PETROCHEMICAL INDUSTRY IN INDIA: VISION … By Mr...SABIC AT-A-GLANCE *Forbes 2018 **Billion 1976...

INDIACHEM 2018

Janardhanan Ramanujalu, VP & Regional Head, S. Asia & ANZ, SABIC

October 5, 2018

PETROCHEMICAL INDUSTRY IN INDIA:

VISION 2025 & BEYOND

2

PRESENTATION OUTLINE

• About SABIC

• Indian Chemical Industry

• Feedstock Challenges

• PCPIR: An Enabling Concept

• Collaboration & Partnership as Way Forward

3

Classification: General Business Use

SABIC AT-A-GLANCE

*Forbes 2018 **Billion

1976Company

established

34,000Employees

around the world

50Countries of operations

3rd

Largest globalchemical company*

120th

Largest publiccompany in the world*

4Core

businesses

64World-class

plants worldwide

11,534Global patent

filings

≈ 150New products

each year

US$ B**

Totalassets

86US$ B**

Netincome

4.9US$ B**

Annualrevenue

39.9

4


SABIC IN INDIA- 25 YEARS JOURNEY

SABIC WORLDWIDE BROUGHT TO INDIA SABIC WORLDWIDE BROUGHT TO INDIA SABIC WORLDWIDE BROUGHT TO INDIA SABIC WORLDWIDE BROUGHT TO INDIA SABIC INDIA PVTLTD,GURGAONSABIC INDIA PVTLTD,GURGAONSABIC INDIA PVTLTD,GURGAONSABIC INDIA PVTLTD,GURGAON

Chemicals Business:Chemicals Business:Chemicals Business:Chemicals Business:

Polymers Business:Polymers Business:Polymers Business:Polymers Business:

AgriAgriAgriAgri----NutrientsNutrientsNutrientsNutrients Business:Business:Business:Business:

Olefins, Aromatics & ChlorAlkali, Glycols and Oxygenates, OXO alcohols, Linear Alpha Olefins (LAO)

PP, LDPE, HDPE, LLDPE, PVC, PS, PET and range of Engineering Thermoplastics

AMMONIA, UREA & DAP

JUBAIL GELEEN

SABIC FOR INDIASABIC FOR INDIASABIC FOR INDIASABIC FOR INDIAMANUFACTURING/VADODARAMANUFACTURING/VADODARAMANUFACTURING/VADODARAMANUFACTURING/VADODARA

Total Area : 29 Acre

Compounding PlantCompounding PlantCompounding PlantCompounding Plant

Plant Start up : Q4 1993

Product Capability: Advanced

engineering compounded

thermoplastics

Sheet Plant Sheet Plant Sheet Plant Sheet Plant

Plant Start up : Q4 2009Product Capability: Roofing, Skylight, Cladding, Sound Barrier

VADODARA MANUFACTURING SITE

SABIC FOR THE WORLDSABIC FOR THE WORLDSABIC FOR THE WORLDSABIC FOR THE WORLDSABIC TECHNOLOGY CENTER SABIC TECHNOLOGY CENTER SABIC TECHNOLOGY CENTER SABIC TECHNOLOGY CENTER

BENGALURUBENGALURUBENGALURUBENGALURU

Land Area: 46 Acre

Investment: > USD 100 Million

Inaugurated in October 2013

More than 360 research scientists

&engineers

4 STAR GRIHA rating by ADaRSH LEED India– Gold certified/100% Export Oriented Unit for captive SABIC Research

BENGALURU RESEARCH CENTER

5

INDIAN CHEMICAL INDUSTRY

6


CHEMICALS : TOUCHING OUR LIVES

BIOTECHNOLOGYBIOTECHNOLOGYBIOTECHNOLOGYBIOTECHNOLOGY

AGRO CHEMICALS AGRO CHEMICALS AGRO CHEMICALS AGRO CHEMICALS

PHARMACEUTICAL CHEMICALSPHARMACEUTICAL CHEMICALSPHARMACEUTICAL CHEMICALSPHARMACEUTICAL CHEMICALS

FINE CHEMICALS FINE CHEMICALS FINE CHEMICALS FINE CHEMICALS

PERFORMANCE CHEMICALS PERFORMANCE CHEMICALS PERFORMANCE CHEMICALS PERFORMANCE CHEMICALS SPECIALTY CHEMICALSSPECIALTY CHEMICALSSPECIALTY CHEMICALSSPECIALTY CHEMICALS

BULK INTERMEDIATESBULK INTERMEDIATESBULK INTERMEDIATESBULK INTERMEDIATES

BASIC CHEMICALSBASIC CHEMICALSBASIC CHEMICALSBASIC CHEMICALS

TEXTILES TEXTILES TEXTILES TEXTILES

CONSUMER CONSUMER CONSUMER CONSUMER APPLIANCES/ELECTRONICSAPPLIANCES/ELECTRONICSAPPLIANCES/ELECTRONICSAPPLIANCES/ELECTRONICS

AUTOMOBILE INDUSTRY AUTOMOBILE INDUSTRY AUTOMOBILE INDUSTRY AUTOMOBILE INDUSTRY

ELECTRONICSELECTRONICSELECTRONICSELECTRONICS

AGROCHEMICALS AGROCHEMICALS AGROCHEMICALS AGROCHEMICALS

PHARMACEUTICALSPHARMACEUTICALSPHARMACEUTICALSPHARMACEUTICALS

MASS TRANSPORTATIONMASS TRANSPORTATIONMASS TRANSPORTATIONMASS TRANSPORTATION

CONSTRUCTIONCONSTRUCTIONCONSTRUCTIONCONSTRUCTION

FRAGRANCESFRAGRANCESFRAGRANCESFRAGRANCES

FLAVOURSFLAVOURSFLAVOURSFLAVOURS

AGRIAGRIAGRIAGRI----NUTRIENTSNUTRIENTSNUTRIENTSNUTRIENTS

7


GLOBAL CHEMICALS FORECAST

3.83.83.83.8

4.64.64.64.6

5.65.65.65.6

6.76.76.76.7

FY 15 FY20 FY25 FY30

GLOBAL GLOBAL GLOBAL GLOBAL CHEMICAL INDUSTRY (USD CHEMICAL INDUSTRY (USD CHEMICAL INDUSTRY (USD CHEMICAL INDUSTRY (USD TRILLIONTRILLIONTRILLIONTRILLION))))

Global Chemicals Market is expected to grow at CAGR ~4% from USD 4Tn Now to USD 6.7 Tn in 2030

Indian Chemical Industry expected to grow to US$300 billion(2025)at CAGR ~ 9%

[VALUE][VALUE][VALUE][VALUE]




FY10 FY15 FY 20 FY 25

INDIAN CHEMICAL INDUSTRY (USD BILLION)INDIAN CHEMICAL INDUSTRY (USD BILLION)INDIAN CHEMICAL INDUSTRY (USD BILLION)INDIAN CHEMICAL INDUSTRY (USD BILLION)

Sources: IHS Markit, CEFIC, GOI website

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C2: ETHYLENE SUPPLY & DEMAND (MMT),INDIA

� Ethylene deficit to growthough current capacityaddition may bring somerespite for the next 2-3 yearsbut urbanization will drive thedemand in the long term.

� Indicator: India’s urbanization will add another 315 million people to our cities; which is current population of US thus boosting demand by 2040

5.5

8.3

13.7

6.4

8.6

2017 2023 2030

Domestic Demand Capacity to produce

Source: IHS: Ethylene Chemical Economics Handbook, 31 May 2017

9


C2 : GROWTH RATE OF ETHYLENE BY MAJOR END USE , INDIA

5.5 MMTA 15 MMTA2016-2030

Ethylene

� Ethylene demand growing with 11% CAGR and will crosses to 13 million metric tons by 2030.

� PE accounted for 66% of total ethylene demand, followed by EO (15%) and EDC (6.2%).


� Ethylene and its intermediates industry will be value-creating segment for Indian market; where SABIC can play an important role

1.673.34

4.911.01

2.39

3.85

0.20

0.71

1.44

0.81

1.63

2.39

0.34

1.08

2.08

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2017 2025 2030

millio

n m

etr

ic t

on

Alpha-olefins Ethylene dichloride EO LDPE LLDPE HDPE

13.9%

7.4%

9.5%

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C2 : ETHYLENE DEMAND (2018),INDIA

Ethane

39%Propan

e

9%

Butane

1%

Naphth

a

49% Others

2%

Ethylene Prod. by FeedstockCapacity: 5.0 MMT

� Approx. 80% is consumed to make Polymers.

NE Asia,

26%

SE Asia,

7%

N.America,

22%

S.America,

3%

Europe &

CIS, 17%

Africa, 1%

M.East,

20%

INS, 4%

Global Ethylene CapacityTotal ~165 MMT


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C3 : PROPYLENE SUPPLY & DEMAND (MMT), INDIA

� Propylene deficit to grow asthe current capacity is likelyto gets absorbed in the longterm.

� PP accounted for more than 95% of the total propylene demand.

Source: IHS: Propylene Chemical Economics Handbook, 31 May 2017

5.19

8.13

10.00

5.00

6.87

2017 2023 2030

Domestic Demand Capacity to Produce

12


C3: PROPYLENE DEMAND (2017),INDIA

PolyprolylePolyprolylePolyprolylePolyprolyle

ne, 96%ne, 96%ne, 96%ne, 96%

PO, 1.00%

Others,

0.20%

Cumene,

0.30%

Isopropan

ol, 1.00%

Oligomers,

0.30%

2 EH,

1.00%

Butanols,

0.35%

Propylene demand by end useDemand: 5.2 MMT

Propylene by Process

Source: IHS: Propylene Chemical Economics Handbook, 31 May 2017

Global Propylene CapacityTotal 124 MMT

� >95% percent propylene was consumed for polypropylene production.

Steam Steam Steam Steam

CrackerCrackerCrackerCracker

34%34%34%34%

Refinery Refinery Refinery Refinery

GradeGradeGradeGrade

48%48%48%48%

On On On On

purposepurposepurposepurpose

18%18%18%18%

19%

3%

18%

1%

9%

39%

7%

N.America

S. America

Europe & CIS

Africa

M.East

INS

NE Asia

SE Asia

4%

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FEEDSTOCK CHALLENGES

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Souce: CPMA

(MMT) 2017201720172017 2030203020302030 2040204020402040

CapacityCapacityCapacityCapacity DemandDemandDemandDemand Surplus/DeficitSurplus/DeficitSurplus/DeficitSurplus/Deficit DemandDemandDemandDemand

Surplus/Deficit Surplus/Deficit Surplus/Deficit Surplus/Deficit over 2017 over 2017 over 2017 over 2017 CapacityCapacityCapacityCapacity DemandDemandDemandDemand

Surplus/Deficit Surplus/Deficit Surplus/Deficit Surplus/Deficit over 2017 over 2017 over 2017 over 2017 CapacityCapacityCapacityCapacity

Ethylene (Derived Demand) 6.26 5.25 1.10 12.96 (6.71) 24.88 (18.62)

Propylene (Derived Demand) 5.24 4.46 0.77 9.11 (3.88) 14.30 (9.06)

Styrene - 0.69 (0.69) 1.23 (1.23) 1.73 (1.73)

Butadiene 0.56 0.28 0.29 0.75 (0.18) 1.42 (0.85)

Benzene 1.99 0.45 1.53 1.68 0.30 2.57 (0.58)

Methanol 0.27 1.97 (1.69) 3.64 (3.37) 5.54 (5.27)

• India needs continuous investments to avoid huge deficits over next 10-20 years

DEMAND-SUPPLY GAP PROJECTIONS FOR PRODUCTS

15


FEEDSTOCK : STRATEGIC OPTIONS FOR INDIA

NAPHTHANAPHTHANAPHTHANAPHTHA ETHANEETHANEETHANEETHANE COAL COAL COAL COAL INTERMEDIATES IMPORTS INTERMEDIATES IMPORTS INTERMEDIATES IMPORTS INTERMEDIATES IMPORTS

• Naphtha constitutes for >60% of feedstock for chemicals in India

• Naphtha has challenges of quality, pooling and fuel value

• Integrated refinery with HPFCC, naphtha availability will be challenge

• Small crackers by speciality chemicals industry is a possibility

• US Ethane glut offer attractive opportunity as there is low cost feedstock.

• Requires large investments in gasification terminals, shipping, pipelines etc.

• Transportation is a challenge as compared to naphtha.

• Ethane based cracker offers less building blocksdiversity.

• Coal to Olefins is attractive option to monetize low cost coal.

• China is a leader in harnessing the potential to monetize low quality coal.

• Established syngas route technologies to produce high purity ethylene & propylene.

• Capital intensive; carbon footprints, low quality coal dampens the profits.

• Intermediates imports is a viable option for specialty chemicals due to its high value addition in the end stage

• This is a practical and viable option and is recommended for India. The country has naturally adopted this route as it is a practical and viable option

• Incremental refinery expansion will not result in sufficient naphtha for total petrochemicals demand.

16

PCPIRs

17


PCPIR: AN ENABLING CONCEPT

GUJARATGUJARATGUJARATGUJARAT

ODISHAODISHAODISHAODISHA

ANDHRA ANDHRA ANDHRA ANDHRA PRADESHPRADESHPRADESHPRADESH

TAMILNADUTAMILNADUTAMILNADUTAMILNADU

VishakhapatnamVishakhapatnamVishakhapatnamVishakhapatnam640 sq km

ParadeepParadeepParadeepParadeep284 sq km

DahejDahejDahejDahej453 sq km

NaghapattinamNaghapattinamNaghapattinamNaghapattinam

Cuddalore &Cuddalore &Cuddalore &Cuddalore &

• PCPIR envisioned in 2007 to harness benefits of co-siting, networking & greater efficiencies through common infrastructure and support services.

• Each PCPIR specifically delineated region has area of ~ 250 sq. km; 40% for processing.

Note: PCPIR- Petroleum, Chemicals & Petrochemicals Investment Regions

257 sq km

DahejDahejDahejDahej PCPIRPCPIRPCPIRPCPIR

Anchor Tenant: ONGC Petro additions Limited

Investment (made/committed): Rs. 85,928 croreEmployment Generation: 1.32 lakh persons

APAPAPAP PCPIRPCPIRPCPIRPCPIR

Draft Master Plan, EIA completedInvestment (made/committed) Rs. 43,744 crore

Employment Generation potential: 1.11 lakh person

TamilnaduTamilnaduTamilnaduTamilnadu PCPIRPCPIRPCPIRPCPIR

Investment (made/committed) Rs. 2100 croreEmployment Generation: 13950 persons

ParadeepParadeepParadeepParadeep PCPIRPCPIRPCPIRPCPIRAnchor Tenant: Indian Oil Corporation LimitedInvestment (made/committed): Rs. 45000 croreEmployment Generation: 38000 persons

1 sq. km = 247.1 acres

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EnablersEnablersEnablersEnablers

• Diligently planned land mapping in a Master Master Master Master

PlanPlanPlanPlan is advocated for the success of concept.

• Infrastructure and utilities/tank farms mapping &

planning for Independent operators.

• Single Single Single Single Environment Clearance Environment Clearance Environment Clearance Environment Clearance for whole PCPIR to

eliminate long processing time.

• Key infrastructure for to be brought under the

ambit of government.

• Roads, airways, railways siding, Ports,

desalinization units; Customs etc.

POLICY SUPPORT FOR PCPIR REALIZATION

Despite Strategic location; 100% FDI in chemicals sector PCPIR still need to reach full potential.Despite Strategic location; 100% FDI in chemicals sector PCPIR still need to reach full potential.Despite Strategic location; 100% FDI in chemicals sector PCPIR still need to reach full potential.Despite Strategic location; 100% FDI in chemicals sector PCPIR still need to reach full potential.

OpportunitiesOpportunitiesOpportunitiesOpportunities

• Availability of adequateadequateadequateadequate landlandlandland withexcellent connectivity

• Institutional mechanism formanagement & implementation.

• DeregulatedDeregulatedDeregulatedDeregulated industryindustryindustryindustry and promotion of100% FDI.

• Ready availability of technical and skilledmanpower.

• Opportunities for investment throughPPP mode and consortium with Indianpartners.

• Investment in utilities and services.

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COLLABORATIONS & PARTNERSHIPS

AS A WAY FORWARD

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Successful Successful Successful Successful PartnershipsPartnershipsPartnershipsPartnerships

in India in India in India in India

FeedstockFeedstockFeedstockFeedstock

InfrastructureInfrastructureInfrastructureInfrastructure

UtilitiesUtilitiesUtilitiesUtilities

PoliciesPoliciesPoliciesPolicies

PartnershipPartnershipPartnershipPartnership

MarketMarketMarketMarket

Secured feedstock at Secured feedstock at Secured feedstock at Secured feedstock at competitive pricescompetitive pricescompetitive pricescompetitive prices

Modern Modern Modern Modern infrastructure & infrastructure & infrastructure & infrastructure & efficient logistic efficient logistic efficient logistic efficient logistic

network required network required network required network required across Indiaacross Indiaacross Indiaacross India

Reliable utility Reliable utility Reliable utility Reliable utility supply & good supply & good supply & good supply & good infrastructureinfrastructureinfrastructureinfrastructure

available in PCPIRs available in PCPIRs available in PCPIRs available in PCPIRs

Clear & simplified policies Clear & simplified policies Clear & simplified policies Clear & simplified policies and approval systems for and approval systems for and approval systems for and approval systems for

major petrochemical major petrochemical major petrochemical major petrochemical investmentsinvestmentsinvestmentsinvestments

Good market Good market Good market Good market access for locally access for locally access for locally access for locally

produced & produced & produced & produced & imported chemical imported chemical imported chemical imported chemical

productsproductsproductsproducts

‘Win‘Win‘Win‘Win----win’ & win’ & win’ & win’ & reliable reliable reliable reliable

partnerships with partnerships with partnerships with partnerships with leading Indian leading Indian leading Indian leading Indian

PartnersPartnersPartnersPartners

SUCCESSFUL PARTNERSHIPS: STRATEGIC DRIVERS & ENABLERS

THANK YOU

PETROCHEMICAL INDUSTRY IN INDIA: VISION … By Mr...SABIC AT-A-GLANCE *Forbes 2018 **Billion 1976...

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