kbc ioe webinar - southeast asia downstream
TRANSCRIPT
© 2012 KBC Advanced Technologies plc. All Rights Reserved.
Southeast Asia Downstream: Where is the next Singapore? Webinar Presented by Edward Kleinguetl
20 June 2012
Before We Begin… > This webinar is being recorded for future reference. > Questions can be asked in the chat box and will be
answered at the end during Q&A. > An email will be sent within 24 hours with download details
of the webinar materials.
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Agenda > The case for Southeast Asia > Investment modality > Intra-regional strategies of the Majors > Capacity rationalisation > Extra-regional influences > Investment opportunity analysis > Where is the Next Singapore?
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The Case for Southeast Asia
Why an Interest in Southeast Asia? > High economic growth > Huge projected deficits in refined products and
petrochemicals > Limited firm capacity development
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7.8 %
6.3 % 5.7
% 4.1 %
4.0 % 3.4
% 2.7 % 1.5
% China India SE Asia FSU Latin
America Middle East
USA Europe
Latest GDP Growth Projections (2012-15)
Product Deficits(SE Asia and ANZ) Refined Products > Refined Products
Considered – LPG – Naphtha – Motor Gasoline – Jet/Kerosene – Gas/Diesel Oil – Other
> Petrochemicals Considered – Polyolefins – Aromatics
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* Deficits before considering capacity adjustments
-743
-3,054 -3,605 -4,000
-3,500 -3,000 -2,500 -2,000 -1,500 -1,000
-500 0
2012 2025 2030
000 Tons
-1,079
-2,989 -3,586 -4,000
-3,500 -3,000 -2,500 -2,000 -1,500 -1,000
-500 0
2012 2025 2030
kbpd
Petrochemicals
Plus the Neighbor to the North (China) Petrochemicals Assumptions:
> Self-sufficient on refined products
> Still requiring petrochemical imports
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-16,331
-20,450 -21,800
-25,000
-20,000
-15,000
-10,000
-5,000
0
2012 2025 2030
000 Tons
How SEA / ANZ Deficit Will be Satisfied
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kbpd
2030 SEA / ANZ Deficit
3,586
KBC assumed net SEA / ANZ capacity additions/closures*
1,107
Extra-regional:
Indian surplus capacity 1,000
Arabian Peninsula – new capacity* 1,127
Extra-regional deficits to be filled from new capacity
(450)
Remaining net deficit
802
2030 product balance 3,586 * Capacity assumptions at 85% of nameplate
Refined Products Only
KBC Assumed Capacity Adjustments
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Country Assumptions kbpd
Brunei Zhejiang Hengyi project 135
Indonesia Three announced revamps; no new refineries 152
Malaysia Project RAPID and Port Dickson expansion 300
Philippines Shell upgrade --
Thailand Sriracha Refinery expansion to 300 bpd 25
Vietnam Five projects move forward 830
ANZ Capacity closures (140)
Adjustment of nameplate capacity to 85% operating rate* (195)
Net capacity additions assumed 1,107 * Capacity assumptions at 85% of nameplate
Refined Products Only
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Investment Modality
Three Possible Investment Modes
> Invest > Acquire > Joint Venture
(Motiva Port Arthur model)
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Major Southeast Asia Investment Risks > No perfect investment > National aspirations > Extra-regional players > The (over)courtship of Vietnam > China economic slowdown > Classic petrochemical over-expansion > Workforce challenges in certain locations > Political and economic stability
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Intra-Regional Strategies of the Majors
International Super Majors > Focused on Mega-Centres > Increasing emphasis on upstream operations
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Chinese Majors > Expanding Trading Capacity
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Indian Merchant Refiners
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> Leveraging the Corporate Advantage
Saudi Aramco Asia Corporation > More than just crude: Leveraging engineering expertise
(Dhahran) and large project experience
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Capacity Rationalisation
Capacity Adjustments
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Country Rationalisation Asset Intra-regional Australia Capacity Closures Exit of the Super-Majors
Thailand Rumoured sale Esso Refinery
Extra-regional* Japan Closure / curtailment IKC: Tokuyama Refinery
JXE: Muroran Refinery Sale Petrobras Nansei Refinery
Tonen General (Exit of a Super-Major) Korea Capacity rationalisation Hyundai Oilbank
* Niche players could exploit available assets
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Extra-Regional Influences
Arabian Gulf: A Surge of Products
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1,000 kbpd
776 kbpd
351 kbpd
Planned Ethylene Capacity (2014-2018)*
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1.5 million tonnes 1.4 million tonnes
1.2 million tonnes
1.3 million tonnes
Est. 1.0 million tonnes
* Excludes new Iranian ethylene capacity: 1.0 million tonnes under construction and 3.0 million tonnes under engineering
> Targeting China and Southeast Asia
Chinese Influences > Refined product self-
sufficiency > Foreign petrochemical
expansion > Involvement of smaller
Chinese companies
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North Asia Influences: Heading South
> Limited exports to Southeast Asia > But, likely investors in regional opportunities
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Investment Opportunity Analysis
Vietnam: Heavily Courted
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> Binh Son Refinery Expansion – 55 kbpd – PDVSA (?), SK Energy, JX Energy (?)
> Nghi Son Refinery & Petrochemical LLC – 200 kbpd – Idemitsu, Kuwait Petroleum, PetroVietnam, Mitsui
> Long Son Refinery Project – Petrochemical Facility
• Siam Cement, QPI, Thai Plastics, PetroVietnam, Vinachem
– Refinery Project (240 kbpd) • Aramco (?), Total (?), PetroVietnam
> Project No. 4: Van Phong Bay Refinery – 200 kbpd – Petrolimex and others
> Project No. 5: Nhon Hoi Refinery – 200 kbpd – STFE (?); PTT (?); other private Chinese (?)
Nghi Son Refinery
Long Son Refinery
Binh Son Refinery
Van Phong Bay Refinery
Nhon Hoi Refinery
Indonesia: Always a Bridesmaid?
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> Three Proposed Revamps (Existing Refineries)
– Balikpapan, Cilacap, and Dumai
– Capacity Increase: 152 kbpd
> Balongan Refinery, West Java – Location: Near Existing Balongan
Refinery
– MoU with Kuwait Petroleum
– Proposed Capacity: 400 kbpd
> Tuban Refinery, East Java – Location: Tuban, Indonesia
– MoU with Aramco
– Proposed Capacity: 400 kbpd
Tuban Refinery
Balongan Refinery
Malaysia: Interesting Possibilities
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> Port Dickson Expansion – Expansion capacity not defined – Potential for additional growth
> Project RAPID
– Location: Johor, Malaysia – Proposed Capacity: 300 kbpd – Integrated refinery and
petrochemical facility • Joint agreements: PTTGC
and Itochu Corporation • Petrochemicals MoU:
BASF – Ground broken: May 2012
Project RAPID
Port Dickson Refinery
Thailand: Interesting Assets
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> Esso Thailand Refinery (Sriracha) – Excellent asset; rumoured for sale – Potential for additional growth – Integration possibilities
> Star Petroleum Refining Company Ltd.
(Rayong) – Joint venture: Caltex and PTT – Good asset – Integration possibilities – Potential expansion challenges due to air
quality issues in Rayong area
Esso Thailand
Star Petroleum
Brunei: Potential Projects to Leverage
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> Zhejiang Hengyi Refinery – Proposed Capacity: 135 kbpd – Proposed Location: Pulau Muara
Besar – Paralxylene back to China
> PetroBru – Proposed Capacity: 200 kbpd – Proposed Location: Pulau Muara
Besar – Feasibility study completed in 2009
> Investment Considerations – Would need additional crude supply – Political and economic stability – Could leverage one of the proposed
projects to expand to world-scale capacity (200-300 kbpd)
PetroBru Zhejiang Hengyi Refinery
Other Possible Locations / Assets
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Intra-Regional > Singapore > Philippines
– Petron Refinery Expansion – Shell announced upgrade
> Myanmar Extra-Regional > Sri Lanka
Poll Question #1 > Where would you site a new world-scale
integrated refinery-petrochemical facility within Southeast Asia? a) Brunei e) Singapore b) Indonesia f) Thailand c) Malaysia g) Vietnam d) Philippines h) Other
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Where is the Next Singapore?
Extra-Regional: Arabian Peninsula > Major Middle East
expansion over the decade > Replaces India as the
global refined products arbitrage hub
> Becomes a major petrochemicals producer
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Intra-Regional: Malaysia and Brunei
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> Even with dominance of Arabian Peninsula, the region has room for at least one world-scale integrated refinery-petrochemical merchant centre Country Location Commentary
Malaysia Project RAPID Subsequent expansion beyond 300 kbpd
Malaysia Port Dickson Expansion Significantly greater expansion; possible Motiva-type JV
Malaysia Grassroots: Sarawak or Sabah Petronas is a solid operating company
Brunei Pulau Muara Besar Leverage either Zhejiang Hengyi or PetroBru Project
Intra-Regional: Runners-Up
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> Other possibilities for consideration Country Location Commentary
Thailand Esso Refinery (Sriracha) Existing asset; likely one of the highest quality existing assets
Vietnam Long Son Refinery Project Grassroots project; proposed integrated facility
Conclusions > Southeast Asia
– Strong economic growth – Increasing demand for refined products and petrochemicals – Least amount of capacity development compared to other high
growth regions
> The “Next Singapore” – Likely “extra-regional” as Arabian Peninsula becomes dominant
production base – Still room for at least one regional world-scale integrated refining and
petrochemical complex (merchant centre)
> Various investment opportunities and models exist > Risks need to be carefully assessed and managed
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Players to Watch Relative to SE Asia > CNOOC > Private Chinese
Companies > Japanese Energy
Companies > Japanese Trading
Companies > Korean Energy
Companies > Kuwait Petroleum
Corporation > PDVSA
> Pertamina > Petronas > PTT (Thailand) > Qatar Petroleum
International > San Miguel Group > Saudi Aramco Asia
Corporation > Siam Cement > Trading Companies (e.g.,
Trafigura, Vitol, Concorde)
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KBC Reports Supporting this Presentation
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See the KBC Website for details www.kbcat.com
A Quick Survey > Was this topic valuable?
– Yes – No
> Was the presentation clear? – Yes – No
> Would you be interested in future webinars? – Yes – No
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> How do you rate the webinar overall? – Excellent – Good – Fair – Poor
Please send any further questions and feedback to: [email protected]
Closing > Questions? > Future webinar topics:
– Asian gas and LNG markets – Market conditions – Asset optimisation for competitive advantage – Investment support – Sustainable workforce development
> We welcome suggestions for future topics – please email [email protected]
> Next webinar information will go out shortly. > Thank you for joining us!
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