Refining & Petrochemicals ME - August 2010

NEWS, DATA AND ANALYSIS FOR THE REFINING AND PETROCHEMICAL INDUSTRIES AUGUST 2010S, DATA AND ANALYSIS FOR THE REFINING AND PETROOOOOOOOOCHCHCHCHCHCHCHCHCHCHHHCHCHHCHHCHCHCHHHCHCHHCHCHCHHHCHCHCHCHCHCHCHCHCHCHCHCHCHCHCHHCHCHCHHCHCHHHHHCHHHCHHCHCCHCHCHCCHCCCCHHHHHCCHCHHCCCCCC EEMEMEMEMEMEMEEMEMEMEMEMEMEMEMEMEMEMEMEMMEMEMEMEMEMEMMEEEE ICICICICICICICICICICICICICICICCICICCICCICCCCCCCCCCCCCCCCCCCCALALALALALALALALALALALALALALALALLALALAALAALALALALLALALAALALAAALALALAAAALAAAAAAAAAA I I IIIII I I I I IIII I IIII IIII I IIIINDNDNDNDNDNDNDNDNDNDNDNDNDNDNDNDNDNDNDNDNDNDNDNDNDNDNNDNDNDNDNDNDDNDDNDDNDNDNNDDDNNDNDNDNDDNDNDNDDDDDDDDDN USUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUUSUSUUUSUSUSSUUSUSUSUSUSUSSSUSSSSSSSUSSSSUUUSUUSSSUSTRTRTRTRTRTRTRTRTRTRTRTRTRTRTRTRTTRTRTRTRTRTRTTTTRTRTRTTRTRRRRTRTRTRTRTRRTRTRTRTRTRTTTRRRIEIEIEIEEIEIEIEIEIEIEIEIEIEIEIEIEIEIEIEIEEEIEIEEIEIEIIEIEIEIEIEIEEIEEIEIEIEIIEEIIEIII SSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS AUGUST 2010

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

An ITP Business Publication, licensed by Dubai Media City

REBRAND TO RECOVERALGERIA’S CORRUPTION INFESTED NOC IS OVERHAULING ITS IMAGE

WORLD CUP FLAVOURSABIC PLASTICS SHINE AT WORLD CUP IN SOUTH AFRICA

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

TIME TOBUILD

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LOGISTICS

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

28 ALGERIA COUNTRY PROFILEWith $28bn allocated to the development of a downstream industry, Algeria must overhaul its ineffi cient and corrupt image.

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

38 NUMBER CRUNCHERRefi ning and Petrochemicals Middle East provides market data and analysis for the region’s listed downstream companies.

40 THE BIG PICTURE Eye in the sky: See QAFCO’s fi rst melamine export to European markets from a bird’s eye view.

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

8 MIDDLE EAST MARKET UPDATEBuild & Projects • Operations & Maintenance • Science & Technology • Equipment & Machinery • Sales & Shipments

14 TIME TO BUILDSalem Shaheen, president and chief executive of Saudi Aramco and Total joint venture SATORP, talks exclusively to RPME.

20 PROCESS OPTIMISATIONReducing production costs requires the adoption of intelligent process optimisation tools and technologies.

August 2010 Volume 03 Issue 08IN PRINT

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1Contents

Refining & Petrochemicals Middle East August 2010www.arabianoilandgas.com

WEB HIGHLIGHTS2

Refining & Petrochemicals Middle East August 2010 www.arabianoilandgas.com

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.

arabianoilandgas.com

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 Pacifi c region.


SPECIAL REPORTONLINE GALLERY

The online home of:

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

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.


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


EDITOR’S CHOICE

KUWAIT’S EXPORT EARNEREquate Petrochemical Company rakes in over 80% of the nation’s non-oil revenues.


WEB FORUM

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


BREAKING NEWS AND VIEWS FIRST

MOST POPULAR NEWS

IRAQ EASES VISA PROCEDURES FOR OIL WORKERS

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

ROBERT DUDLEY NEW BP CEO AS HAYWARD STEPS DOWN

CB&I NETS $190 MILLION ASIAN LNG EPC CONTRACT

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


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DEBATE

GPCA Fertilizer ConventionWorking towards Global Food SecurityFORECASTING FERTILIZER DEMAND – STRATEGIES FOR SUPPLY

www.gpca.org.ae/fertilizerconvention

29-30 September 2010, Dubai

Co-organised by: China Partner:

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

• Hear fertilizer demand forecasts from industry experts

• Overview of key consumer regions

• Network with key fertilizer producers

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Algeria’s AfflictionT

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-the-counter (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 fi ght 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 fi ve years, so if the clean regime can be maintained,

is your company positioned for a slice of that action?

Abdelghani Henni, editor e-mail: [email protected]

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SPOT POLL

27% Excellent

26% Good

26% Expected

21% Poor

How would you assess the Q2 fi nancial results of the region’s listed petrochemical companies?

Comment4


Borouge inks US$2.6bn contracts News

Abu Dhabi Polymers Company (Borouge) has signed three ma-jor engineering, procurement and construction (EPC) con-tracts 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 fi rst of the two contracts, worth $1.26bn, was signed for the construction of two poly-ethylene and two polypropylene units, with an annual capac-ity of 1 080 000 tonnes/year and 960 000 tonnes/year respec-tively, while the second contract, worth $400m, was agreed for the construction of a 350 000 tonnes/year low density polyeth-ylene (LDPE) unit.

A third contract for the utili-ties and off-site facilities for the expanded plant was signed with South Korea’s Hyundai Engi-neering and Construction and was worth $935m.

“Signing these contracts rep-resents an important milestone in the fulfi lment 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 low-density polyethylene production

Samsung and Tecnimont jointly bag $1.26bn contract to build two PE and PP plants

will spearhead our ability to man-ufacture innovative solutions for the global wire and cable mar-ket.” said Abdulaziz Alhajri, CEO of Borouge at the signing.

“In addition to the pipe, auto-motive and advanced packaging markets that we serve today, our investment in low-density polyeth-ylene production will spearhead

our ability to manufacture innova-tive solutions for the global wire and cable market,” he added.

The signing ceremony took place at the Sheikh Khalifa Ener-gy Complex in Abu Dhabi in the presence of Abu Dhabi Polymers Company’s (Borouge) CEO, Ab-dulaziz Alhajri; Roberto Bertocco, managing director of Tecnimont;

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 award-ed a $1.075 billion contract to Linde Engineering for the con-struction of the Borouge 3 ethane cracker, while Al Asab General Transportations and Contract-ing Establishment of Abu Dhabi are executing the Borouge 3 site preparation.

These signifi cant investments will quadruple Borouge’s produc-tion capacity to over 4.5 million tonnes per year by 2013, making it the largest integrated polyole-fi ns site in the world.

Borouge is a joint venture be-tween the Abu Dhabi National Oil Company (ADNOC) and Borealis.

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

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

AUGUST 2010

5News

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

Saudi Basic Industries Corporation (SABIC) said second quarter net profi t grew 177% from a year ear-lier to $1.34 billion, but down 7.6% from the fi rst quarter of 2010.

The company said in a state-ment on the bourse website that the result was driven by new pro-duction units coming on line.

The Gulf’s largest listed com-pany 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 profi t for the second quar-ter 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 profi t in the fi rst half of 2010 totaled $2.79 billion, compared

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-profi t organisation was founded by pro-fessionals from major companies in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE to pro-mote maintenance professional-ism 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 main-tenance professionals and all who are interested in the fi eld of main-tenance,” said Hussain Ali Mattar, a founder member of the GSMP. “The society provides its members at all stages of their career with

to $221.3 million in the fi rst six months of last year.

SABIC attributed the year-on-year growth to higher prices and higher sales volumes for its petro-chemical, plastic and steel products.

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

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

Hussain Ali Mattar, founder member GSMP.

SIIG announces new conversion projects in JubailSaudi Industrial Investment Group (SIIG) and Arabian Chev-ron Phillips (ACP) announced they will start some conversion projects in Jubail Industrial city, on the Eastern coast of the King-dom of Saudi Arabia, the com-pany said in statement published on the Saudi stock exchange.

One of the projects will be the fi rst project in the Kingdom to produce Nylon 6.6. The esti-mated cost of these projects is US$480 million, contributed by each partner equally.

These projects will depend mainly on the products pro-duced 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 con-sumer needs in the Kingdom.

Saudi Kayan said it was seeking bank fi nancing 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 an-nual 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 ob-tain fi nancing from one or several banks to cover the increase in costs

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

and support from the main share-holders to ensure the completion of all plants in the complex within the fi xed deadline.”

Kayan chairman Mutlaq al Mor-ished told Reuters the company would organise a loan with help from its shareholders.

He said: “They (the sharehold-ers) 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 medi-um 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.

News 6

Petrochemicals Middle East August 2010 www.arabianoilandgas.com

OCTAL appoints new chief financial officerOman-based OCTAL Petro-chemicals announced the ap-pointment of Nadeem Fayyaz as its chief financial officer (CFO). Nadeem brings with him over 20 years of experience in cor-porate and investment banking, having spent most of his career at Chase Manhattan Bank in New York and London in vari-ous client related roles and specialising in the commod-ity and petroleum industries. In addition, he has substantial experience in investment man-agement having worked at UBS Financial Services as an invest-ment advisor and at Pound Capital Ltd., New York as a pri-vate equity manager.

As CFO, Nadeem will look at opportunities in the global and regional fi nancial markets offer-ing OCTAL the means to attain attractive sources of fi nancing and to access advanced risk man-agement tools. Commenting on his new role, Nadeem said, “I am pleased to have the opportu-nity 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 Chair-man, Saad Suhail Bahwan. “We believe his background and solid fi nancial experience will further strengthen OCTAL and add to our capabilities going forward”.

OCTAL is one of the largest in-tegrated PET sheet manufactur-ers 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.

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 offi cial, confi rmed the explosion and said the cause of the incident was high pressure in a central boiler, according to IRNA’s report.

The Najaf Refi nery has achieved an increase in its production during the fi rst 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 refi nery said in a statement, according to Aswat al-Iraq news agency.

Iran is investing US$46 billion in building new oil refi neries 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 refi neries by 2014.

BriefsKPC to invest $9bn in AsiaKuwait Petroleum Corp will invest US$9 billion in a new 300 000 barrels per day (bpd) oil refi nery on Indonesia’s Java island, Indonesian Industry Min-ister MS Hidayat said.

Hidayat said Kuwait Petroleum Corp and Indonesia’s state energy fi rm Pertamina will sign an MOU at the end of this month for a refi n-ery in Balongan in western Java.

However no timeframe was given for the Kuwaiti project, and previous plans to build new refi n-eries 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 fi rm Per-tamina has said previously it planned to build a new refi neries in west and east Java in joint ven-tures with foreign investors, and to boost capacity at its refi neries in

New refinery will be built in Indonesia and will process 300 000 bpd

Balikpapan, Dumai and Balongan.Pertamina has asked the gov-

ernment for tax incentives for new refi nery projects to attract investors.

Indonesia’s investment chief Gita Wirjawan said the govern-ment will consider giving a tax holiday to refi nery investors.

“I have talked with the fi nance minister and he responded posi-tively about giving tax incentives for new refi nery projects,” Wir-jawan told reporters on Thursday.

Indonesia has not build new refi neries because of the high cost of projects and low margins in a country where fuel is subsidised.

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

Nadeem Fayyaz is the new CFO of OCTAL.

7News

Petrochemicals Middle East August 2010www.arabianoilandgas.com

BUILD&PROJECTS8


CB&I to provide propylene storage tanks for Takreer refinery

Saudi Aramco has awarded seven engineering, procurement and construction contracts for the de-velopment of Yanbu’ Export Re-fi nery Project, and has established a project company called Red Sea Refi ning 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 gaso-line unit and a hydrocracker. South Korea’s SK Engineering won a con-tract 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

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

Saudi Aramco is expected to announce the winner of the front-end engineering and de-sign (FEED) and project man-agement 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 refin-ing capacity.

Aramco awards Yanbu’s contractsNewly incorporated Red Sea Refining Company to execute and operate the project

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

CB&I have been awarded a con-tract valued in excess of US$70 million by Daewoo Engineer-ing 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 Refi nery expansion project in Abu Dhabi, which belongs to Abu Dhabi Refi n-ing Company (Takreer).

CB&I’s scope of the project is expected to be completed by the fi rst half 2013.

Takreer has signed EPC agree-ments in March worth US$9.6bn for fi ve main packages of the Ru-wais Refi nery Expansion Project. Daewoo Engineering & Construc-tion won the tankage and associat-ed interconnecting piping package.

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

next few months, the company said in the statement.

Early this year, the project man-agement team awarded the Site preparation contract to Abdulrah-man Al-Shalawi Establishment to ensure that the site would be ready for EPC contractors in the con-struction phase.

“We have taken many steps along the way to ensure the Yanbu Project will pioneer many fi rsts for the Kingdom in the areas of detailed engineering, human re-sources 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 Refi ning Company.

Last January, Saudi Ara-bia 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 Pet-rochemicals Co (ARPC) and Nama Chemicals Group; and the other from Swedish-regis-tered Corral Petroleum - which is owned by Saudi businessman Mohammed al-Amoudi.

The refinery now is expected to go on stream by 2015 in-stead of 2013.

Aramco to award Jizan’s FEED and PMS contracts The Ruwais refi nery expansion

project will increase Takreer’s refi n-ing 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 confi guration con-sists of 21 major Process Units with supporting Offsite and Utili-ties Units. Takreer claims it has deployed the latest technology to reduce its carbon footprint, which makes it a pacesetter across the re-gional and global industry.

The centrepiece of the project is the residue fl uidised catalytic cracking unit; at 127 000 barrels per day, the largest of its kind un-der construction.

If the list is too longto remember, don’t forget one name:

Your gateway to the Petrochemicals and ChemicalsIndustry in the Middle East.

www.gpca.org.ae

Gulf Petrochemicals & Chemicals AssociationTel: +971 4 321 74 44 Fax: +971 4 321 76 77 P.O.Box: 123055 Dubai-UAE

IVC to start production in AugustSaudi 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 com-missioning 33 0000 t/y of VAM in December 2009, and was ex-pecting to start commercial pro-duction in July. The company did not disclose the reason be-hind the delay.

“The feedstock, acetic acid, will be provided internally by other Sipchem affi liates, namely Inter-national Acetyl Company (IAC) thus ensuring an uninterrupted supply of feedstock,” the com-pany said.

The company started commissioning its 300 000 t/y VAM plant in Jubail in December 2009

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

OPERATIONS&MAINTENANCE

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 com-missioning production from its 231 000 t/y methanol plant, which provides the main feed-stock for the fi rm’s entire prod-uct range.

Meanwhile, the commission-ing 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-

duction capacity from an initial 420 000t/y to nearly 1 million t/y, so our fi nal products have a very competitive price on a glob-al level,” said Khalid Ibrahim Al-Rabiah, chief executive offi cer 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.

SIIG resumes operations in JubailSaudi 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 gen-eral maintenance work.

SIIG operates three companies in joint venture with Chevron Phil-lips Petrochemical including Saudi Chevron Phillips Company (SCP), Jubail Chevron Phillips Company (JCP) and Saudi Polymers Com-pany (SPCo). Collectively, these projects are known as S-Chem.

SCP began operations in De-cember 1999 and produces ben-zene, cyclohexane and gasoline blend stocks.

JCP is another Saudi project lo-cated in the Eastern Province city

of Al-Jubail. This facility produces benzene, ethylbenzene, styrene, and propylene, and began com-mercial production during the sec-ond half of 2008. JCP is owned 50 percent by Arabian Chevron Phil-lips Petrochemical Company Ltd. and 50 percent by the Saudi Indus-trial 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 world-class olefi ns cracker and will pro-duce olefi ns and polyolefi ns. SPCo began construction in January 2008, with mechanical completion expected in early 2011. Commercial production is scheduled to begin in 4th Quarter 2011.

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 Min-istry of Endowments.

Chemanol’s methanol plant in Jubail, KSA.

10


10

SCIENCE&TECHNOLOGY

SABIC funds degree training in KSASABIC 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 re-search projects, and facilitating faculty members’ participation in conferences and scientifi c semi-nars. Strengthening cooperation with universities and research centers in Saudi Arabia is a key element of SABIC’s social com-mitment and dedication towards building a learning and knowl-edge based society.

This ongoing support is part of SABIC’s wider program to enrich Saudi Arabia’s research and technology capabilities,

New programmes at KAU to cover petrochemicals, polymers and catalyst applications

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

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

which will ultimately enable the country to realize its ambi-tious goals for industrial and economic development.

SABIC’s programs to support research at universities have evolved signifi cantly over time

vironment, health, pollution and the recycling of industrial waste through scientifi c methods.

It is a key part of SABIC’s strategy to strengthen coopera-tion with Saudi universities and research centers. The company is currently exploring various chan-nels through which it can support research, such as through grants, funding, encouraging faculty members to participate in scien-tifi c forums, and by undergoing research projects that are directly related to its line of operations. SABIC also assists faculty mem-bers 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.

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

Shell launches new polyol productEmerson donates PlantWeb to JIC

Shell Chemicals announced that it has broadened its CAR-ADOL polyols product range by launching CARADOL MD 250-10. This new additive polyol en-hances the polymerisation level in foam and improves foam sta-bility 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 formula-tion. Alternatively, it can be used to reduce TDI in formulations to Shell Chemicals launches new polyol product

produce foam of the same hard-ness. The material reduction in TDI can help foam producers de-crease formulation costs and im-

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 hav-ing to use very high levels of TDI in existing approaches in order to

Emerson Process Manage-ment has donated a PlantWeb Cruiser valued at US$165 000 to Jubail Industrial College (JIC), Saudi Arabia’s largest and most sophisticated hands-on technical institute.

The Emerson PlantWeb Cruiser was officially donated at a Memorandum of Under-standing (MoU) signing cer-emony held at the College .

The MoU underscores Emer-son’s contribution to enhancing the capabilities of the students at Jubail Industrial College and the commitment from the college to ensuring the integra-tion of the PlantWeb Cruiser and training material into their curriculum.

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 Pa-cifi c, and is available in all markets through Shell’s global supply and logistics network.


11

Siemens to supply IPS to GASCOSiemens Energy has been awarded a US$40 million contract in the UAE to engineer and supply an in-tegrated power solution (IPS) for a natural gas liquids (NGL) fraction-ation plant.

The customer is a joint venture between Petrofac and GS E&C on behalf of Abu Dhabi Gas Indus-tries 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 opera-tion in March 2012.

As main electrical contractor (MEC) for the NGL fractionation plant, Siemens will provide pow-

Power and distribution transformers plus motor control centers included in deal

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

EQUIPMENT&MACHINERY

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, medi-um- and low-voltage motors, and various other items of equipment. The order also includes engineer-ing, installation, commissioning and supervision of the complete electrical equipment. Benefi ts of the ‘one-stop’ MEC approach are the reduction of interfaces, project management simplifi cation, risk reduction and the leveraging of core competencies.

“This order is a breakthrough for our integrated solution capabil-ities and a door-opener for further

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 custom-ers turning to Siemens early on in

projects to fi nd innovative ways to reduce risk and costs while accel-erating completion.” Siemens had already been involved in the previ-ous NGL trains at the Ruwais plant in providing smaller packages and components.


12

SALES&SHIPMENTS

SABIC MEG price is $850Saudi 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. ME-Global has nominated its Au-gust contract price for MEG for Asia at $840/mt levels.

MEG contract prices are gen-erally set by the three major players of the industry, which

includes SABIC, MEGlobal and Shell Chemicals.

SABIC is the largest MEG pro-ducer in the world, with a produc-tion capacity exceeding 5.345mil-lion t/y, through 10 production units located in Al Jubail Indus-trial 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 Zhan-jiagang, in China, as it aims to im-prove 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.

Petro Rabigh to supply PO to TasneeRabigh Refi ning & Petrochemi-cal Company (Petro Rabigh) has signed a deal to supply propyl-ene oxide to the polyether polyol project of National Industrial-ization Co (Tasnee) and Saudi Advanced Industries Company (SAIC) in Rabigh, Saudi Arabia, the company said in statement published on Saudi stock ex-change (Tadawul).

Under the deal, Petro Rabigh would provide 100 000 tonnes/year of PO to the 120 000 tonne/year polyether polyol project that

Propylene oxide will be used to produce 120 000 t/y to new polyether polyol project

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

ENOC enters Kenyan marketVTTI to build new

fuel oil terminalENOC Lubricants, a division of ENOC International Sales LLC, signed a lubricant supply agree-ment with Galana Oil Kenya to distribute its range of products in Kenya, including the fully syn-thetic 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 prod-ucts 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 big-gest markets for lubricants and of-fers 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 ex-pansion plans in line with our de-velopment goals,” he added.

Vitol Tank Terminals International (VTTI), announced plans to build a major oil import and distribution ter-minal in Vassiliko, Cyprus.

The company said that the ter-minal, 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 Mid-dle 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 grow-ing 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.

was scheduled to start produc-tion in the fourth quarter of 2013. The company did not disclose the value of the deal.

Polyether polyol is the pre-cursor of polyurethane, which is used various industries such as furniture, automotive as well as in manufacturing construc-tion materials.

The project will be built in the Red Sea city of Rabigh, west of Saudi Arabia, and will start production in the fourth quar-ter of 2013.


13

Cover Story14


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

TIME TO BUILD

14

EPC CONTRACTS AND THE CORRESPONDING AWARDEES

Contract Name Awarded to

Permanent Infrastructure Al-Osais Contracting Co

Refi nery 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

15Cover Story


Saudi Arabia launched its fi rst integrated

project, Petro Rabigh , in November 2009.

The ambitions of Saudi Arabia to be the world’s number one player in the petrochemical industry fi nd expression in the construction of

world-class, mega projects. From Jubail on the Eastern coast to Yanbu in the West, integrated refi ning 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 refi ning business and is looking to upgrade its existing refi neries.

“There are several key drivers in moving forward with developing integrated facilities in Saudi Arabia,” Salem Shaheen, president and CEO of SATORP, tells Refi ning and Petrochemicals Middle East. “ There is the lower capital expenditures (CAPEX) of running one unit as opposed to a separate refi nery and petrochemicals complex, as well as saving on operational expenditure (OPEX),” says Shaheen. “Another driver is the fl exibility 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 refi nery, we are

able to adapt to changing gasoline specifi cations,” explains the CEO.

“The fi fth 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 refi nery in Jubail integrated with a petrochemicals complex to produce olefi ns and aromatics.

As in every successful joint venture, the two partners complement each other, and bring to the table what the other is lacking.


Cover Story1616

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.

17Cover Story


“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 benefi t is its knowledge of implementing mega projects in the Kingdom,” says Shaheen. “Of course, this is in addition to the most obvious benefi t: 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 refi ning 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 refi nery, which is located in Jubail Industrial City, will process Arabian heavy crude oil from the giant Manifa fi eld, and produce wide variety of refi ned and petrochemical products, including diesel with 10 ppm specifi cations 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

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 fi rst order going in March 2013, just one quarter behind the original date of December 2012,” says Shaheen. “The

“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”

Salem Shaheen, President and CEO of SATORP.

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


Cover Story18

adds. French engineering company Technip has been awarded two packages worth an estimated total of US$3 billion. The fi rst, 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 benefi ts for the company.

“The fi rst and most obvious being better profi tability due to lower capital expenditure. In addition, the fi nancing is easier to borrow as we are borrowing less money and the money market is not overheated,” points out Shaheen.

The company completed the project fi nancing 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 fi nancial 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

“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”

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.

Saudi Aramco plays the dominant

role constructing integrated

projects in the Kingdom.

Process Optimisation20


20

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

EVERY LAST DR P

A 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 refi ning processes and growing competition between manufacturers, is proving to be ideal for the industry’s process optimisation specialists.

Refi ning & 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 ever-diversifying petrochemicals sector.

21Process Optimisation


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 refi ning, 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 defi ned components. Whereas within the refi ning arena, we deal with pseudo-components where the major focus is on property tracking and maximising the refi nery 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 refi neries, equipment used is the same.

“The equipment used in refi neries and petrochemical plants like fi red heaters, distillation columns, boilers, exchangers, have the same application in both areas,” says Bothma.

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 defi nition, 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 defi nes process optimisation as “the task of improving a process in order to meet specifi c objectives (specifi cations) such as maximising yields, minimising energy consumption, maximising throughput and fi nal product.”

Process optimisation is also about controlling the process at it’s peak effi ciency.

“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,

“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.

Process Optimisation22


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

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 effi ciency for our clients,” he says.

The cost savings for a typical 100 000 bpd refi nery optimising in areas such as process control, refi nery 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 benefi ts 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 refi neries,” 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 thebest 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

Downstream Logistics24


24

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

GETTING SHIP SHAPE

With 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 offi cer, 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

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 signifi cant 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.

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 RegulationsShipping refi ned 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 qualifi cations 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 fi nancing the tanker. “When you buy a chemical tanker, unless you can pay in cash which very few people can do, you will need to fi nance your purchase and a typical carrier of this size will cost you $45-$50m, so if you fi nance that on normal conditions, you will have fi nancial 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 diffi cult to operate profi tably and to Per Wistoft, chief executive offi cer, Gulf Navigation.

Fleet of chemicals tankers to be delivered for NCC by 2012

16


25Downstream Logistics

More shipping lines than ever

before are calling at Gulf ports.

Downstream Logistics26


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

SUPPLY CHAIN FOCUS

Refi ning & Petrochemicals Middle East speaks to Anthony Elwine, global head of Petrochemicals, Damco Middle East Area. The

company offers fl exible 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 confi dentiality 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 signifi cant 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 Anthony Elwine, global head of Petrochemicals, Damco.

27Downstream Logistics


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 suffi ciently fl exible to

respond to market and customer changes. In house organisations tend to be exceptional at procurement but then fi nd 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 offi ces 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 confi dentiality we cannot divulge the list of our current customers but our portfolio does include almost all of the major regional and global producers for specifi c country based services or for global supply chain solutions.

Containerised shipping plays a

crucial role in linking solid plastic

pellet production with large

conversion markets in Asia.

Algeria Country Profi le28


28

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

NEW BEGINNINGS

29Algeria Country Profi le


29

The 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

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 infl ame 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 stifl ing growth.

ALGERIA GAS PRODUCTION

Year (billion cubic metres)

1999 86

2000 84

2001 78

2002 80

2003 83

2004 82

2005 88

2006 85

2007 85

2008 86

2009 81

Alan Troner, president of Asia Pacifi c Energy Consulting.

Source: BP

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 benefi t 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 Pacifi c 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 specifi c 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 refi ning projects steadily over recent decades, but is expected to ramp this up in the coming fi ve years.

Sonatrach has three fertiliser projects in joint venture with three foreign partners including Al

Panoramic view of the city

of Oran, which hosted the

LNG16 conference.



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 refi ning capacity and also Algeria’s abundant natural gas supplies.

The Algerian government has allocated $28bn to develop the petrochemicals and refi ning 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 liquefi ed 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 refi ning sectors.

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

Sonatrach which participated in GASTECH last year is investing $4bn to uprgarde its existing refi neries.

The government’s budget to develop the downstream sector is US$28bn

$28bn

31Algeria Country Profi le


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 refi ning sector in Algeria needs more focus to meet the increasing demand for the domestic market. Currently, the refi ning capacity of Sonatrach stands at 450 000 bpd and is operated by Sonatrach subsidiary, NAFTEC which operates four refi neries 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 liquefi ed 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) refi nery 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 refi nery has two units producing lubricants, greases and paraffi n 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 refi ning units. The fi rst, 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 refi neries at Skikda and Arzew,” said Akli Rimini, chief executive offi cer of NAFTEC. “This expansion programme would allow Algeria to increase its refi ning capacity to 27m tonnes/year in 2012 from the present 22m tonnes/year,” he added. The refi ning capacity of Sonatrach stands at 450 000 bpd and is operated by Sonatrach subsidiary, NAFTEC.

“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



To this end, Sonatrach awarded a $1.2bn EPC contract in May 2009 to South Korean fi rm Samsung Engineering and Construction for the modernisation of the Skikda refi nery. 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 refi nery 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 refi nery will be fed by crude oil from the OZ-2 pipeline and will produce 15m t/y of

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

refi ned products including propane, butane, gasoline, naphtha and benzene.

What next?The corruption scandal that hit Sonatrach

has halted the development of these petrochemicals and refi ning 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 off-exchange 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 offi cer 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

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 hard-pressed to fi nd 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.

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

$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

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SOAGE 2010 200 265 i dd 1 7/29/2010 3 52 54 PM

34


VIP Interview34

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

MANUFACTURING & ENGINEERING GURU

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

After 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 infl uential 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


35VIP Interview

www.arabianoilandgas.com

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.

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 identifi es and works with highly qualifi ed 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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37Fantastic Plastic


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

SABIC ‘PLAYERS’ SHINE AT WORLD CUP

The 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

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).

While Saudi Arabia’s football team was absent

from the world cup, but its products scored highly.

Number Cruncher38


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

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

Change %

Saudi Basic Industries Corporation (SABIC) 24.33 23 -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 Refi ning 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

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 13.27

Boubyan Petrochemical Company (BOUBYAN) 1.79 1.86 3.77

Ikarus Petroleum Industries (IKARUS) 0.47 0.46 -3.08

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

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

Change %

Industries Qatar 28.49 26.90 -5.92



Change %

Oman Chlorine S.A.O.G. (CHLORINE) 0.94 0.92 -2.29



Change %

Abu qir Fertilizers 36.53 34.89 -4.70

Sidi Kerir Petrochemicals Company 2.12 2.09 -1.23

Downstream Data

Number Cruncher38

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

LISTED COMPANIES IN THE KUWAITI STOCK MARKET

LISTED COMPANIES IN THE QATARI STOCK MARKET

LISTED COMPANIES IN THE OMANI STOCK MARKET

LISTED COMPANIES IN THE EGYPTIAN STOCK MARKET

39Number Cruncher


39

Source: www.argaam.com

07/0

1/09

15/0

4/09

03/0

6/09

20/0

7/09

06/0

9/09

19/1

2/09

06/0

2/10

27/0

3/10

16/0

5/10

03/0

7/10

25/1

0/09

25/0

2/09750

850

950

1050

1150

1250

1350

1450PPF (CFR FAR EAST)

US

$/t

on

ne

07/0

1/09

15/0

4/09

03/0

6/09

20/0

7/09

06/0

9/09

19/1

2/09

06/0

2/10

27/0

3/10

16/0

5/10

03/0

7/10

25/1

0/09

25/0

2/09550

650

750

850

950

1050

1150

1250

1350PROPYLENE (FOB FAR EAST)

US

$/t

on

ne

07/0

1/09

15/0

4/09

03/0

6/09

20/0

7/09

06/0

9/09

19/1

2/09

06/0

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27/0

3/10

16/0

5/10

03/0

7/10

25/1

0/09

25/0

2/09550

650

750

850

950

1050

1150PVC (CFR FAR EAST)

US

$/t

on

ne

07/0

1/09

15/0

4/09

03/0

6/09

20/0

7/09

06/0

9/09

19/1

2/09

06/0

2/10

27/0

3/10

16/0

5/10

03/0

7/10

25/1

0/09

25/0

2/09350

400

450

500

550

600

650

700

750

800NAPTHA (CRF FAR EAST)

US

$/t

on

ne

07/0

1/09

15/0

4/09

03/0

6/09

20/0

7/09

06/0

9/09

19/1

2/09

06/0

2/10

27/0

3/10

16/0

5/10

03/0

7/10

25/1

0/09

25/0

2/09400

500

600

700

800

900

1000

1100MEG

US

$/t

on

ne

07/0

1/09

15/0

4/09

03/0

6/09

20/0

7/09

06/0

9/09

19/1

2/09

06/0

2/10

27/0

3/10

16/0

5/10

03/0

7/10

25/1

0/09

25/0

2/09750

850

950

1050

1150

1250

1350

1450HDPE (CFR FAR EAST)

US

$/t

on

ne

(HDPE Injection)

550

650

750

850

950

1050

1150

1250

1350

07/0

1/09

15/0

4/09

03/0

6/09

20/0

7/09

06/0

9/09

19/1

2/09

06/0

2/10

27/0

3/10

16/0

5/10

03/0

7/10

25/1

0/09

25/0

2/09

ETHYLENE (FOB FAR EAST)

US

$/t

on

ne

FOB: Freight On Board

07/0

1/09

15/0

4/09

03/0

6/09

20/0

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06/0

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2/09

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27/0

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16/0

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03/0

7/10

25/1

0/09

25/0

2/09300

400

500

600

700

800

900

1000

1100

1200BENZENE (FOB FAR EAST)

US

$/t

on

ne

CFR: Cost and Freight

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

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

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

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.

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

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

PVC have prices dropped to $890 per tonne, amid sluggish global demand.

40


The Big Picture40

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

Qatar Fertiliser Company (Qafco) facility at Mesaieed.

QAFCO 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

(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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24-26 October 2010 | Gulf Convention Center | Gulf Hotel | Bahrain

The only Middle East Supply Chain event presented by the industry for the industry

Co-organized by

Organized by:

Savethe dates24-26 October

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Topics to be covered include:

• Supply Chain Infrastructure

• Issues in Marine and Overland Transportation

• Development of Ports

• Building Green Supply Chain

• Regulations and Standards

• GPCA Supply Chain Study

And more!

Serving Vibrant Global Markets: Implications for Gulf Supply Chain Management

Refining & Petrochemicals ME - August 2010

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