powerpoint presentation · pdf fileh2s scavenger corrosion inhibitors demulsifiers scale...

Saudi Aramco: Public

2017Oil Field Chemicals


Disclaimer

The next slides contain forward-looking statements regarding future events based on current

expectations, estimates, forecasts, and projections. The data is subject to updating, revision, further

verification and amendment without notice. No reliance may be placed for any purpose on the

information or opinions contained in this presentation or any other document or statement, or on the

completeness, accuracy or fairness of such information or opinions therein. No representation or

warranty, express or implied, is made or given by or on behalf of Saudi Aramco or its employees, or

any other person as to the accuracy or completeness or fairness of the information or opinions

contained in this presentation and no responsibility or liability is accepted by any of them for such

information or opinions or for any errors, omissions, misstatements, negligent or otherwise, or for

any communication written or otherwise, contained or referred to in this presentation.


Your company can benefit from “the KSA advantage”

KSA is the largest Middle East market and one of the top 20 world economies

4World-class

logistics1Funding

incentives

5Government

support

2Affordable

land & utilities

3Skilled labor

The KSA advantage

Source: Saudi Aramco analysis


Table of Content

■Corrosion Inhibitors

■Production chemicals

■Drilling muds

■Well Stimulation Fluids

■Demulsifiers


Several opportunities, across manufacturing and services, exist for corrosion inhibitors

Additional SME opportunities

Testing & Certification Logistics

and transportation

1-2 SMEs (CBM, Testing and

Inspection)

1-2 SMEs (iso containers,

flatbed trailers, trucks)

Manufacturing/investment Opportunities

Raw Materials Finished Products

Potential to develop local

plants for ethoxylates,

copolymers, phosphonates and amidoamines which are key end products for

final formulations

Potential for manufacturers of

input materials such as

ethoxylates to integrate

vertically into blending and

formulation of finished

products

1. Employment and GDP figures are estimations based on NAICS code 212322; calculations based on 2025 demandSource: Saudi Aramco Analysis

Employment1

GDP contribution1

140FTEs

$ 30mn


Corrosion Inhibitors are an important production chemical, constituting ~20% of a large Middle Eastern OFS market

At a global level, demulsifiers and corrosion inhibitors command ~45% market share of an ~2million ton market

In the Middle East demulsifiers and corrosion inhibitors command ~60% of an ~130 ktpa market

24%

20%

10%

8%

7%

9%

7%

5%

9%

Source: Saudi Aramco analysis, IHS Report: Specialty Chemicals Update program

2014 Production chemicals for oil field applications

Global market segmentation (%) Middle East Market segmentation (%)

13%

40%

2%

11%

21%

6%

7%

1%

Demulsifiers

Corrosion Inhibitors

Other

Paraffin inhibitors

Gas well foamers

Water clarifiers

Biocides

Scale inhibitors

H2S ScavengerCorrosion Inhibitors

Demulsifiers

Scale inhibitors

H2S Scavenger

Gas well foamers

Paraffin inhibitors

OtherWater clarifiers

Biocides


Corrosion Inhibitors also have applications beyond oil field chemicals such as water, power generation and processing

In KSA, largest consumers of corrosion inhibitors are oil & gas, metal processing and water treatment

11%

6%

21%

20%30%

12%

Source: Saudi Aramco analysis, Technavio Market Research, RCJY report, Purolite Internacional and SRI reports

By Application By Industry Sector

8%

9%

10%

32%

13%

28%

2014 Global Market Breakdown

Anti-foaming agents

Biocides & Disinfectants

Inhibitors

Others

Coagulants and Flocculants

pH adjusters and Stabilizers

Oil & gas

Pulp & paper

Chemical processing

Others

Metal processingPower generation


Corrosion inhibitor formulations comprise of several key input materials in different proportions

Fatty diamines

Copolymers

Polyoxyalkylatedamines / alcohols (EO/PO based)

Quaternaries

Amidoamines

Betaines

Phosphate esters

Phosphonates

Acetylenic alcohols

Imidazolines

Quaternary ammonium salts

Alkyl pyridine

Corrosion inhibitors

Corrosion inhibitor chemicals covered in this value proposition

1. Formulation will be different based on manufacturer and end application Source: IHS


The KSA Corrosion inhibitors market is expected to grow at 4% annually reaching 23 KTPA in 2025

KSA corrosion inhibitors demand market size

6 7 8 8 9 9 10 11 1113

66

67

7 77 7 7

8

+4%

+7%

2025202020192018201720162015201420132012

Source: Saudi Aramco analysis, IHS Chemicals: specialty chemicals update program, GWI

Volume(‘000 MT)

Water Oil & gas

$30 $31 $32 $33 $34 $35 $36 $37 $38 $45

$31 $31 $36 $39 $41 $45 $47 $54 $57 $75O&G Value($ MM)

Water value($ MM)


Corrosion inhibitor market in ME for oil field applications is expected to grow up to 41 Ktpa by 2025, at 4% CAGR

20 19 20 20

28

28

9(32%)

8(30%)

20172016

28

41

2018

3029

4%

13(32%)

10(34%)

2019

9(32%)

2025

Rest of Middle East

KSA

ME corrosion inhibitors expected market size evolution (‘000 Tons)

Both the ME

and KSA

markets are

expected to

grow at roughly

the same pace,

with KSA

commanding

~30% of the ME

market

Source: Saudi Aramco analysis, IHS Chemicals: specialty chemicals update program

Oil field applications only

143 146 155 162 245

$45 $47 $54 $57 $75

Rest of ME Value($ MM)

KSA Value($ MM)

Volume(KTPA)


Gaps across the value chain for corrosion inhibitors present opportunities for SMEs

Gaps

• Raw materials of EO already localized at Sadara value park

• Petroleum products e.g. heavy naphtha already available locally

• Limited potential for additional raw materials as several other products are proprietary

• Potential for local facilities to produce key synthesis products such as ethoxylates , copolymers, phosphonates and amidoamines

• 8 players in KSA already approved for formulation- limited potential for new pure play blenders

• Potential for new blending facilities to cater to market growthand potential for manufacturers of key chemicals to integrate vertically

• Limited presence of toll blenders

• Limited presence of advanced maintenance and testing/inspection facilities

• Potential exists to further develop logistics and supply chain capabilities such as

- Long haul trucking

- Iso containers

- Loading and warehousing

• Technical assistance is part of contract with tier1’s

• Potential exists for Tier 1’s further develop additional local capabilities to handle after sales requests (e.g. set up a vocational institute)

Tiering

Step


Tier-1/2/3

Corrosion inhibitors manufacturing value chain

Technical assistance

Raw materialsSolution packaging & formulation

Chemical synthesis

Transportation and logistics

Localization potential

Low High


No synthesis products are currently produced in Kingdom, however raw material such as EO/PO are readily available

Source: Saudi Aramco

Chemical(s) Current KSA production

Fatty diamines

Copolymers

Polyoxyalkylated and ethoxylated amines / alcohols

Quaternaries

Amidoamines

Betaines

Phosphate and polymeric esters

Phosphonates

Acetylenic alcohols

Imidazolines

Quaternary ammonium salts

Alkyl pyridine

Raw materials used in the synthesis of corrosion inhibitors

EO/PO

EO and PO are key raw materials for several synthesis products

necessary for corrosion inhibitors- these are

readily available from Sadara

✓Available

Not Exhaustive


SMEs have an opportunity to enhance logistics across the value chain


Loading

Transporting

Terminal operations &

storage

Supplier

Saudi Aramco currently manages its own corrosion inhibitor logistics and transport and is willing to consider credible 3PL to provide additional services

SME opportunities Key features

• Offer customized on-site logistics

• Supplying iso-containers, conveyer belts, and drums

• Drive loading operations

• Offer state of the art monitoring and measuring

systems

• Supplying advanced storage facilities such as tanks

and drums

• Enhance value offering via reduced turnaround times

• Transport corrosion inhibitors via tank, drums, or iso-tanks

• Provide trucking for the transportation of corrosion inhibitors

• Corrosion inhibitors can be stored in drums, with a capacity of ~13,000L, or in iso-tanks, with a capacity of ~24,000L

• Pumping, monitoring, and measuring equipment required to ensure smooth operations

• To control liquid flow and output to the storage tanks or the well site, different pressure pumps are used

• To manage high volume of corrosion inhibitor transfer, manifold trailers are used

• Corrosion inhibitors can be transported in one of two ways:

– Tank, drum, or iso-tank storage and transported on cargo trailers, van trailers or flatbed trailers

– Pumping stations along a pipeline

Corrosion inhibitors and logistics value chain


Gaps across the value chain for corrosion inhibitors present opportunities for SMEs

Opportunities

1. Potential for SMEs to liaise with leading producers and make niche raw materials required for synthesis (beyond EO/PO)

2. Potential for players to set up 1-2 facilities to produce key synthesis products from EO/PO raw material such as ethoxylates

3. Potential for 1-2 additional formulation facilities for corrosion inhibitors to cater to existing demand as well as future growth in demand

4. Potential for additional local toll blending facilities

5. Offer customized on-site logistics

6. Provide enhanced value offering via reduced turnaround times

7. Offer state of the art monitoring and managing systems

8. Partner with leading players to establish vocational and training facilities to train local staff in technical assistance

Tiering

Step


Tier-1/2/3

Corrosion inhibitors manufacturing value chain

Technical assistance

Raw materialsSolution packaging & formulation

Chemical synthesis

Transportation and logistics


Next steps: Please direct all inquiries to

Khazisyed Ahmedjeelani

Industrial development department

Saudi Aramco

[email protected]

We invite you to engage with the iktva program and grow your business in Saudi Arabia


Table of Content



■Drilling muds


■Demulsifiers


Key opportunities for localization – Other production chemicals

1. Composition and demand to be determined after discussion with leading playersSource: Saudi Aramco analysis

Op

po

rtu

nit

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ati

on

ale

Input chemicals and materials

Blending and formulation

Logistics and supply chain

• Establish local production of key input materials1

e.g. polyacrylamide, polyacrylates and non ionic surfactants

• No local production of these raw materials in KSA

• Diverse applications beyond oil field chemicals (e.g. surfactants)

• Vertically integrate production of input materials and develop blending facilities

• Establish local toll blending facilities

• Additional demand of ~8 ktpa in KSA and ~42 ktpa in Middle east by 2025

• Opportunity for raw material manufacturers to integrate and capture market share

• Limited presence of local toll blenders

• Provide handling services e.g. drums and iso containers

• Provide transportation and loading e.g. flatbed trailers and manifold trailers

• Demand for 40-60 additional iso tanks and drums by 2025

• Demand for ~2-4 additional flatbed and manifold trailers by 2025


Other production chemicals compose of several products, each composed of different formulations of input materials

Production chemicals

Typical production chemicals (excl. demulsifiers and corrosion inhibitors)

1. Formulation will be different based on manufacturer and end application Source: IHS

Water clarifiers

Formaldehyde free biocides

Scale inhibitors

H2S Scavenger

Paraffin inhibitors

Gas Well Foamers

Other (excl. demulsiifer and corrosion inhibitor)

4%

16%

27%

2%33%

18%

H2S Scavenger Other

Paraffin InhibitorsWater Clarifiers

Biocides (organic)

Scale Inhibitors

Middle East breakdown (2016)

Biocides is the

dominant segment

in the Middle East,

with a volume of 17

Ktpa over the total

market volume of

51 Ktpa


Other production chemicals is expected to grow at 5% annually until 2030, reaching 103 Ktpa in Middle East

17 18 20

37

53

70

3325

3738

2030

103

2025

5%78

57

201820172016

55 54

Rest of Middle East

KSA

ME Other production chemicals expected market size evolution (‘000 Tons)

Production chemicals category is expected to grow hand in hand with drilling fluids consumption in Middle East

Expected market size

in 2030 will be ~2X the current market

size

Source: Saudi Aramco analysis, CDSI, I..S report: specialty chemicals program


While some raw materials are available, potential exists to manufacture several others locally


(Jubail)Water clarifiers

Formaldehyde free biocides

Scale inhibitors

H2S Scavenger

Paraffin inhibitors

Gas Well Foamers

Other

Polyamines

Polyacrylamides

✓

Quaternary phosphonium

Glutaraldehyde

Phosphonates

Phosphate esters

Polyacrylates

Polyvinyl sulfonates

Co-polymers

✓

✓

Triazines

Amines

Ethanolamine

Aminealkylaryl sulfonates

Ammonium ether sulfates

Alphaolefin sulfonatesAlkyl naphthalene

sulfonates

MEG/TEG

Phosodium nitrite

Anionic surfactants

Nonionic surfactants

✓

✓

✓

✓

(Yanbu)

(Jubail)

(Ras Al-Khair)

(Jubail)

(Jubail) (Jubail)

Raw materials such as polyacrylamide, anionic surfactants and sulfonates have several other applications and have potential for local production

Not Exhaustive


Several opportunities exist for local players to enhance logistics and transportation for production chemicals

Loading

Requirements and gaps Opportunities

Transportation

Terminal ops

1. Assuming iso containers are replaced every 2 weeksSource: Saudi Aramco analysis

40-60 additional iso containers (24,000 liter capacity)1 and/or drums (13,000 liter) by 2025


• Be a supplier of iso containers and drums

• Drive loading operations (Aramco currently manages its own operations)

2-4 additional flatbed trailers (TEU) by 2025


• Be a supplier of transportation equipment (e.g. flatbed trucks)

• Drive transportation operations (Aramco currently manages its own operations)

Limited monitoring in place

• Offer state of the art monitoring and measuring systems

• Supply manifold trailers as a part of a larger portfolio

2-4 additional manifold trailers (TEU) by 2025


Key conclusions and next steps


Industrial Development Department

Saudi Aramco

[email protected]

In case you are interested in discussing this opportunity further, please contact✓ Consumption of other production chemicals

in KSA nd ME is expected to increase by ~8 ktpa and 23 in 2025 respectively driving opportunities for additional local blending

✓ Limited presence of toll blenders in KSA presents an opportunity for local players

✓ Several chemicals essential to other production chemicals can be localized in KSA e.g. polyacrylamide, polyacrylates and non ionic surfactants

✓ Local players can also supply key equipment and services to enhance logistics and supply chain, for instance players can offer flatbed trucking, iso containers, drums and manifold trailers

Key conclusions



Table of Content



■Drilling muds


■Demulsifiers


Key opportunities for localization – Drilling muds

1. Composition and demand to be determined after discussion with OFS playersSource: Saudi Aramco analysis




Disposal and after sales

• Establish local production of key input materials e.g. PAC, guar gum, premium lubricants and cross linking agents

• Growth of ~6% CAGR in drilling muds will drive growth in raw materials

• Diverse applications beyond oil field chemicals (e.g. binders, food industry)

• Establish additional blending facilities




• Provide trucking services especially flatbed trucks

• Provide storage and loading equipment (conveyor units, jumbo bags etc.)

• Demand for ~10 additional flatbed trailers till 2025

• Demand for ~14 additional mobile conveyor units and 30,000 jumbo bags by 2025

• Provide disposal services for stimulation chemicals

• Provide inspection, maintenance and after sales

• More stringent environmental regulations (GAMEP)

• ~50 ktpa additional consumption in KSA by 2025 will require additional disposal

Op

po

rtu

nit

yR

ati

on

ale


Going forward, we expect a growth of 6% CAGR in drilling muds, with KSA accounting for ~30% of Middle East demand

920 902 912 945

1,591

6%

2025

2,208

618(28%)

2019

1,392

447(32%)

2018

1,334

423(32%)

2017

1,272

370(29%)

2016

1,266

345(27%)

Rest of Middle East KSA

ME drilling muds expected market size evolution1 (KTPA, $MM)

• Growth in drilling fluids will be driven by both increased production (~20% increase expected across Middle East) and increased well activity.

• Increase in drilling activity expected to take off post 2019

1. Excludes minerals such as barite, bentonite, hematite, l ignite and calcium carbonateSource: Saudi Aramco analysis, IHS Chemicals: specialty chemicals update program

277 267 264 269 401Rest of ME Volume(KTPA)

104 110 123 127 156KSA Volume(KTPA)

Value($ MM)


Several raw materials required for formulations are not available in KSA- opportunity exists for new players

Drilling muds raw material availability

Chemical synthesis compounds like guar gum and emulsifiers have diverse applications beyond drilling muds

1. Actual volumes to be determined based on discussion with OFS players. Demand for PAM ~50 ktpa across water treatment appli cationsSource: Press research, Saudi Aramco analysis

Chemicals limited/not available in KSAChemicals available in KSA

Primary and secondary emulsifiers

Xanthanum gum

Polyionic cellulose (PAC)

HT thinner

Premium lubricants for drilling

Cross linking agents

Guar gum

Po

ten

tia

l lo

ca

lizati

on

op

po

rtu

nity

1

Not Exhaustive

Sodium and calciumchloride

Processedbarite

Anionicpolyelectrolytes

Diesel/LAO/Lubricants

Calciumcarbonate


Several opportunities exist for local players to enhance logistics and transportation for drilling muds

Loading


Transportation

Terminal ops


14 additional mobile conveyor units and sand kings (25 MT) by 2025


• Be a supplier of loading equipment (e.g. mobile conveyor units)


10 additional flatbed trailers (TEU) by 2025

Long existing lead times making planning difficult




30,000 additional jumbo bags (1.5 MT) in 2025


Limited use of advanced eqpt. like mobile silos


• Supply advanced storage facilities such as mobile silos

• Offer palletized package well stimulation fluids (jumbo bags)





Saudi Aramco

[email protected]

In case you are interested in discussing this opportunity further, please contact

✓ Consumption of drilling fluids in KSA is expected to increase by ~50 ktpa in 2025 driving opportunities for additional local blending and additional players for disposal


✓ Several chemicals essential to drilling muds can be localized in KSA e.g. PAC, guar gum, premium lubricants and cross linking agents

✓ Local players can also supply key equipment and services to enhance logistics and supply chain, for instance players can offer flatbed trucking, mobile conveyor units and jumbo sacks

Key conclusions



Table of Content



■Drilling muds


■Demulsifiers


Key opportunities for localization - Well Stimulation Fluids

1. Composition and demand to be determined after discussion with OFS playersSource: Saudi Aramco analysis




Disposal and after sales

• Establish local production of key input materials e.g. PAM, HF and borates1

• Growth of ~8% CAGR in well stimulation fluids

• Diverse applications beyond oil field chemicals (e.g. water treatment)

• Establish additional blending facilities




• Provide trucking services especially flatbed trucks

• Provide storage and loading equipment (conveyor units, jumbo bags etc.)

• Demand for ~25 additional flatbed trailers till 2025

• Demand for ~40 additional mobile conveyor units and 100,000 jumbo bags by 2025

• Provide disposal services for stimulation chemicals

• Provide inspection, maintenance and after sales

• More stringent environmental regulations (GAMEP)

• ~160 ktpa additional consumption in KSA by 2025 will require additional disposal

Op

po

rtu

nit

yR

ati

on

ale


The market in the Middle East is expected to grow at ~8% CAGR, with KSA commanding ~30% market share

237 234 242 248

462

2025

652

190(29%)

2019

377

129(34%)

2018

363

121(33%)

8%

2017

340

107(31%)

2016

337

100(30%)

KSARest of Middle East

ME well stimulation agents expected market size evolution (‘000 Tons)

• KSA expected to grow in line with the rest of the ME, and is expected to account for ~30% of the market

• Strong market growth expected after 2019

Source: Saudi Aramco analysis, IHS Chemicals: specialty chemicals update program, Rystad

Value($mm)

Rest of ME volume(KTPA)

670 648 656 660 1093

282 295 330 344 449KSA volume(KTPA)



Hydrochloric acid

Formic acid

Acetic acid

Aluminum

Well stimulation fluids raw material supplier companies

Chemical synthesis compounds like PAM and hydrofluoric acid acid have diverse applications beyond well stimulation fluids



Hydrofluoric acid

Ammonium bio fluoride/ methyl formate

Enzymes

Polyacrylamide (PAM)

Triethanolamine titanite

Organoborates

Chromium and Zirconium processing

Po

ten

tia

l lo

ca

lizati

on

op

po

rtu

nity

1


Several opportunities exist for local players to enhance logistics and transportation for well stimulation fluids

Loading


Transportation

Terminal ops


40 additional mobile conveyor units and sand kings (25 MT) by 2025


• Be a supplier of loading equipment (e.g. mobile conveyor units)


25 additional flatbed trailers (TEU) by 2025

Long existing lead times making planning difficult




100,000 additional jumbo bags (1.5 MT) by 2025


Limited use of advanced eqpt. like mobile silos


• Supply advanced storage facilities such as mobile silos

• Offer palletized package well stimulation fluids (jumbo bags)





Saudi Aramco

[email protected]

In case you are interested in discussing this opportunity further, please contact

✓ Consumption of well stimulation fluids in KSA is expected to increase by ~160 ktpa in 2025 driving opportunities for additional local blending and additional players for disposal


✓ Several chemicals essential to well stimulation fluids can be localized in KSA e.g. PAM, Organoborates, Hydrogen fluoride

✓ Local players can also supply key equipment and services to enhance logistics and supply chain, for instance players can offer flatbed trucking, mobile conveyor units and jumbo sacks

Key conclusions



Table of Content



■Drilling muds


■Demulsifiers


Key opportunities for localization – Demulsifiers

1. Composition and demand to be determined after discussion with leading playersSource: Saudi Aramco analysis

Op

po

rtu

nit

yR

ati

on

ale

Input chemicals and materials Blending and formulation


• Establish local production of key input materials1 e.g. ethoxylates, alkylated phenols, alkoxylated resins and block copolymers

• No local production of these raw materials in KSA

• Diverse applications beyond oil field chemicals (e.g. surfactants)

• Vertically integrate production of input materials and develop blending facilities

• Establish local toll blendingfacilities


• Opportunity for raw material manufacturers to integrate and capture market share


• Provide handling services e.g. drums and iso containers

• Provide transportation and loading e.g. flatbed trailers and manifold trailers

• Demand for 20-30 additional iso tanks and drums by 2025

• Demand for ~1 additional flatbed and manifold trailers by 2025


The demulsifiers market in ME is expected to grow at ~7% CAGR, with KSA commanding ~35% market share

88 88 92 97

162

7%

2025

238

76(32%)

2019

149

52(35%)

2018

141

49(35%)

2017

131

43(33%)

2016

128

40(31%)

Rest of Middle East KSA

ME demulsifiers expected market size evolution (KTPA, $mm)

KSA and ME are

expected to grow at

roughly the same

growth rate going

forward to 2025; with

KSA’s market share

remaining roughly

constant at ~35%

Source: Saudi Aramco analysis, IHS Chemicals: specialty chemicals update program

$xxx$896.

4$965.

3$1,04

2$1,22

355 55 57 59 78

$xxx$896.

4$965.

3$1,04

2$1,22

317 18 20 21 25

Value($ MM)

Rest of ME Volume(KTPA)

KSA Volume(KTPA)



Demulsifiers raw material availability

EO/PO, which is key to several products is readily available in Sadara; select products like alkoxylates and copolymers also have application in surfactants



Alkoxyalkylated resins with low-or high oxide content

Oxyalkylated phenols

Oxyalkylated polyamines

Alkanolamine condensation products

Oxyalkylated polyglycols

Block copolymers (EO/PO ; polyol block etc.)

Po

ten

tia

l lo

ca

lizati

on

op

po

rtu

nit

y1

Not Exhaustive

Polyglycol esters and ethers

Sulfonates

Polymerized oils and esters

Polymerized polyglycols


Several opportunities exist for local players to enhance logistics and transportation for demulsifiers

Loading


Transportation

Terminal ops

1. Assuming iso containers are replaced every 2 weeksSource: Saudi Aramco analysis

20-30 additional iso containers (24,000 liter capacity)1 and/or drums (13,000 liter) by 2025


• Be a supplier of iso containers and drums


1-2 additional flatbed trailers (TEU) by 2025






• Supply manifold trailers as a part of a larger portfolio

1-2 additional manifold trailers (TEU) by 2025





Saudi Aramco

[email protected]

In case you are interested in discussing this opportunity further, please contact✓ Consumption of demulsifiers in KSA nd ME is

expected to increase by ~8 ktpa and 23 in 2025 respectively driving opportunities for additional local blending


✓ Several chemicals essential to demulsifiers can be localized in KSA e.g. ethoxylates , alkylated phenols, alkoxylated resins and block copolymers

✓ Local players can also supply key equipment and services to enhance logistics and supply chain, for instance players can offer flatbed trucking, iso containers, drums and manifold trailers

Key conclusions


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