-

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prove safety at their production units. It also results in more stable foams by easing seasonal variation in foam properties associated with changes in atmospheric humidity. The development of CARADOL MD 250-10 was Shell’s response to customer concerns about having to use very high levels of TDI in existing approaches in order to

produce stable and hard foam at low density. It also demonstrates Shell’s commitment to safety that extends beyond the company to our customers and partners. CARADOL MD 250-10 is being produced in Europe and Asia Pacific, and is available in all markets through Shell’s global supply and logistics network.

SEPC project in Singapore has created Shell’s largest, fully-integrated petrochemicals hub.

Refining & Petrochemicals Middle East August 2010

EQUIPMENT&MACHINERY

Siemens to supply IPS to GASCO Power and distribution transformers plus motor control centers included in deal Siemens Energy has been awarded a US$40 million contract in the UAE to engineer and supply an integrated power solution (IPS) for a natural gas liquids (NGL) fractionation plant. The customer is a joint venture between Petrofac and GS E&C on behalf of Abu Dhabi Gas Industries Ltd. (GASCO), responsible for the fractionation of natural and associated gas. Siemens will be the main electrical contractor for GASCO’s Ruwais 4th NGL train, located in the city of Ruwais. The train is scheduled to go into operation in March 2012. As main electrical contractor (MEC) for the NGL fractionation plant, Siemens will provide pow-

er- and distribution transformers, high-, medium- and low-voltage switchgears, and motor control centers. The company’s scope of supply will also encompass a power management system, medium- and low-voltage motors, and various other items of equipment. The order also includes engineering, installation, commissioning and supervision of the complete electrical equipment. Benefits of the ‘one-stop’ MEC approach are the reduction of interfaces, project management simplification, risk reduction and the leveraging of core competencies. “This order is a breakthrough for our integrated solution capabilities and a door-opener for further

Refining & Petrochemicals Middle East August 2010

The order includes engineering, installation, commissioning and supervision of equipment.

projects as it demonstrates our ability to engineer and deliver the entire power solution scope from a single source,” said Tom Blades, CEO of the Oil and Gas Division of Siemens Energy. “We see customers turning to Siemens early on in

projects to find innovative ways to reduce risk and costs while accelerating completion.” Siemens had already been involved in the previous NGL trains at the Ruwais plant in providing smaller packages and components.

www.arabianoilandgas.com

SALES&SHIPMENTS

Petro Rabigh to supply PO to Tasnee Propylene oxide will be used to produce 120 000 t/y to new polyether polyol project Rabigh Refining & Petrochemical Company (Petro Rabigh) has signed a deal to supply propylene oxide to the polyether polyol project of National Industrialization Co (Tasnee) and Saudi Advanced Industries Company (SAIC) in Rabigh, Saudi Arabia, the company said in statement published on Saudi stock exchange (Tadawul). Under the deal, Petro Rabigh would provide 100 000 tonnes/ year of PO to the 120 000 tonne/ year polyether polyol project that

VTTI to build new fuel oil terminal Vitol Tank Terminals International (VTTI), announced plans to build a major oil import and distribution terminal in Vassiliko, Cyprus. The company said that the terminal, which is set for completion in 2012, marks an initial investment of more than US$129 million and will establish the island as a major oil trading hub. It will also complement the supply of oil products to the Middle East region, linking in with VTTI’s storage and refining asset in Fujeirah, one of the largest oil bunkering ports in the world. Speaking about the new Vassiliko terminal, CEO of the Vitol Group Ian Taylor said: “The terminal will play an important part in supplying Middle East regional markets to meet growing energy demand.” Work is scheduled to start on the Vassiliko facility in the next few months. In addition to storage tanks, a jetty will be constructed to handle seagoing vessels.

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was scheduled to start production in the fourth quarter of 2013. The company did not disclose the value of the deal. Polyether polyol is the precursor of polyurethane, which is used various industries such as furniture, automotive as well as in manufacturing construction materials. The project will be built in the Red Sea city of Rabigh, west of Saudi Arabia, and will start production in the fourth quarter of 2013.

Petro Rabigh is the unique producer of propylene oxide (PO) in the GCC countries.

SABIC MEG price is $850

ENOC enters Kenyan market

Saudi Arabia Basic Industries Corporation (SABIC) has fixed Asian Contract Prices (ACP) of mono ethylene glycol (MEG) for August at US$850 per tonne, which is the same level as July. Meanwhile Shell rolled over its August ACP nominations at $820 per tonne CFR Asia. MEGlobal has nominated its August contract price for MEG for Asia at $840/mt levels. MEG contract prices are generally set by the three major players of the industry, which

ENOC Lubricants, a division of ENOC International Sales LLC, signed a lubricant supply agreement with Galana Oil Kenya to distribute its range of products in Kenya, including the fully synthetic engine oils, Protec Green 5W40 and Protec X-treme Energy 5W30. “Our expansion to Kenya through the supply agreement is part of our long term strategy to expand and distribute our products in the African region and beyond,” said Saeed Abdullah Khoory, ENOC Group CEO. “The agreement is a major milestone for ENOC as Kenya is one of the biggest markets for lubricants and offers strong growth opportunities. Galana Oil has extensive industry experience and is ideally placed to assist us in our long-term goals.” “ENOC will continue to explore potential growth opportunities through strategic geographic expansion plans in line with our development goals,” he added.

includes SABIC, MEGlobal and Shell Chemicals. SABIC is the largest MEG producer in the world, with a production capacity exceeding 5.345million t/y, through 10 production units located in Al Jubail Industrial City and in Yanbu. The company signed a deal last year with Vopak, the storage and terminal operator, to rent MEG storage tanks at the port of Zhanjiagang, in China, as it aims to improve the delivery of the products to end users, and reduce the delay in deliveries.

A shutdown at SABIC’s MEG plants in 2007 saw prices soar to historic highs of $1700/t.

Refining & Petrochemicals Middle East August 2010

14 Cover Story

TIME TO BUILD Salem Shaheen, president and CEO of SATORP, says the company slashed 20% off building costs by delaying the award of its major EPC contracts

EPC CONTRACTS AND THE CORRESPONDING AWARDEES Contract Name

Awarded to

Permanent Infrastructure

Al-Osais Contracting Co

Refinery Tank Farm

Petro Steel

Pipelines & Off Plot Facilities

Gulf Consolidated Contractors Co.

Auxiliary Utilities

Mohammed Rashid Khathalan Est. Fo Contracting

Aromatics

Samsung Engineering Co

Sulphur/ Amine

Daelim Industrial Co Ltd

Interconnecting Utilities

Technip SpA

Plant Utilities

SK Engineering & Construction

Distillation & Hydrotreating

Tecnicas Reunidas,

Port Tank Farm

Dayim Punj Lloyd Construction Contracting Co. Ltd

Coker

CHIYODA/SAMSUNG

Conversion

Technip SpA

Telecommunication System

Sumitomo Corporation

Refining & Petrochemicals Middle East August 2010

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Cover Story 15

he ambitions of Saudi Arabia to be the world’s number one player in the petrochemical industry find expression in the construction of world-class, mega projects. From Jubail on the Eastern coast to Yanbu in the West, integrated refining and petrochemical projects are being established in partnership with major international companies. While medium-scale petrochemicals projects are open to governmental and private investors, integrated projects are still largely restricted to Saudi Aramco, due to the huge investment these projects require, and because Aramco is already

involved in the refining business and is looking to upgrade its existing refineries. “There are several key drivers in moving forward with developing integrated facilities in Saudi Arabia,” Salem Shaheen, president and CEO of SATORP, tells Refining and Petrochemicals Middle East. “ There is the lower capital expenditures (CAPEX) of running one unit as opposed to a separate refinery and petrochemicals complex, as well as saving on operational expenditure (OPEX),” says Shaheen. “Another driver is the flexibility of being able to switch from gasoline production to the production of aromatics. Also, due to the state-of-the-art technology of our brand new refinery, we are

able to adapt to changing gasoline specifications,” explains the CEO. “The fifth driver is the ability to include an aromatics complex, for example, in the initial construction phase as opposed to expanding upon something existing, which is more complex,” he adds. SATORP is a joint venture between Saudi Aramco and Total, tasked with developing a 400 000 barrels per day, full-conversion refinery in Jubail integrated with a petrochemicals complex to produce olefins and aromatics. As in every successful joint venture, the two partners complement each other, and bring to the table what the other is lacking.

Saudi Arabia launched its first integrated project, Petro Rabigh , in November 2009.

www.arabianoilandgas.com

Refining & Petrochemicals Middle East August 2010

16 Cover Story

SATORP BY NUMBERS • Refinery complex size: 4.87 Km2 • 130 million construction man hours by as many as 30 000 workers • 1 million cubic meters of concrete • 4250 pieces of equipment (reactors, column, drums, heaters, boilers, flares, exchangers, air fins, pumps) • 30 000 tonnes of structure (pipe racks, steel structure, and access structure) • 100 000 tonnes of pipes (7 000km) • Materials, equipment and construction will amount to $5.5bn

The project is located on the Eastern coast of the Kingdom.

Refining & Petrochemicals Middle East August 2010

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Cover Story 17

“THE MAIN ASSET THAT SAUDI ARAMCO BRINGS IS ITS RELATIONSHIP WITH THE SAUDI GOVERNMENT, WHICH HAS EASED EVERY STEP OF THE PROCESS TO DATE. THE SECOND BENEFIT IS ITS KNOWLEDGE OF IMPLEMENTING MEGA PROJECTS IN THE KINGDOM” “The main asset that Saudi Aramco brings is its relationship with the Saudi government, which has eased every step of the process to date. The second benefit is its knowledge of implementing mega projects in the Kingdom,” says Shaheen. “Of course, this is in addition to the most obvious benefit: Its reputation its and hydrocarbon reserves,” he explains. The other part of the venture is the French integrated oil company giant. “Total brings its experience and design, a history of good operations, technical and general capacities, conceptual capacities, experience in refining operations, and ability in trading products,” Shaheen adds. “As Total is a fully internationally integrated company, it perfectly complements Aramco’s strong position in the region.” The refinery, which is located in Jubail Industrial City, will process Arabian heavy crude oil from the giant Manifa field, and produce wide variety of refined and petrochemical products, including diesel with 10 ppm specifications instead of the 500 ppm (the content of sulfer), in order to meet the Euro 5 standards which dictate the reduction of sulphur content in diesel and gasoline. The company plans to target both local and international markets. “The market for gasoline will be the Kingdom or the Middle East in general. A minor share, if any, will go to Asia and North America. Our jet fuel will go to Asia and Europe, although it could stay in the Kingdom. This is not clear at present. The Paraxylene will go to Asia,” says Shaheen. Typically, a joint venture in Saudi Arabia is based on a 50/50 ownership between the local and the foreign partner. A project company is established (SATORP in this case), and each partner markets its own split. But, with SATORP, the situation is different www.arabianoilandgas.com

as it signed the off take agreements with Total and Aramco to market some products in the Kingdom. “We have signed off take agreements to sell some petrochemical products,” he reveals. “The demand in Saudi Arabia is increasing, and Aramco may be buying some of Total share, mainly diesel,” he notes. After signing the Memorandum of Understanding in 2006, the two partners spent two years conducting studies and negotiations, but they delayed the award of the engineering, procurements and construction (EPC) contracts due to high costs. SATORP was able to cut its EPC costs by delaying the project to capitalise on falling prices during the global recession. “We actually cut our costs by more than 20% and this will have positive impact by reducing our CAPEX and improving our internal rate of return,” Shaheen says. “When there is a lot of tension, costs are increasing and the schedule is delayed. When the costs are down, there is more room to relax the schedule a bit.” The company expects to achieve the mechanical completion of its integrated project during the second half of 2012 while the commercial production is set for early 2013. “We have developed a revised schedule with the first order going in March 2013, just one quarter behind the original date of December 2012,” says Shaheen. “The

previous schedule has been delayed due to the longer EPC selection process but this has been reduced to a delay of just a three month. In the end, the cost of the delay in terms of operating margin will be much more than offset by our total cost savings.” The company awarded the 13 EPC contracts in July 2009, after delaying the award for more than six months. “Initially, we were supposed to award the contracts in the fourth quarter 2008, but due to the economic downturn, we delayed the award for three months, and then another three months,” he

Salem Shaheen, President and CEO of SATORP.

Refining & Petrochemicals Middle East August 2010

18 Cover Story

Saudi Aramco plays the dominant role constructing integrated projects in the Kingdom.

adds. French engineering company Technip has been awarded two packages worth an estimated total of US$3 billion. The first, Package 2A, covers the conversion unit and is worth an estimated at $1.7 billion, while the second, Package 5A, is worth $1.3 billion and covers the construction of offsites and utilities. Technip will share the second package with Taiwanese company CTCI. Spanish contractor Tecnicas Reunidas has been awarded Package 1, which covers the distillation and hydrotreating and is worth an estimated $1.2 billion. Much hype has in the past surrounded the cost of the project, with estimates running as high as $15bn. Shaheen provides clarity: “The total cost of the project is around US$12bn.” Holding off the award of the EPC contracts had two benefits for the company. “The first and most obvious being better profitability due to lower capital expenditure. In addition, the financing is easier to borrow as we are borrowing less money and the money market is not overheated,” points out Shaheen.

“TOTAL BRINGS ITS EXPERIENCE AND DESIGN, A HISTORY OF GOOD OPERATIONS, TECHNICAL AND GENERAL EXPERTISE, CONCEPTUAL CAPACITIES, EXPERIENCE IN REFINING OPERATIONS, AND ABILITY IN TRADING PRODUCTS” The company completed the project financing in June. Finances totalling US$8.5 billion were secured from multiple sources including US$4.01 billion from the Public Investment Fund and Export Credit Agencies, and US$4.49 billion from commercial financial institutions. The senior loan facilities have a tenor of 16 years with an all in pricing of 1.85% (above LIBOR) for the US dollar commercial and Export Credit Agencies (ECA) covered loan facilities. The reputation of the two partners facilitates their ability to secure the funding for the project. “We were afraid of the capital markets going dry. However, we found that

Refining & Petrochemicals Middle East August 2010

this was not the case. At present, with many projects slowing down or stopping altogether, there is less competition for the same capital,” says Shaheen. “Both Aramco and Total are trustworthy companies with strong reputations which put lenders at ease.” Challenges do remain. Just as other companies in the region, SATORP faces a shortage of skilled people, not least due to the scale of the project. “The biggest challenge that we are facing is time and manpower with such a complex project involving the collaboration of the project team, consultants, lenders, and contractors – a huge effort by all,” concludes Shaheen. www.arabianoilandgas.com

20 Process Optimisation

EVERY LAST DR6P Once a plant is up and running, reducing production costs and squeezing extra value from the substantial investment falls to process optimisation tools and technologies

s plant operators look for the best way to cut operating costs, process optimisation service providers continue to develop their offering to meet their clients’ requirements.

The current economic conditions coupled with increasingly complicated refining processes and growing competition between manufacturers, is proving to be ideal for the industry’s process optimisation specialists.

Refining & Petrochemicals Middle East August 2010

Refining & Petrochemicals Middle East speaks to a few of the industry’s top process optimisation experts and specialists to guage the situation on the ground for the everdiversifying petrochemicals sector.

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Process Optimisation 21

“OUR DIET OF CRUDE IN THE REGION IS IN GENERAL, CONSTANT. THIS HELPS IN REDUCING THE OPTIMISATION PROBLEM OUR REFINERIES FACE MAKING OUR OUTCOMES MORE DETERMINISTIC” RONAULD WEEKS, HONEYWELL PROCESS SOLUTION

Juan-Carlos Mani, Process System Enterprise.

Nile Al Rushaid, Hyperion Systems Engineering.

Jaco Bothma, director asset optimization MEA at Emerson.

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The basic premise of process optimisation involves measuring, analysing and then making informed decisions on what changes can be made to a process to improve performance-related results for a company. “This could mean improved quality, increased revenues, or decreased cost,” says Ronauld Weeks, advanced solutions business development manager at Honeywell Process Solution. According to this definition, he says process optimisation does not need to be carried out by a computer running a mathematical optimisation algorithm, it can be a manual activity and entirely implemented or completed by humans. Hyperion Systems Engineering’s general manager, Nile Al Rushaid defines process optimisation as “the task of improving a process in order to meet specific objectives (specifications) such as maximising yields, minimising energy consumption, maximising throughput and final product.” Process optimisation is also about controlling the process at it’s peak efficiency. “It involves both dynamic considerations (reducing variability) as well as steady state (where to set the setpoints),” says Jaco Bothma, business director asset optimization MEA at Emerson. He says “that it requires models and algorithms that determine the optimum operating point that will maximise or minimise an objective function while observing all process constraints.” Fundamentally, there are three parameters that can be adjusted to affect optimal performance including equipment optimisation, operating procedures and control optimisation. “This should be done without violating certain limitations or constraints on other parameters such temperatures, pressure,

raw material consumption, physical equipment capabilities such as vessel size and compressor power. That is why in general it is a complex task,” Bothma adds. For both petrochemicals and refining, there are opportunities to optimise every process unit to increases the yields of more valuable products, reduce energy and improve product quality control. The optimisation tools used for both sectors of the downstream industry are the same. “From a reaction/process angle there may be different constraints on the actual process and different tools that should be used, however the techniques used and the goal remains the same,” says Al Rushaid. Weeks says: “In the petrochemical industry, we are dealing with defined components. Whereas within the refining arena, we deal with pseudo-components where the major focus is on property tracking and maximising the refinery margin by optimising the distribution of these properties within the products they sell.” In general, the optimisation of a refinery is more complex as it starts before the crude even arrives at the facility. “It starts when the trader buys that crude,” Weeks explains. “However, we have one factor in our favour, our diet of crude in the region is in general, constant. This helps in reducing the optimisation problem our refiners face making our outcomes more deterministic.” While the processes and models may differ between petrochemicals and refineries, equipment used is the same. “The equipment used in refineries and petrochemical plants like fired heaters, distillation columns, boilers, exchangers, have the same application in both areas,” says Bothma.

Refining & Petrochemicals Middle East August 2010

22 Process Optimisation

Juan-Carlos Mani, vice president of Process System Enterprise explains his company’s approach to process optimisation. “Our technology is built on what’s called Open Equation, which allows high energy efficiency for our clients,” he says. The cost savings for a typical 100 000 bpd refinery optimising in areas such as process control, refinery planning and energy and emissions management is estimated to be between $10-50 million a year. “One of the largest chemical manufacturers has adopted our process optimisation technology and has already reaped benefits to the tune of $70 million each year with half the number of assets that they originally planned,” says Emerson’s Bothma. With the boom in the Middle East’s downstream sector, demand for process optimisation and control applications is increasing. “We see a strong demand for technologies and applications that can optimise controls and daily operation of plants, and of course there is a separate level of optimisation effort happening in the interaction of the plant with the business which covers planning, scheduling as well as blending in refineries,” says Hyperion’s Al Rushaidi. This trend is likely to continue as long as new and increasingly complex processes are integrated in the region’s downstream sector. Increasing competition between manufacturers will add to the mix as the best optimisation methods and new tools are sought. “The Middle East is one of the fastest growing industrial regions in the world today, so we expect demand to be strong,” says Bothma. End-users are also making more informed decisions he says. “Users are more savvy when it comes to software technologies these days, as they utilise it in their everyday life and expect that the same freedom and latitude should be possible with software being used in a high availability and mission critical environments where health, safety and security are top priority.” While demand for process optimisation is positive, real-world environment and issues such as cyber-security are paramount, concludes Bothma.

“USERS ARE MORE SAVVY WHEN IT COMES TO SOFTWARE TECHNOLOGIES...AND EXPECT THAT THE SAME FREEDOM AND LATITUDE SHOULD BE POSSIBLE WITH SOFTWARE” JACO BOTHMA, BUSINESS DIRECTOR, ASSET OPTIMIZATION MEA, EMERSON

There are opportunities for every downstream process unit to optimise, resulting in significant cost-saving and yield increases.

Refining & Petrochemicals Middle East August 2010

www.arabianoilandgas.com

24 Downstream Logistics

GETTING SHIP SHAPE Marine shipping is the vital link getting Middle East downstream production to its primary global markets. RAPME speaks to global players servicing the local industry

ith the Arabian Peninsula surrounded by sea from three directions, marine shipping is the primary means for petrochemicals producers to transport their end products to international markets. The start up of new petrochemical projects in the region has increased the demand on chemical tankers. “We expect a major chunk of demand to originate from the Middle East region in the months to come,” says Ashita Khanna, chemical tanker analyst at Drewry Shipping Consultants. While some companies are chartering tankers for long periods, some petrochemical producers are constructing new ships to be able to carry their products. Saudi Arabia Basic Industries Corporation (SABIC) is building 16 chemical carriers tankers through its subsidiary National Chemical Carriers (NCC), these tankers are set to be delivered gradually by 2012, SABIC controls 20% of NCC, while National Shipping Company of Saudi Arabia (NSCSA) holds 80% of the company. Moreover, SABIC chartered with Gulf Navigation to ship its products as well. “Our prime customer is SABIC and they use our ships to serve their markets in Asia, particularly China, Korea and other parts of the world,” says Per Wistoft, chief executive officer, Gulf Navigation. “We also have our ships calling in the Mediterranean and the UK delivering SABIC products,” he adds. The average time to reach these destinations is 22 days. But in some cases, there is delay due to different factors such as

Fleet of chemicals tankers to be delivered for NCC by 2012

weather conditions. In order to avoid this kind of delay, regional petrochemical companies started storing their products near their customers in order to serve them rapidly. “Most chemical companies in the region are securing some storage facilities in the respective ports and they make sure they always have products in their storage, meaning that they can deliver a lot quicker if they get an enquiry from their customers,” says Wistoft. “So they don’t have to wait for a cargo to come in from the Arabian Gulf,” he explains.

IMO Regulations Shipping refined and petrochemical products is not easy to do, as it should be carried in ships that meet the standards of International Marine Organizations (IMO). Meeting these standards is considered as challenge facing the ship’s owners and operators. “Of course the international rules and regulations for carrying petrochemical products are quite strict, so you have to make sure that your crew has the right qualifications and your ship is at the right standard,” says Wistoft. “So getting the right crew together with a good quality ship, complying with international regulations is really what we strive to do,” he observes. The operational cost of these vessels depends mostly on the way of financing the tanker. “When you buy a chemical tanker, unless you can pay in cash which very few people can do, you will need to finance your purchase and a typical carrier of this size will cost you $45-$50m, so if you finance that on normal conditions, you will have financial costs on a ship like that of say $10 000 to 12 000 a day,” says Wistoft. In addition to the crew, the maintenance and other related expenses the operation cost may reach $50 000-75 000 per day. But, with the current economic situation, it is difficult to operate profitably and to

Refining & Petrochemicals Middle East August 2010

cover the operational cost. The rates to rent a chemical tanker fell to the lowest levels around $10 000 per day in late 2008 and Q1 2009. “Since the beginning of 2009, the clean product tanker market has suffered significant losses in freight rates. This was due to lackluster overall demand for oil products and rising tonnage supply,” says Khanna. “Although activity improved in the latter half of 2009, with rates rising in tandem, the recovery in freight markets is too modest to make up the sharp declines in rates from the start of the year 2009,” she adds. Moreover, the piracy issue is another burden for the ship’s owners and operators. “What we do at Gulf navigation when we have a ship going through these waters, and that happens quite often, is we deploy barbed wire around the ships, we go full speed to make it hard for a small ship to board, and we never go through without naval protection,” Wistoft concludes.

Per Wistoft, chief executive officer, Gulf Navigation.

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Downstream Logistics 25

More shipping lines than ever before are calling at Gulf ports.

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Refining & Petrochemicals Middle East August 2010

26 Downstream Logistics

SUPPLY CHAIN FOCUS Innovative supply chain solutions are being tailor made for the Petrochemicals industry in the Middle East, says Anthony Elwine of Damco

efining & Petrochemicals Middle East speaks to Anthony Elwine, global head of Petrochemicals, Damco Middle East Area. The company offers flexible solutions for the petrochemical industry focused on safety and operational optimisation. The company, and its Middle East support team has designed tailor made supply chain solutions and services for a host of clients across the upstream, downstream and conversion sectors of the petrochemical industry.

Are you currently involved in much downstream logistics activity? Yes. Damco has a global dedicated chemical logistics team, headquartered in Dubai, which is a focus industry for Damco both globally and regionally within the Middle East. Today we are providing an array of logistical services across the region and have a pipeline of opportunties with existing and

new facilities coming on stream with both short and medium term time horizons. Due to client confidentiality we are not at liberty to divulge the names of these clients.

What sort of service do regional petrochemical companies typically want from you? The level of acceptance of 3PL outsourcing that chemical companies are willing to commit to is changing rapidly and this is having a significant impact across the service portfolio that service providers are having to accomodate. The type of services that clients are looking for ranges at both origin and destination from basic services such as trucking, warehousing and ocean bookings to more complex supply chain solutions which include IT integration and innovative product postponment solutions. Most recently producers, as part of their plans to improve overall net-back, have started

Refining & Petrochemicals Middle East August 2010

Anthony Elwine, global head of Petrochemicals, Damco.

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Downstream Logistics 27

Containerised shipping plays a crucial role in linking solid plastic pellet production with large conversion markets in Asia.

working with us in facilitating growth in non traditional markets such as Africa, Latin America and the Indian sub-continent which have been the domain of traders and distributors for many years. This means that you have to be global and you have to be able to support and develop with your client ahead of the market.

Why is your firm better placed to handle this than an in-house logistics management team? The third party logistics model is based on the scale and volume that the producers have. Having said that, its also about having a global presence in key markets, taking best practice from other industries and using relevant tools and methodology to implement the best solution whilst linking this to intergrated IT systems which streamline the exchange of data. This allows the supply chain to be sufficiently flexible to

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respond to market and customer changes. In house organisations tend to be exceptional at procurement but then find that processes are too rigid when it comes to areas of competence of global supply chain management.

What is your regional presence in terms of assets you can call on, and what is the main advantage of working with Damco? We have offices located in all markets across the region and at all of the key destinations. Damco invests where appropriate in assets that support our and/or our customers strategic ambitions so we have a combination of owned, leased and subcontracted services that we call upon. Our aim is to supply the right solution for our customer which is not based around what assets we have in which locations but on providing a solution that optises the best cost to serve them.

What has happened to margins for 3PL or wider logistics providers over the course of the last two years? I think most third party logistics providers have seen margins in general become eroded with the general deterioration of global conditions. Fortunately for Damco, as a result of rigorous cost controls and customer innovation, we have seen our overall performance improve over the last two years and expect 2010 to exceed last years performance.

Which Petrochemical companies do you currently work with, both regionally and internationally? Due to customer confidentiality we cannot divulge the list of our current customers but our portfolio does include almost all of the major regional and global producers for specific country based services or for global supply chain solutions.

Refining & Petrochemicals Middle East August 2010

28 Algeria Country Profile

NEW BEGINNINGS With $28bn allocated to downstream sector development, the Algerian government is determined to avoid the repetition of the Sonatrach scandal by setting new tendering

Refining & Petrochemicals Middle East August 2010

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Algeria Country Profile 29

he huge oil and gas reserves Algeria possesses is not being translated into real value added projects, as bureaucracy and bad management have plagued attempts to monetise the country’s reserves through downstream efforts. The government has launched ambitious plans to develop its gas reserves aiming to export LNG to US markets, but recent Panoramic view of the city of Oran, which hosted the LNG16 conference.

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developments in extracting gas from shale in the US along with stiff competition from Qatar on the European market have put the plans under pressure. This has driven the country to think of alternatives for its gas, with petrochemicals thought to be the front-runner. During the LNG 16 conference, in Oran in April, Algeria urged gas producers to link gas with oil prices on spot markets in order to benefit from the sustained high oil prices, but it failed to get the necessary support from other members. Getting the best value for its gas has consistently thwarted Algerian attempts. “I sat in on the Sonatrach/ENI price negotiations back in the early 1980s on gas sales through the Trans-Med (now Mattei) gas pipeline,” explains Alan Troner, president of Asia Pacific Energy Consulting. “Sonatrach fought for years to get a direct linkage to the OPEC crude basket and as that price basket began to collapse from 1982-84, they desperately try to get out of that linkage.” “There is no magic formula or any specific form of a hydrocarbon that guarantees you best return. Algeria must balance the capital cost of petrochemicals plants versus return against the capital cost of pipelines/LNG versus return on gas sales,” he adds. With this situation and the decline of gas prices in the international markets, the country is faced with limited options to add value to its gas reserves. Intensifying investments in downstream projects is on the agenda, but has proved hard to get off the ground. “As to Algeria’s choices of exporting gas or exporting petrochemicals, it is likely that they would do both,” says Troner. “But they have to do their sums carefully either way. If they want to stay in the LNG game however, they also have to revamp and upgrade their ancient liquefaction facilities. So far the programme has not performed well in revamping the LNG complex in Skikda on the Eastern coast of the country.” One of the key strengths for the downstream industry in Algeria is its proximity to European markets and American transshipment routes, coupled with its abundance of feedstock. Algeria has been investing in its fertilisers, petrochemicals and refining projects steadily over recent decades, but is expected to ramp this up in the coming five years. Sonatrach has three fertiliser projects in joint venture with three foreign partners including Al

Alan Troner, president of Asia Pacific Energy Consulting.

Djazairia El Omania Lil Asmida, in joint venture with Suhail Bahwan Holding Group from Oman, and the Sorfert project with Orascom Industries from Egypt. The third is a JV with Spain’s Fertiberia. “These projects combined will add 3.6m t/y of ammonia, and 4.1m t/y of urea when completed in 2011 and early 2012,” says Abdelhak Kazitani, communication manager at downstream activities department, Sonatrach. The increase of Algerian fertiliser capacity is threatening traditional Middle Eastern producers, who expect stiff competition from the country. “North African producers are enhancing their position in the market which will inflame the competition, mainly Algeria,” admits Yousef Al-Kuwari, marketing manager at Qatar Fertilser Company (QAFCO). Algeria’s petrochemicals sector is centred around two main industrial complexes, one on the eastern coast at Skikda, the other in Arzew, but low production rates are stifling growth. ALGERIA GAS PRODUCTION Year

(billion cubic metres)

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: BP

Refining & Petrochemicals Middle East August 2010

30 Algeria Country Profile

Petrochemical production in Algeria is handled by Sonatrach’s subsidiary ENIP (Entreprise Nationale de l’Industrie Petrochemique). Promoting petrochemical projects is of interest to the government, as it will help diversify the economy away from oil and gas production and create much-needed employment opportunities. Several projects have already been announced worth billions of dollars. Feedstock for these projects will come from the expansion of refining capacity and also Algeria’s abundant natural gas supplies. The Algerian government has allocated $28bn to develop the petrochemicals and refining sectors with new projects or upgrading existing ones. In July 2007, Sonatrach awarded a contract worth $5bn to France’s Total to build an ethane cracker, in Arzew Industrial City, on the west coast of the country. The project encompasses the construction of an ethane cracker and three product lines. The cracker will have the capacity of 1.4m t/y of ethane, and will produce 1.1m t/y of ethylene. The produced ethylene will be processed into 410 000 t/y of mono ethylene glycol, 350 000 t/y of high density of polyethylene (HDPE) and 450 000 t/y of linear low density of polyethylene (LLDPE) mainly for export. The ethane cracker in Arzew is linked to the liquefied plant LNG 1 and 2, which will be providing ethane feedstock to the cracker. Algeria also awarded a contract for the Almet project to construct a 1m t/y methanol plant worth $800m in Arzew. Members of the consortium include Kuwait’s Qurain Petrochemical Industries Company (QPIC), Mitsui, Lugi and the local Sotraco. Since awarding the two projects (each of which Sonatrach owns a controlling 51% stake in) the progress of development has been slow and is now at a standstill. “All agreements are in place for the methanol project,” says Mubarak Abdullah Al Mubarak Al Sabah, chairman of QPIC. “But, understandably major changes at Sonatrach do slow down the progress

The Algerian government has allocated US$28bn to develop the petrochemicals and refining sectors.

Algeria aims to increase its refining capacity to 27m tonnes/year in 2012 from the current 22m tonnes/year.

$28bn

The government’s budget to develop the downstream sector is US$28bn Sonatrach which participated in GASTECH last year is investing $4bn to uprgarde its existing refineries.

Refining & Petrochemicals Middle East August 2010

www.arabianoilandgas.com

Algeria Country Profile 31

“MAJOR CHANGES AT SONATRACH DO SLOW DOWN THE PROGRESS TEMPORARILY, HOWEVER, WE REMAIN COMMITTED TO THE [METHANOL] PROJECT” MUBARAK ABDULLAH AL MUBARAK AL SABAH, CHAIRMAN OF QPIC

The refining capacity of Sonatrach stands at 450 000 bpd and is operated by Sonatrach subsidiary, NAFTEC.

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temporarily, however, we remain committed to the development of the project,” he adds. Sonatrach also has investments in petrochemical projects outside the country, mainly in Spain where it operates a propane dehydrogenation plant in Terragona in Spain, in joint venture with BASF. Sonatrach holds 49% of the project and supplies the project with propane feedstock. Meanwhile, the refining sector in Algeria needs more focus to meet the increasing demand for the domestic market. Currently, the refining capacity of Sonatrach stands at 450 000 bpd and is operated by Sonatrach subsidiary, NAFTEC which operates four refineries including Skikda, Algiers, Arzew and Hassi Messaoud. Skikda is the largest, producing 300 000 bpd, followed by Algiers and Arzew with 60 000 bpd each and Hassi Messaoud with a capacity of 30 000 bpd. Skikda was commissioned in 1980 and exports 80% of its products. It has two units, each with a capacity of 7.5m t/y producing liquefied petroleum gas (LPG) and fuels as well as a 380 000 t/y aromatics unit and a 145 000 t/y road and oxidised asphalt unit. The Algiers (Sidi R’zin) refinery came on stream in 1964 and processes 2.7m t/y of crude. It produces LPG, kerosene, gasoline, gas oil, naphtha and fuel oil. Arzew was commissioned in 1973 and specialises in the production of lubricants and asphalt. It can process 2.5m t/y of crude and supplies the west and southwest of Algeria with fuels and LPG. The refinery has two units producing lubricants, greases and paraffin with a combined capacity of 170 000 tonnes. There is also a bitumen unit producing 145 000 t/y of road and oxidised asphalt. The Hassi Messaoud facility also has two refining units. The first, which produces 120 000 t/y of fuels and butane, it was commissioned in 1960, while the second, which processes 1 116 500 t/y of crude, came on stream in 1979 and supplies a large area of southern Algeria with gasoline, gas oil and kerosene. “NAFTEC plans to invest $4bn in upgrading and rehabilitating its refineries at Skikda and Arzew,” said Akli Rimini, chief executive officer of NAFTEC. “This expansion programme would allow Algeria to increase its refining capacity to 27m tonnes/year in 2012 from the present 22m tonnes/year,” he added.

Refining & Petrochemicals Middle East August 2010

32 Algeria Country Profile

Algeria has launched a project to establish a $5bn refinery project, with a processing capacity of 300 000 bpd in Tairet, 300km south west of the capital Algiers.

To this end, Sonatrach awarded a $1.2bn EPC contract in May 2009 to South Korean firm Samsung Engineering and Construction for the modernisation of the Skikda refinery. The 36-month lump-sum contract involves the refurbishment of existing units and the installation of several new units including a benzene recovery plant and a paraxylene production facility. Algeria has also launched a project to establish a $5bn refinery project, with a processing capacity of 300 000bpd in Tairet, 300km south west of the capital Algiers. Four international contractors are competing to win the front end engineering and design (FEED) contract. Sonatrach has shortlisted four international contractors including Technip (France), Sinopec (China) CB&I Lummus and the Italian/Japanese joint venture Saipem/Chiyoda. The new refinery will be fed by crude oil from the OZ-2 pipeline and will produce 15m t/y of

$5bn

Algeria’s 300 000 bpd refinery in Tiaret will cost US$5bn.

“THIS EXPANSION PROGRAMME WOULD ALLOW ALGERIA TO INCREASE ITS REFINING CAPACITY TO 27M TONNES/YEAR IN 2012 FROM THE PRESENT 22M TONNES/YEAR” AKLI RIMINI, CHIEF EXECUTIVE OFFICER OF NAFTEC refined products including propane, butane, gasoline, naphtha and benzene.

What next? The corruption scandal that hit Sonatrach has halted the development of these petrochemicals and refining projects due to the involvement of senior executives in the scandal, as some of the contracts mainly those related to the upstream and the pipeline were awarded through over-the-counter (OTC) or offexchange trading basis, without tendering. As a consequence of this scandal, the government has taken measures to imrpove transparency in the energy sector through a revised project tendering and contract awarding process. The newly appointed chief executive officer Noureddine Cherouati, issued, in early July a new internal memo known as R16, obliging all Sonatrach’s subsidiaries to publish all their tenders in the Energy

Refining & Petrochemicals Middle East August 2010

Ministry’s tenders book, and banned OTC practice in most cases. The new R16 decision however, does allow the company to use OTC only in the case of exploration and production. “This will improve the tendering situation and will increase the transparency in awarding contracts,” says Mostapha Meliani, Resident manager at UNAOIL SAM, a service provider based in Algeria. With energy prices creeping higher and predictions for solid economic expansion on the horizon, Algeria should not be hardpressed to find funds for its downstream investment programme. In late April, the IMF revised its forecast for Algeria’s economy, raising its estimates for GDP growth from 3.9% for both this year and 2011 to 4.6% and 4.1%, respectively. The IMF also predicted Algeria would enjoy trade surpluses of 2.5% of GDP in 2010 and 3.4% of GDP in 2011.

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ted n i o p p a l ofďŹ cia

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he publis

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7/29/2010 3 52 54 PM

34 VIP Interview

MANUFACTURING & A ENGINEERING GURU Industry vetrean Margaret Walker of The Dow Chemical Company shares her parting thoughts on the downstream industry in the Middle East ahead of her retirement last month

fter almost 36 years of with The Dow Chemical Company, Margaret Walker, a highly respected individual across the downstream and process industry, retired in July. Her most recent role was as global vice president for engineering solutions, technology centres and manufacturing and engineering work processes for Dow. Walker joined the company in 1974, working her way up through Dow’s global manufacturing and engineering organisation to eventually head it up, becoming one of the most influential women, not only in the company, but across the industry worldwide. She takes pride in being intimately and strategically engaged with almost every decision that goes into Dow’s capital spending on mega projects. Amongst the major roles Walker has held with Dow, including technical and non technical positions, she was on the Steering Committee for Ras Tanura Integrated Project, providing high-level oversight for project development. “I joined Dow as a research engineer in Freeport, Texas. I held a variety of positions in operations, gaining extensive experience in process development and scale up, plant modernisation, and process improvement projects,” Walker told RPME

Margaret Walker, global vice president, The Dow Chemical Company.

Refining & Petrochemicals Middle East August 2010

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VIP Interview 35

on the sidelines of the Petrotech conference and exhibition held in Bahrain in May. “My business and technology experiences include chlor-alkali, epoxy resins, performance chemicals and pharmaceuticals,” she said. Speaking to RPME before her retirement, Walker pointed out several key messages to the region’s downstream industry. Walker sees that the Middle East will be the foremost global hub for the petrochemicals industry in the not-so-distant future, and accordingly how Dow has made the region a key hub for its business. “We have established a solid manufacturing presence in the Middle East petrochemicals industry, partnering with leading regional companies to set up state-of-the-art petrochemical complexes with global reach,” she added. The company’s regional success in the Middle East is mainly due to its commitment to a strategy that identifies and works with highly qualified contractors and suppliers. “We work very hard to earn our ‘license to operate’ and it is critical to build high safety standards and loss prevention principles, to implement best-in-class work processes and to train employees on process safety best practices. Last, but not least, it is important for us to work with contractors and suppliers who adhere to the highest levels of safety performance,” Walker said. In order to build a world class facility in the region, Walker said that companies need to have a clear strategy on what they

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want to achieve from the project at the outset. “They need to have a great team combined with the right technology and then build around that,” she explained. With the growth the petrochemicals industry in the region is witnessing, Walker urged companies to focus more on education and training. “I think that this region’s biggest challenge is how to get the right education to the right people.” Walker presented a speech at Petrotech conference on process safety and cost perspective. She noted that manufacturing and engineering (M&E) technologies and processes play an integral role in the global petrochemicals industry, and Arabian Gulf producers are quickly growing their role in downstream manufacturing. She went on to praise a number of technology centres that have been established throughout the region to focus on enhancing technologies to improve reliability, productivity and address key environment, health and safety issues.

Walker took the opportunity to celebrate the region’s economic growth activities. She said the Middle East’s commitment to grow its manufacturing footprint by collaborating with international partners, who are equally committed to balancing manufacturing excellence with a commitment to safety, training and career development for the region’s growing workforces was a crucial development. Citing Dow’s recent highlights in the Middle East as examples, she said that EQUATE, Dow and Kuwait’s PIC’s successful 15-year joint venture, and a leading producer of polyethylene and ethylene glycol, is already operating at safety levels that Dow aspires to as part of its 2015 Sustainability Goals. “Through our various Middle East operations and joint ventures, Dow designs sustainability and reliability into the assets, using best-in-class processes and technologies – so that the facility is safe – for employees and the environment, and fully operational, enabling investors to recoup their multi-billion dollar investment quickly,” she added.

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SABIC ‘PLAYERS’ SHINE AT WORLD CUP While Saudi Arabia’s football team was absent from the world cup, but its products scored highly.

SABIC’s Lexan and Polyethylene products were used for stadium joints and roof glazing, and its HDPE for the infamous vuvuzela’s at South Africa’s 2010 World Cup

he world cup in South Africa may be over and all the teams have packed up and gone home but the games have left a more permanent legacy according to Saudi Basic Industries Corporation (SABIC). The company’s Lexan and Polyethylene products have been used for the 14 000 square metres of roof covering on the Soccer City Stadium in Johannesburg where the final game on July 11 between Spain and The Netherlands took place. The roof is made of SABIC Lexan PC sheet which delivers the clarity of glass without the drawbacks of weight and fragility said the company. The SABIC Lexan sheet is also carefully designed to resemble flowing water and protects up to 95,000 spectators from changing weather conditions. SABIC’s Lexan PC sheet has also been used for the building joints of the Moses

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Mabhida Stadium in Durban as well as for roof glazing at the Peter Mokaba Stadium in Polokwane. And perhaps the most memorable element that anybody will remember South

Africa’s World Cup for - for better or for worse - is the ubiquitous vuvuzela blown by the thousands of football fans at the country’s stadiums, these were produced using SABIC’s HDPE products.

Spanish fans deploy their dreaded vuvuzelas during the World Cup Final between Spain and Holland last month (Spain won).

Refining & Petrochemicals Middle East August 2010

38 Number Cruncher

Downstream Data

Most listed petrochemical companies saw share prices decline through July, as the second quarter financial results delivered poorer results than anticipated. LISTED COMPANIES IN THE SAUDI STOCK MARKET Price on June,19th (US$ per share)

Price on July,19th (US$ per share)

Change %

Saudi Basic Industries Corporation (SABIC)

24.33

-5.80

Saudi Arabian Fertilizer Company (SAFCO)

33.93

35.47

4.32

Saudi Kayan Petrochemical Company (Kayan)

5.00

4.64

-7.76

Rabigh Refining and Petrochemical Company (Petrorabigh)

7.28

6.75

-7.91

Yanbu National Petrochemical Company (YANSAB)

10.67

10.00

-6.67

National Industialization Company (TASNEE)

6.88

7.23

4.80

Saudi Industrial Investment Group (SIIG)

5.01

4.68

-7.12

Saudi International Petrochemical Company (SIPCHEM)

5.84

5.75

-1.62

Sahara Petrochemical Company (SAHARA)

5.63

4.88

-15.30

Advanced Petrochemicals Company (Advanced)

5.49

5.21

-5.37

Nama Chemicals Group (NAMA)

2.60

2.48

-4.84

Alujain Corporation (ALUJAIN)

3.49

3.39

-3.15

Methanol Chemicals Company (CHEMANOL)

3.83

3.68

-3.99

Petrochem

4.19

3.87

-8.28

LISTED COMPANIES IN THE KUWAITI STOCK MARKET Price on June, 19th (US$ per share)

Price on July,19th (US$ per share)

Change %

Qurain Petrochemical Industries Company (AL-QURAIN)

0.60

0.69

Boubyan Petrochemical Company (BOUBYAN)

1.79

1.86

13.27 3.77

Ikarus Petroleum Industries (IKARUS)

0.47

0.46

-3.08

LISTED COMPANIES IN THE QATARI STOCK MARKET Price on June, 19th (US$ per share) Industries Qatar

28.49

Price on July, 19th (US$ per share) 26.90

Change % -5.92

LISTED COMPANIES IN THE OMANI STOCK MARKET Price on June,19th (US$ per share) Oman Chlorine S.A.O.G. (CHLORINE)

0.94

Price on July, 19th (US$ per share) 0.92

Change % -2.29

LISTED COMPANIES IN THE EGYPTIAN STOCK MARKET Price on June,19th (US$ per share)

Price on July, 19th (US$ per share)

Change %

Abu qir Fertilizers

36.53

34.89

-4.70

Sidi Kerir Petrochemicals Company

2.12

2.09

-1.23

Refining & Petrochemicals Middle East August 2010

www.arabianoilandgas.com

Number Cruncher 39

1200

1350

BENZENE (FOB FAR EAST)

1100

1250

1000

declined to $780 per tonne, the lowest price in nine months. Plunging crude values was the key factor pushing prices for benzene down.

1150 US$/tonne

900 800 700 600

1050 950 850

CFR: Cost and Freight

1450

1350

PPF (CFR FAR EAST)

03/07/10

16/05/10

PROPYLENE (FOB FAR EAST)

1250

MEG prices have continued to decline and reached $700 per tonne, the lowest level in eight months. Supply and demand fundamentals remained largely unchanged.

1150 US$/tonne

US$/tonne

1250 1150 1050 950

1050 950 850

800

PVC (CFR FAR EAST)

03/07/10

16/05/10

27/03/10

06/02/10

19/12/09

25/10/09

06/09/09

20/07/09

03/06/09

15/04/09

NAPTHA

750

1050

25/02/09

03/07/10

16/05/10

27/03/10

06/02/10

19/12/09

25/10/09

06/09/09

20/07/09

03/06/09

550

15/04/09

750

25/02/09

650 07/01/09

850

07/01/09

750

1150

(CRF FAR EAST)

650 US$/tonne

850

600 550 500

750

450

650

1100 1000

1250

900

03/07/10

16/05/10

27/03/10

06/02/10

19/12/09

25/10/09

06/09/09

20/07/09

03/06/09

15/04/09

PVC have prices

03/07/10

16/05/10

27/03/10

06/02/10

19/12/09

25/10/09

06/09/09

dropped to $890 per tonne, amid sluggish global demand. 20/07/09

03/07/10

16/05/10

27/03/10

06/02/10

19/12/09

400

25/10/09

750

06/09/09

500 20/07/09

850 03/06/09

600

15/04/09

950

25/02/09

700

03/06/09

1050

have plunged to $1200 per tonne. Weak buying sentiment in the key Asian markets were behind the slide.

800

15/04/09

US$/tonne

1150

25/02/09

US$/tonne

1350

Polyethylene prices have declined to $1080 per tonne, pushed down by weak sentiment, low offers and falling feedstock ethylene costs. Polypropylene prices

MEG

07/01/09

HDPE (CFR FAR EAST)

07/01/09

350

03/07/10

16/05/10

27/03/10

06/02/10

19/12/09

25/10/09

06/09/09

20/07/09

03/06/09

15/04/09

25/02/09

07/01/09

400

1450

Propylene prices have declined to $1030 per tonne, the lowest level in nine months, amid a lower feedstock price, and uncertainty about the outlook of the market.

700

950 US$/tonne

27/03/10

FOB: Freight On Board

1350

550

06/02/10

19/12/09

25/10/09

06/09/09

20/07/09

03/06/09

15/04/09

25/02/09

03/07/10

16/05/10

27/03/10

06/02/10

19/12/09

25/10/09

550

06/09/09

300

declined to $870 per tonne, due to limited demand. The perception of ample supplies in the market continued to weigh on discussions.

20/07/09

650 03/06/09

400 15/04/09

Ethylene prices have

25/02/09

750

07/01/09

500

07/01/09

US$/tonne

Benzene prices have

ETHYLENE (FOB FAR EAST)

(HDPE Injection)

Source: www.argaam.com

www.arabianoilandgas.com

Refining & Petrochemicals Middle East August 2010

40 The Big Picture

Qatar Fertiliser Company (Qafco) facility at Mesaieed.

DESTINATION EUROPE Qafco has begun exporting melamine to Europe from its subsidiary Qatar Melamine Co

AFCO has signed an agreement with German company Helm to export 18 000t/y of Melamine to Europe from its facitlity in Mesaid. “The agreement is in line with QAFCO’s marketing strategy to expand its market reach of its melamine product from our upcoming Qatar Melamine Company plant to the European markets,” explained QAFCO managing director, Khalifa Al Sowaidi. He further added that the

agreement will be a milestone for future business relationships in the region. The agreement was signed by Khalifa Al Sowaidi, and Harmut Glaser, executive board member from Helm. The ceremony was attended by Yousef Al Kuwari, QAFCO marketing manager, Abdulla Al Kuwari, QAFCO Melamine sales manager, Uwe Paulsen and Sami Jayousi from Helm. It is worth mentioning that the Qatar Melamine Company is owned by QAFCO

Refining & Petrochemicals Middle East August 2010

(60%) and Qatar Intermediate Industries Holding Company (QH) (40%). Being built with a total cost of US$350 million and a production capacity of 60 000 tonnes per year, the plant is the largest melamine plant in the Middle East as well as one of the largest in the world. The plant is expected to add value to the urea produced by QAFCO and is expected to boost QAFCO’s profitability.

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