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Kuwait Petrochemicals Report Q4 2011 Published on August 2011
Report Summary Planned refinery expansions offer the potential for new petrochemicals projects in Kuwait. However, mindful of past project failures, BMI's latest Kuwait Petrochemicals Report warns that there may be difficulties in starting these projects. The approval for the construction of the 615,000b/d Al-Zour refinery project, which was scrapped in 2009, has prompted speculation that Kuwait will host a third petrochemical complex. At the same time, Kuwait has approved the upgrade of the Mina Abdullah and Mina Al-Ahmadi refineries. The simultaneous execution of the two projects will see Kuwait's refining capacity jump from 930,000b/d to 1.4mn b/d, and significantly boost Kuwait's naphtha feedstock potential for the petrochemicals industry. Certainly, new capacity could support another world-scale cracker. There are no plans for major additions to Kuwait's olefins capacity until 2016, with the proposed Olefins III project at 1.4mn tpa of ethylene production capacity. Downstream plants will include EG, PE and PP, although capacities will depend on the feed mix. It is not yet clear if the project will be executed by state-owned Petrochemical Industries Company (PIC) on its own or with Equate Petrochemicals, the JV between PIC and Dow Chemical. However, given the near-constant political gridlock in Kuwait, the realisation of these refinery and petrochemicals projects is likely to be slow. As such, a third complex is still an aspiration rather than a firm plan. Equate has forecast profit growth of between 20-40% in 2011 compared with last year, largely due to new capacity and healthy margins. A major threat to Kuwait's objectives is the moderation in demand growth in the crucial Chinese market. BMI had warned of the impact of a slowdown in China on Kuwaiti petrochemicals exports. By mid-2011, it was evident that economic expansion had passed its peak. China's annual PE demand is expected to grow by 8-9% in 2011 down from 19% in 2010, but new capacity will reduce imports by up to 14% from the 7.4mn tonnes imported in 2009. BMI believes this will be more at the expense of neighbouring Asian states while Kuwaiti suppliers will be less affected. In terms of polymer capacities, we estimate that China's polymer market self-sufficiency should approach 75% PE and exceed 100% PP in 2011. Given that Kuwait polymer production is oriented towards PE with PP production representing just 16% of total polymer output, it is unlikely to be affected by China's expected PP surplus. In 2010, Kuwait had ethylene capacity of 1.7mn tpa feeding downstream units that included 825,000tpa LLDPE. It also has 370,000tpa of benzene, 822,000tpa of xylenes, 1mn tpa of EG, 765,000tpa of EO and 160,000tpa of PP capacity. In the fertiliser sector, Kuwait has capacities of 1.04mn tpa urea and 885,000tpa ammonia. Olefins and polyolefins capacities are unlikely to increase before 2015, with the main expansion projects completed in 2009. The upgrading of three Kuwait National Petroleum Company (KNPC) refineries has limited the availability of propylene feedstock, prompting PIC to shutter its 150,000tpa PP plant for two months from March 2011. BMI has revised up Kuwait's petrochemicals rating by 0.6 points to 58.0 points this quarter due to an improvement in its Country Risk scores. It retains fourth place, 5.0 points behind the UAE and 1.5 point ahead of Iran. Kuwait's score declined over 2010 owing to uncertainty over the future of the al-Zour refinery, which has attracted considerable controversy over its tendering process. The resumption of the al-Zour refinery project and other upstream projects has helped improve the country's score, although this is held back by past cancellations due to political opposition.
Table of Content Executive Summary SWOT Analysis
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Kuwait Economic SWOT
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Kuwait Business Environment SWOT
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Global Petrochemicals Overview Financial Results
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Global Products Outlook
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Table: Oil Product Price Assumptions, 2011 (US$/BBL)
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Table: Oil Product Price Forecasts, 2011-2015 (US$/BBL) Gulf Regional Overview
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Table: Announced Ethylene Crackers In The Gulf Region Kuwait Market Overview Industry Trends And Developments Upstream
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Financial Results
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Olefins And Polyolefins Aromatics
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Downstream Plastics Industries
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Overseas Investments
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Business Environment Ratings
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Table: Middle East And Africa Petrochemicals Business Environment Ratings Overview Of Kuwait's Business Environment Industry Forecast Scenario
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Table: Kuwaiti Petrochemicals Sector, 2008-2015 ('000tpa, Unless Otherwise Stated) Macroeconomic Outlook
Table: Kuwait ' Economic Activity, 2008-2015 Company Profiles
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Equate Petrochemical Company
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Petrochemicals Industries Company (PIC) Glossary Of Terms
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Table: Glossary Of Petrochemicals Terms BMI Methodology
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How We Generate Our Industry Forecasts
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Chemicals And Petrochemicals Industry Cross Checks
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Business Environment Ratings
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Table: Petrochemicals Business Environment Indicators And Rationale Weighting
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Table: Weighting Of Indicators
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