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Saudi Energy Forum. 18-20 November 2006. SIPCHEM OLEFINS & DERIVATIVES COMPLEX. a Snapshot. Future. BDO Start-up,. Integrated Olefins Complex Start-up. Acetyl Complex Start-up. Methanol Start-up. IPO. Ammonia Start-up. Company Incorporated. By 2011 Sipchem will invest ~ $ 10 billion.

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Saudi Energy Forum

18-20 November 2006

SIPCHEM OLEFINS & DERIVATIVES COMPLEX


a Snapshot..

Future

BDO Start-up,

Integrated Olefins Complex Start-up

Acetyl Complex Start-up

Methanol Start-up

IPO

Ammonia Start-up

Company Incorporated

By 2011 Sipchem will invest ~ $ 10 billion


Phase I & II

Current Projects

  • Methanol

  • Butanediol & THF

  • Carbon Monoxide

  • Acetic Acid & Acetic Anhydride

  • Vinyl Acetate Monomer


Current Projects

  • Methanol and BDO Plants are operating at full capacity (total production : 1.05 Million TPY)

  • Downstream integration from Methanol to Acetyl Chain

  • Acetyl Chain : CO, Acetic Acid & VAM due for start up end 2008 (production : 1.14 Million TPY) – approx. 50% captive and local use

  • By 2010, approx 50% of our methanol production will be “captive” used in downstream productions

  • Target markets: Saudi Arabia, Asia and Europe :

    exports dropping from 90% to 50% - maximizing local & captive use.


Phase III

Olefins & Derivatives Complex

  • Grass Root Project

  • more than 15 World Scale Plants

  • ~ US$ 7.0 Billion (+) Investments

  • first in Jubail 2


Integrated Olefins Complex

  • Ethane and Propane feedstock allocated contingent on meeting set targets and milestones with MINPET.

  • ~1.3 MMTPA Cracker

  • Total of 18 products including 6 products chains

  • Full integration in other added value downstream products

  • Massive investment program of ~ US$ 7.0 Billion + (estimate)

  • Involvement of International Companies in JV & Product Offtake

  • State of Art Technologies

  • Start Up 2011


Forward Integration..

Value Added Downstream

Chemicals & Performance Products

Polymers

Bimodal HDPE (butene1)

PP (ICP E/P Rubber based)

EVA / LDPE

(~ 800 KTA)

Methyl Methacrylate (MMA)

Acrylonitrile

Sodium Cyanide

Polyacetal / PMMA

EVOH / PVOH / PVB

(~650 KTA)

Acrylic Fibers (PAN based)

Carbon Fibers (PAN Based)

Films

Finished Products

(~150 KTA)

Cracker

Ethylene & Propylene

(~1.3 MMTPA)

Maximizing local conversion


Maximum Integration

Phase 1

Phase 2

Phase 3

H2

MMA

CO

Methanol

H2

Ammonia

Acetic Acid

BDO

ACN

VAM

EVA

Polyolefins

Downstream


Key Partners

(co-signatories to the feedstock allocation letter)

  • Mitsui & Co., Japan

  • DuPont , USA

  • Lucite, UK

  • Others: in progress


Gulf Petchem Capacities by 2011

(Primary ProductsProduced by Sipchem)


Status

  • Industrial Licenses have been obtained

  • Significant progress in technologies selection, JV participation and offtake with five international companies

  • Selected Financial & Legal Advisors – actively determining Optimal Capital Structure for the complex

  • Awarded PMC Contract for the project – completing detailed study and projects definitions


Investment Plans

  • Sipchem will form a New Public Co. (IPO) to own the Complex (50% Sipchem, 50% Public)

  • Primary Products & Specialties will be set up in partnership with reputable foreign companies.

  • Downstream & finished products will be set up in partnership with experienced local and international partners


Project Financing

  • Required Funding (preliminary estimate) : ~ US$ 7.0 Billion +

  • Gearing : 70/30

  • Equity : ~ US$ 2.1 Billion

  • Debts : ~ US$ 4.9 Billion (SIDF, PIF, ECA & Banks)


Benefits of Integration

  • Value Added Products – some with better margins

  • Opportunity to expand business value chain

  • Creation of more job opportunities

  • Optimization of Shared Services

  • Feedstock Cost Competitiveness - across the fence transfer

  • Import of high niche technologies in Kingdom

  • Enhancing the Kingdom’s Export Portfolio with specialty products


Employee

Plant

Capacity

per

KTA

$ mil. Inv.

Cracker & Polymers

2,065

0.22

Chemicals & Performance

1,320

0.33

Products

Films and other products

138

0.92

Overall

3,523

0.33

Jobs Creation!


Challenges

  • Complex Project Structure

  • High Capital Investment

  • Involvement of Multiple Parties

  • Complex Execution & Financing

  • Access to Specialty know how and markets

  • Complete Integration to finished products

  • Loss of focus on core business

  • Impact on the growth of Saudi Petchem Industry


Sipchem in 2011

  • will position itself strongly in the market with:

  • Over 5 million tons per year production

  • Over US$ 10.0 billion total investments

  • Over US$ 3.7 billion of revenues

  • 3,000 employees

  • 20 technologies employed

  • Numerous opportunities for local conversion industries

  • A preferred Company by: customers, employment, community and investors



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