nexant apic 2016
TRANSCRIPT
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Indiaa new growth engine of petrochemicals?
Threat or Opportunity for Asian producers?
APIC ANNUAL MEETING, Singapore
19-20 May 2015
Clive Gibson
Vice President, Nexant
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Nexant Overview
A Global Advisor to the Energy & Chemicals Industry with ProvenTrack Record
2
Headquarters Main Offices
Representative Offices
San FranciscoWashington, DC
White Plains
LondonFrankfurt
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TokyoSeoul
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Singapore
Kuala LumpurBangkok
Our People
Over 150 consultantsworldwide in Energy &
Chemicals Advisory
Expertise covering strategic,
commercial, operational and
technical aspects with deep
energy and chemicals sector
knowledge
Nexants consultants are
typically Chemical Engineers,Economists and MBA graduates
who have significant prior
experience working at energy
& chemical producers
Proven Track Record
Advising clients in the energy &
chemicals industry for 50 years Completed over 2,000 client
assignmentsincluding market
assessments, technology
evaluations, valuations /
appraisals and due diligence
Global Footprint
Strong international presence provides valuable insights through our consultants local
market knowledge and our vast network of sector specialists
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Macro Economic Fundamentals
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Industry Growth Drivers
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Increasing consumer wealth is driving vehicle fleet growth in India resulting inhigher fuels demand
India Vehicles, Population and GDP Regional Vehicle Ownership vs GDP
Vehicle ownership percapita in India is oneof the fastest growingin Asia
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Indian transportation fuels demand
Global Polymer Consumption Trends
0
1
2
3
4
56
7
8
9
10
0 10 20 30 40 50 60 70 80 90 100
M
arketGrowth-percentC
AGR
2015-
2020
Current Annual Consumption, Kg/Capita
India
China
Japan
Western Europe
United States
8
Bubble size indicates total current demand
Polymers include: LD, LL, HD, PP, PVC, PS, EPS, ABS, SBR, BR
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Indian polymer growth trends remain well above the global average
Global Polymer Consumption Trends
0
1
2
3
4
5
6
7
8
9
10
0 10 20 30 40 50 60 70 80 90 100
M
arketGrowth-percentC
AGR
2015-
2020
Current Annual Consumption, Kg/Capita
India
China
Japan
Western Europe
United States
9
Bubble size indicates total current demand
Polymers include: LD, LL, HD, PP, PVC, PS, EPS, ABS, SBR, BR
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Industry Landscape
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Indian refining capacity is 4.2 million barrels per day (210 million tons per year),concentrated in West India.
Essar Vadinar, 400kbd
IOC Panipat, 300kbd
IOC Barauni,
120kbd
IOC
Bongaigon,
47kbd
BPCL Numaligarh,60kbd
IOC Haldia, 150kbd
IOC Mathura, 160kbd
BORL Bina, 120kbd
IOC Paradip, 300kbd
HPCL Vizakh, 166kbd
HMEL Bathinda, 180kbd
BPCL Mumbai, 240kbd
HPCL Mumbai, 130kbd
MRPL Mangalore, 300kbd
BPCL Kochi, 192kbd
CPCL, Madras 210kbd
Reliance DTA
Jamnagar, 660kbd
IOC Koyali 260kbd
Reliance SEZ
Jamnagar, 580kbd
Existing Refinery
New Refinery
Essar
Vadinar,
400kbd
Most recent grass roots capacity additionsinclude IOCL Paradip (2015/6), HMEL
Bathinda and BORL Bina (2012)
Over 50 percent of refining capacity in W India
Landlocked refineries must match local
demand
Refinery upgrading focused on FCC andcoking
Refinery-Petrochemicals integration focused
on propylene and aromatics
Ownership is domestically focused and mainly
state owned.
Refinery Locations
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Threat or Opportunity?
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Uncertain timesbut sources of competitive advantageremain clear and robust in refining and chemicals sectors
PARAMETER KEY OBJECTIVES
Size
Location
Configuration
Integration
Capture economies of scale
Access to low cost feedstocks/
deficit markets
Cost advantage/ product
differentiation
Synergies with adjacent facilities
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0
500
1000
1500
2000
2500
3000
0 50 100 150 200
EthyleneC
ashCost
(CurrentUS
dollars
pertonethylene)
Ethylene Cumulative Capacity (million tons)
Oil Price(US$ per bbl)
140
100
70
50
Lighter feedstocks
Liquids cracking
Petrochemicals feedstock cost advantages remain atlower oil prices but are substantially reduced
Global ethylene production cost curves versus crude oil price
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Revisiting sustainable value drivers in turbulent times
2020 VISIONFeedstocks
Integration
Technology
Sourcing a competitive cost advantage
Creating value via optimising molecules
Innovation to capture cost advantages
Lower oil prices may bring longer term benefits for industry
leaders
Stronger global GDP growth and product demand growth
Weaker capacity growth in the near term
Lowercapital costs.in the longer term
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www.thinking.nexant.com
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Energy & Chemicals Advisory
Clive GibsonVice President