PETROCHEMICAL WINNING STRATEGY SABIC : FROM GREEN FIELD TO GLOBAL GROWTH IOC Petrochemical Conclave, India

16 March 2012 Henry Wang, SABIC

IOC Mar12 CSP EA HW 20123

No. 1

INTRODUCTION

• Good afternoon and thank you for kind invitation to speak • Henry Wang :

Executive Adviser Corporate Strategy and Planning Saudi Basic Industries Corporation (SABIC)

• India Petrochemical & Chemical Growths • SABIC set out on the journey 35 years ago • We are happy to share our experience and

learning with India Government and our valued Strategic Partners in India

No. 2

• 1976 only a vision • Today a leading Global Petrochemical Company

• Revenue >$50 Billion • Net Income $7.8 Billion • Production > 67 Million Metric Tons • Present in > 40 Countries • 87 International Subsidiaries &

Sales Offices • 16 Technology & Innovation Centers • 33,000 employees & talented individuals …………………………………….………..no longer a vision but a reality

SABIC : OUR JOURNEY …….

No. 3

SABIC : OUR BUSINESSES

6 Global Strategic Business Units (SBUs) • Chemicals • Polymers • Performance Chemicals • Innovative Plastics • Fertilizers • Metals

From 1976 onwards a growth engine meeting worldwide demand for Petrochemicals, growing from 6 to 67 million tons per year production

No. 4

SABIC : OUR GROWTH SUCCESS STORY

• From Green Field & Fishing Villages to Global Growth • Share our story and our learnings • SABIC is a case study with… • Unparalleled experience in helping our Strategic Partners succeed • Growth with Global Partners • Growth capabilities and competencies • Emerge and Succeed on the World Stage

No. 5

SABIC : THE BEGINNING

• 1970 Saudi Arabia largely un-industrialized • Saudi Government Vision & Strategy aimed at :

• Modernize the country and its infrastructure • Diversify the economy to develop a 20th century economy • Focused on

• Education • Health Services • Infrastructure development • Private business participation • GDP Added Value Contributions

• Reduce dependence on oil • Develop Refining, Gas and Petrochemicals (when Petrochemicals was a

regional business and global trading of chemicals limited)

No. 6

SABIC : EARLY IMPORTANT DECISIONS

• Simultaneously develop people , infrastructure and the economy • Open up Labour markets & created employment • Invest our oil proceeds in diversification and development • Encourage imports of leading EPC, construction Equipment and supplies • Offer competitive financing – up to 60% of capital investment • Develop State-Owned Enterprises (SOEs) for rapid development of Power

supply, Water, and Infrastructure • 2 Commercial SOEs developed SABIC and SAMAREC:

• Reduced country risk for investors • Facilitate access to Saudi Arabia • Localize expertise, know-how, and management

• Aggressively encourage Foreign Direct Investment in Refining & Petrochemicals

No. 7

SABIC : EARLY IMPORTANT DECISIONS (CONT’D)

• Build gas distribution capability for industry, desalination and power • Develop 2 industrial cities

• Al Jubail on the East Coast • Yanbu on the West Coast

• Establish the Royal Commission For Jubail and Yanbu to:

• Co-ordinate Ministries, Authorities, Utility providers • Develop Infrastructure • Manage land allocation • Provide telecommunications • Municipal and industrial services to residents and tenants

No. 8

SABIC : INDUSTRIAL DEVELOPMENT : A TALE OF TWO CITIES : JUBAIL

• Al Jubail was a quiet fishing village in the 1960’s. • Today it is a world scale chemicals and refining hub – and still growing. • It is a modern industrial city Planned with growth in mind phase 1 = 35,000

hectares • Built in 2 parts – Residential and Industrial. • With phase 2 total land area reaches 75,000 Hectares ! Development included: • Road networks • Water, power, telecoms, sewers • Connections between industrial port and industrial sites by

pipelines & iron ore conveyor

Two ports constructed: • one industrial, chemical, fertilizer, sulphur, refinery products, RORO ships,

connection to sites. • A commercial port commercial for containers and plastics products

PE,PP,PS,PVC

No. 9

SABIC : SEEING IS BELIEVING

No. 10

SABIC : Jubail : Seeing is believing

No. 11

SABIC : YANBU : SEEING IS BELIEVING

No. 12

SABIC : JUBAIL : SEEING IS BELIEVING

No. 13

• Jubail and Yanbu today producing the majority of SABIC Petrochemical & Chemicals, Fertilisers, Iron & Steel Products

• The 2 cities are perfect locations • Enabling deep integration • Reducing total capex and opex

SABIC : INDUSTRIAL DEVELOPMENT : A TALE OF TWO CITIES

No. 14

• SABIC was created by the Saudi government in 1976, with $3 Billion capital, to utilize associated gas to produce value-added chemicals, polymers, fertilizers

• In 1984, the first public offering of 25% of SABIC was made for public purchase

• SABIC was created as the government vehicle for • Development of Petrochemical & Chemical Clusters • Fertilizers • Metals

• We had many doubters and critics • This was a regional industry and KSA did not

have critical mass • Petrochemical trading was limited back then • We had many doubters who paid lip service & did

not believe we can succeed.

SABIC : ITS FORMATION AND PURPOSE

No. 15

• We were sure that we would succeed, we now know why, and we are happy to share with you….

• The primary success factor is the vision of the Saudi government • They were generous in their support • They met their commitments • SOEs were created and with Ministries delivered quality facilities,

reliable services and supply of fuel gas and feedstock

• SABIC was always managed as a commercial enterprise • Managed by SABIC • Board provided advisory and strategic direction AND KSA issue

resolution (Infrastructure/regulatory

• We embraced integrity, focusing on delivery and performance

• In the 70’s and 80’s we operated as a holding company, transforming by the 90’s to a corporate business model

SABIC : WE BELIEVED !

No. 16

• Complexes were developed on a stand-alone basis

• They were developed jointly with world leaders • To provide technology and know-how • To jointly develop projects and share EPC experience • Share management, commissioning, start-up, and

operational experience • To train Saudi engineers, operators, and technicians (up to 2+ years) • To market and sell products

• Plants were designed using “best-in-class” proven world scale technologies

• Using first class contractors and suppliers

• With total quality principles, Highest EHSS standards, Safety commitment, all from CEO level

• Investing in logistical infrastructure, and participating in a chemical shipping company

SABIC : WE BELIEVED !

No. 17

• We developed our own Marketing and sales organization ahead of start-up

• Focused early on the Customer

• Developing capabilities to adopt new technologies successfully

• Early R&D focus • 1989 begin development of SABIC R&D capability • 1992 Riyadh R&D centre – World class, analytical, unique PE Pilot plant

• A willingness to learn

• Embrace best practices

• Continually adopt new, more sophisticated processes and systems

• Constant Organizational adaptation, leveraging experience & responding to changes

• Business model developed from a holding company to a Global Corporation today

SABIC : WE BELIEVED !

No. 18

• From our outset we excelled in the pursuit of growth • We grew organically either with JV or 100% owned

structures • By 2000 we realized growth was needed at home

and abroad • For stronger presence in mature and emerging

markets • 2000 Revenue ~$7Billion, with 10% in Europe • 2002 Acquisition of DSM Petrochemicals • 2006 Acquisition of Huntsman UK Petrochemicals • 2007 Acquisition of GE Plastics, now SABIC

Innovative Plastic • 2009 Sinopec JV in China – start up 2010

• Beginning of China growth Platform • Successful JV – More JV’s to come

SABIC : GROWTH IN KSA AND THEN GLOBALLY…

No. 19

• We are now experienced in organic , JV, and M&A growth • Our KSA growth continues • We want to share our experience to grow in new areas

and markets which provide opportunities to add value • Many emerging economies will find SABIC the right

partner for growth • We are ourselves the product of an emerging economy ! • We have fresh and first hand experience

FROM GREENFIELD TO GLOBAL GROWTH…………

SABIC : TODAY A GLOBAL CORPORATION…

No. 20

• We have a sincere and genuine interest to collaborate with the India Petrochemical, Chemical & Energy industry and the Government of India to grow the Petrochemical & Chemical industry.

• Petrochemical growth is the foundation of economic growth, creating high quality employment, and enables downstream investment.

• SABIC’s experience is one of rapid, efficient and effective monetization of valuable resources

• We have played and still play a major role in the development of the KSA economy

• From Green Fields & Fishing Villages to Global Player • Sustainable Developments & Successes • We create sustainable Win-Win Partnership with all

our Strategic Partners globally

SABIC : A MAJOR GLOBAL PETROCHEMICAL CORPORATION

SABIC & INDIA

THANK YOU FOR THE KIND

INVITATION TO SPEAK

IOC Mar12 CSP EA HW 20123