argus asian petcoke conference 2016

Overview of Middle East Petcoke-

Price, Sulphur & ExportsArgus Conference, Mumbai, 27th – 28th April 2016

A Global PlayerOTI’s key role is to trade oil, petroleum products,petrochemicals and carbon emissions in the globalmarket place through its extensive marketingnetwork.

Building Dynamics

• OTI is 100% owned by Sultanate of Oman.

• The OTI team consists of 70 staff as at March2016.

• Strong presence in Singapore and Europe.

• OTI is aiming to further expand its presenceinternationally allowing:

• around-the-clock trading,

• capitalization of growth opportunities,

• access to information and key markets.

• Houston office opening will be OTI’s nextimportant growth step allowing OTI to getcloser to the American market.

• All locations share middle and back officefunctions which are centralized in Dubai.

OTI geographical location

2

Journey to Success

Since its establishment, OTI has been on a continuous trajectory of growth in terms ofproducts, geography and clients:

2006 2008 2010 20122007 2009 2011

• OTI established in 2006 in Dubai, trading Omani Blend crude andOrpic refined products.

• OTI establishes a subsidiary in Singapore for trading Orpic’s output of Aromatics products through an exclusive off take agreement

• OTI establishes an Off take agreement with Salalah Methanol Company (SMC) to trade all of its output set for export through OTI Singapore

• Gasoline and Naphtha trading and blending activities commenced in Dubai office

• OTI acts as the sole face in the market for Orpic, managing all of its products exports and imports.

• Acquired 200,000 m3 of storage in Sohar, Oman for clean products.

• Trading on DME starts

• OTI Rotterdam and Shanghai offices established

2013 2014 2015

• OTI Shanghai Rep office inauguration

• Increased 3rd party paper trading for refined products

• Crude desk expansion in Singapore

• SGRF purchase Vitol’s 30% shareholding, OTI is 100% owned by the Sultanate of Oman. 3

Incorporated in 2006, OTI has grown from an Omanipetroleum products trader to a worldwidecommodity trader with an outstanding growth rate.

Financial History

14.2

0.11.6 2.0 2.2 2.9 3.1 3.02.3 1.50.7

4.3

6.47.0 5.5 6.1

4.0 4.5 4.1

4.0

6.2

7.6

5.4 5.1

6.3 6.1 6.3

10.4

14.8

17.5

14.0

2008 2009 2010 2011 2012 2013 2014 2015

OTI Volumes by Matrix (Mn MT)

Crude(36%)

Products(43%)

Chemicals(21%)

2015

4.6

2.83.8

10.0

12.4

14.9

10.6

6.6

2008 2009 2010 2011 2012 2013 2014 2015

OTI Revenues ($bn)

OTI traded volumes are expected to reach 18 million MT in 2016, up

from a high of 17.5m MT in 2013.

Total revenues have seen a decline in 2014 and 2015 in line with

global oil prices.

4

Wells to Wheels

OTI is currently conducting trading activities for products across all

segments of the Oil & Gas and Petrochemicals value chain

Refined

Products

Retail

Petchem

End Users

Petchem

Logistics

Petchem

Producers

UpstreamCrude

Logistics

Crude

RefiningProducts

Wholesalers

OTIs current activity

OTIs potential expansion

Crude

Marketing &

Trading

Crude

Sourcing

Products

Marketing &

Trading

Products

Marketing &

Trading

Petchems

Marketing &

Trading

Petchems

Supply

5

Refineries

Plants

Upstream

Trading partners

P&L

Generation

Trading Tools Utilized

Blending Operations

Storage Arbitrage

Hedging Optionality

Risk

management

Swaps

Financing

ShippingPaper trading

Governments

Refineries

Plants

Trading partners

Governments

Trading Tools at OTI

OTI Petroleum Coke

OTI has set-up its Petroleum Coke desk out of Muscat for trading Captive Omani

Petcoke & 3rd party petcoke.

• OTI will start Petcoke exports in Dec 2016/

Jan 2017 from Sohar Port.

• Annual Petcoke prod. – 500 KT

• OTI will build-up significant 3rd party

volumes to complement its captive petcoke.

• Leverage established relationship with

global refineries – Complimented by

existing portfolio of Crude, Aromatics &

Refined products.

• Our new refinery – DUQM is expected to

come online in 2018. Estimated Petcoke prod

– 750 KT.

OTI Petcoke highlightsStrategic relationship with in-house Oman

refineries for exclusive lifting

7

Duqum 230kbpd

refinery.

1.2 – 0.75 million MT

petcoke prod.

Sohar

Duqm

ORPIC 200kbpd

refinery.

0.5 million MT petcoke

prod.

MIDDLE EAST PETCOKE:

SUPPLY & QUALITY

OTI - PETCOKE STRATEGY

8

COKER LOCATION OWNERPETCOKE

PROD (Kt)OUTPUT

YASREF YAMBU ARAMCO/SINOPEC 2,200 F

SATORP JUBAIL ARAMCO/TOTAL 2,200 F

IZMIT TURKEYTURKISH REFINERIES PETROLEUM CORP.

600 F

ALEXANDRIA EGYPT MIDOR 300 F

MINA ABDULA 1 KUWAITKUWAIT NATIONAL

PETROLEUM500 A

HOMS SYRIA HOMS REFINERY CO. 100 A, F

OTI - PETCOKE STRATEGY 9

Existing ME Cokers

Upcoming Coker Projects & Quality

Anode

Fuel

ORPIC (5-6% S)

DUQM : 6-7% S

(Indicative)

Ruwais (Takreer )

(3-5% S -)

Al Zour (KNPC )

(3-4% S)

1. Hormuz refinery

2. Iran Petroleum

Corporation

(No Data)

11

-

20

40

60

80

100

120

140

160

180

2015 2020

World Production (Million MT)

UNITED STATES CHINALATIN AMERICA CANADAEUROPE CISMIDDLE EAST/AFRICA JAPANOTHER ASIA

141

170

6

10

2015 2020

Middle East Prod. (Million MT)

• Middle East Coke Output

increasing by 2/3rd

• Long on Fuel Grade Petcoke

• Short on Anode Grade Petcoke

Petcoke Supply Outlook

OTI - PETCOKE STRATEGY12

China

3% Max

C: Consumption(KT)

Balance (KT)

Rest of Europe

4.5% Max

Egypt9%

India

9% Max

W. Europe

4.5% Max

Far East

8-9% Max

Turkey & ME

4.5% Max

Petcoke Quality (Sulphur) & Markets

Sulfur - Key factor

influencing petcoke

consumption/ avoidance in

different geographies.

Markets moving to lower

sulfur to match tougher

emission norms

ME EXPORTS – POTENTIAL

MARKETS


13

ME Petcoke - Future Trade Flows

14

C: Consumption(KT)

Balance (KT)

India, Turkey & Egypt will be top drivers for ME Petcoke

US

Latin America

China

Middle East

Africa

India

Turkey & Europe

Far

East

• Size of Cement Market: India is the 2nd largest cement producer, as

well as 2nd largest consumer.

• Proximity to ME – Less voyage time, working capital benefits

• Minimum Risk of price volatility.

• Market Price @ Cargo Booking v/s Market Price @ Cargo

receipt

• Blends: Flexibility on using different blends.

• Power Plants ? Key Game changer


India – the biggest market

• 100,000 kilns producing 250 bn bricks / year, located mostly in northern India

(65%) of production.

• Typically use, coal, coke, biomass

• 18t approx. of coal needed for 100,000 bricks.

• Buy from distributors in small quantities

• Require CV 6 000 kcal/kg Size 0-120 mm, Low moisture.

• Brick sector consumed around 24mn t coal in 2014 (8% of India’s annual

consumption)

• Energy represents - 35-50p% of production costs


The brick producers…Potential buyers

17

Infrastructure growth to drive fuel grade petcoke demand

Demand triples by 2020

⁻ 2017~ +1 million WMT




Export Fuel Grade

Import Calcinable Grade

ME/ Africa demand overview

Egyptian cement industry the primary driver of demand

Egypt Solid Fuel market of: 8-9 million MT

Sulfur 8% max, but not all kilns can use

4.5-5% Sulfur petcoke preferred

Petcoke may ultimately take 60% of this market.

Petcoke imports in 2015 about 200 KT, about 20% of solid fuel imports.


Egypt

Far East/ South East Asia

Power plants in South Korea/ Japan

Flexibility on higher sulfur

Vietnam - key emerging market.

South Mediterranean basin – Turkey, Parts of Europe

Power plants – an alternative market in India, ME & Egypt ?

Cement industry in Pakistan

Annual Coal Exports in the range of 300-400 Kt

Geographical vicinity/ Low sea freights / Less voyage time


Other potential markets

PRICING


20

21

Petcoke Price fall

Lowest

petcoke

prices for 5

years

Pricing - Few suggestions

22

Petroleum Coke has to be discounted vs. the next best alternative to be accepted.

Standardize Sulfur discounts/premiums

One option would be indexed discounts linked to the 4.5pc-6.5pc sulphur

spread

Or

To a calculation of potential losses based on sulphur issues

Market to develop a wider acceptance of Petcoke Indexes for actual trades.

100% Transparency in quoted prices/ trades.

Individual Price Index for Middle east markets & sulfur content.

Forward Curve for petroleum Coke

23

Thank You

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argus asian petcoke conference 2016

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