NEWS 06 | GAS SUMMIT ARABIA10 | EFFICIENT REFINING 24 | CONTRACTOR FOCUS 26 | FACE TO FACE 32

NEWS, DATA AND ANALYSIS FOR THE REFINING AND PETROCHEMICAL INDUSTRIES MARCH 2010

HOT STUFF
HEAT EXCHANGER MARKET WARMS
ON MID EAST PROJECT PIPELINE

SOHAR CALLING
OMAN’S 2020 REFINING
VISION IS TAKING SHAPE

VIEW FROM
JUBAIL
Ahmad Al-Ohali, CEO Sipchem

Sipchem
h CEOO says multi
l billion
b ll dollar
d ll projects are keeping
k
Saudi Arabia’s downstream dreams alive
An ITP Business Publication, licensed by Dubai Media City
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 1

In Print 12
March 2010
05

16 4 EDITOR’S LETTER
Downstream producers can expect their strongest quarter in two
years, with an optimistic eye on a demand boom come year end.

5 REGIONAL NEWS
NAMA to double epoxy output, AOL starts up production, Algeria
methanol project on track, JBF and OOC join forces in Oman.

12 SIPCHEM EXCLUSIVE: TEN YEARS ON

Ahmad Al-Ohali, CEO of Sipchem talks exclusively to PME and
reveals that multi billion dollar contracts will be awarded soon.

16 OMAN’S PETROCHEMICAL PROFILE

The southern Gulf country has its sights firmly set on a thriving
diversified downstream sector by 2020. PME tracks its progress.

22 EXCHANGE GAME
Petrochemicals Middle East conducts an industry survey with the
leading temperature transfer technology providers.

30 DOWNSTREAM DATA
The most important petrochemical products and share prices from
the Middle East’s leading listed companies.

32 FACE TO FACE
22 32 Peter Venn, regional director, oil and gas, SAS.

www.arabianoilandgas.com Refining & Petrochemicals Middle East March 2010

2 Online

The online home of:

ONLINE GALLERY FEBRUARY EVENTS ROUNDUP

UNDU
UP MOST POPULAR NEWS

1 Aramco to inject CO2 into

world’s biggest oil
eld
2 Aramco delays Jubail re
nery
start up
3 ADCO awards NPCC Bab
eld
contract
4 Kuwait signs 5 year deal with
Royal Dutch Shell
5 PIC says new ole
ns plant to
cost US$b5 billion

EDITOR’S CHOICE

An eye on Jubail- Exclusive Operating in Iraq - A Guide

Arabianoilandgas.com picture gallery takes you Arabianoilandgas.com brings you insights from
behind the scenes of Saudi International firms working on the ground helping rebuild
Petrochemical Company (Sipchem) in Al-Jubail, Iraq’s embattled industrial sector. Read
with brand new shots of its third phase plants. interviews with businesses based in Baghdad.
arabianoilandgas.com arabianoilandgas.com
MOVING EAST
Exclusive interview with the
BREAKING NEWS AND VIEWS FIRST president of ExxonMobil
Chemical, Steve Pryor.
COMPANY ACCUSED OF SMUGGLING KUWAIT TO REVIEW STALLED PROJECT arabianoilandgas.com
A private Saudi Kuwait will send a
petrochemical company stalled project for a WEB FORUM
has been accused of 615 000 barrels per day
smuggling petroleum (bpd) re
nery to its
products from King Fahd highest oil policy body
industrial port to France. for review.

arabianoilandgas.com arabianoilandgas.com

ARAMCO DELAYS REFINERY START UP JGC WINS $100MN SASREF CONTRACT

Saudi Aramco has Japanese contractor
revealed the start up of its JGC has been awarded a
Jubail oil re
nery has US$100mn contract to
been delayed to late 2013, reduce the carbon
later than the previous footprint of the Sasref
target of March 2013. re
nery in Saudi Arabia. E
JOIN TH
DEBATE
arabianoilandgas.com arabianoilandgas.com

Refining & Petrochemicals Middle East March 2010 www.arabianoilandgas.com

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Offices in Dubai & London Green shoots of
recovery?
ITP Business Publishing
CEO Walid Akawi
Managing Director Neil Davies
Deputy Managing Director Matthew Southwell
Editorial Director David Ingham
VP Sales Wayne Lowery
Publishing Director Jason Bowman
rices of petrochemical products have increased noticeably in the last

P
Editorial
Energy Group Editor Daniel Canty
Tel: +971 4 435 6257 / daniel.canty@itp.com
few months, reecting a net improvement in market fundamentals.
Editor Abdelghani Henni Some product prices have more than doubled, such as ethylene which
Tel: +971 4 435 6239 / abdelghani.henni@itp.com
Contributors Contax jumped from US$600 per tonne in February 2009 to $1220 per tonne just one
Advertising year on. Others have increased signi
cantly too. Polypropylene traded at $890
Commercial Director Jude Slann per tonne in February 2009, and is currently trading at arround $1310, a 14
Tel: +971 4 435 6348 / judith.slann@itp.com
month high.
Studio
Group Art Editor Daniel Prescott These fascinating numbers will surely appear in higher incomes in the next
Photography
round of quarterly
nancial results of Middle East’s petrochemical producers.
Director of Photography: Sevag Davidian However, new capacities from the Middle East are coming on stream,
Chief Photographer: Khatuna Khutsishvili
Senior Photographers: G-nie Arambulo, Efraim Evidor, mainly from Saudi Arabia and Iran, which may disrupt the balance of supply
Thanos Lazopoulos
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Galushko, Jovana Obradovic, Ruel Pableo, Rajesh Raghav
On the other hand, aging facilities in Europe and America, and increasing
Production & Distribution
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Group Production Manager Kyle Smith
Production Coordinator Devaprakash taining a price level most would agree is fair, if not good.
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Image Editor Emmalyn Robles Arabianoilandgas.com, the online home of Petrochemicals
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mirrors what we last saw in 2006 and 2007 - widely
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considered great years for the industry. At these prices
ITP Group there will be enough liquidity in the market to fund
Chairman Andrew Neil
Managing Director Robert Serafin new regional investments, further cementing the
Finance Director Toby Jay Spencer-Davies
Board of Directors K.M. Jamieson,
region’s status as the new epicentre of downstream
Mike Bayman, Walid Akawi, Neil Davies,
Rob Corder, Mary Serafin
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Refining & Petrochemicals Middle East March 2010 www.arabianoilandgas.com


NEWS
NAMA to double epoxy plant output
New capacity will see firm account for half of all Middle East epoxy resin production
NAMA Chemicals said that its
subsidiary Jubail Chemical In-
dustries Company (Jana), has re-
ceived a US$56mn loan from the
Saudi Industrial Development
Fund (SIDF), to
nance the ex-
pansion of its epoxy plant located
in Al-Jubail last month.
The company said it has com-
pleted approximately 30% of de-
tailed engineering of the project.
The total cost of the expansion
project which will double the pro-
duction capacity of the existing
plant is $116 million.
“Such support came in the
form of granting a project loan of
$56mn after review of the overall
plans and careful studies of the
project, which has clearly proven
a strong strategic
t and econom-
ic viability,” said Abdolmohsin Al
Ogaili, CEO of NAMA Chemicals.
“In addition to enabling NAMA
to maintain its market lead in the
region and increase our market
share around the world to meet
the growing demand of Epoxy
products,” he added.
NAMA is the only producer of
epoxies in the Middle East, and
currently produces 60 000 t/y of
epoxy from its subsidiary Jana.
“We use epichlorohyrin (ECH)
and bisphenol-A (BPA) as feed-
stock for the plant,” Al Ogaili told
PME. “We use Huntsman pro-
cess technology in our plants,” Al
Ogaili revealed.
Al Ogaili added that the expan-
sion project will be completed in
www.arabianoilandgas.com
Abdolmohsin Al Ogaili, CEO of NAMA Chemicals says NAMA will dominate the market.
two years and will enable NAMA
to double its production capacity
to reach 120 000 tonnes per year.
When completed, the company
will control 50% of the Middle
East market and 6% of the world’s
total epoxy supply. “We are tar-
geting the regional market includ-
ing the Gulf and Middle East,”
MARCH 2010
revealed Al Ogaili. “Europe and
the rest of the world are also in-
cluded in our marketing agenda,”
he added.
“By 2012, the production ca-
pacity of our plant will be in-
creased by 100%, which will allow
us to be one of the
ve largest pro-
ducers of epoxy in the world,” ob-
Refining & Petrochemicals Middle East March 2010
News 5
served the CEO of the company.
“This will positively affect the

nancial performance of the
company in general by reducing
production costs and extend-
ing NAMA’s reach globally to
meet the increasing demand for
epoxy,” Al Ogaili added.
Epoxy is used as a raw material
for paints and other major indus-
trial sectors such as automobiles,
building and construction and
engineering, as well as the fast
growing wind power industry.
NAMA announced in January
that it has stopped the expansion
of the caustic soda plant, which
is operated by its subsidiary
Arabian Alkali Company (Soda),
due to the shortage of feedstock
allocations.
The company said that this
decision comes after the reduc-
tion of feedstock allocation from
its supplier, which informed the
company it will reduce alloca-
tions starting from 2011. “We will
resume the expansion once we
secure suf
cient feedstock alloca-
tions,” the company said.
NAMA is a listed company and
operates four subsidiaries includ-
ing Jana, Soda, Nama Industrial
Investment and Nama Europe.
$9.14mn
NAMA posted losses of
around $9 million in 2009
6 News
RTIP on schedule for 2015
Aramco and Dow approach contractors to gauge interest in bidding
The joint venture project be-
tween Saudi Aramco and the
Dow Chemical company, the Ras
Tanura Integrated Re
ning and
Petrochemical Complex (RTIP),
is set to start up in 2014 or 2015,
though the two partners have
held back on issuing tenders on
the back of reduced EPC project
prices, according to Andrew Liv-
eris, CEO of Dow Chemical.
The RTIP will be the third integrated project in the Kingdom after Petro Rabigh and SATORP.
KSA’s NatPet under offer
Alujain Company revealed that it
has submitted an offer to Nation-
al Petrochemical Industrial Com-
pany (NatPet) to buy the remain-
der of the company’s shares.
The deal will be completed
with a swap of NatPet shares
with shares of Alujain through a
capital increase of Aljuain.
Alujain currently holds 57.39%
of Natpet’s shares.
Meanwhile, the company said
that NatPet has resumed opera-
tion at its propylene and polypro-
pylene plants following the pow-
er outage in Yanbu industrial city
last December. “The power out-
age has affected some machinery
in the complex,” said Marwan
Nusair, president of Alujain.
Refining & Petrochemicals Middle East March 2010
Prices have fallen for Middle
Eastern engineering, procure-
ment and construction (EPC)
contracts, Liveris said during an
earnings conference call.
“Saudi Aramco has some very
big re
nery projects that have
just recently seen some substan-
tial decreases in the engineering,
procurement and construction
contracts,” said Liveris.
Currently, NatPet operates be-
low 100%. “We produced 35 000
tonne since the beginning of
2010, with an operation rate of
90%” he added. “Since the start
of the production last year, we
produced 155 000 tonnes of poly-
propylene,” he revealed.
Much hype surrounds NatPet operations.
However, Ras Tanura is still on
track for its
rst units to start by
2015, Liveris said. “Ras Tanura is
moving ahead nicely on its mile-
stones,” revealed Liveris.
The joint venture partners are
approaching contractors to gauge
their interest in bidding for work
on the project in an effort to min-
imise cost exposure.
The joint venture partners
made initial inquiries to engi-
neering
rms in mid-December
over bidding for a bulk-handling
facility at the complex, covering
tankage, conveyors, packing and
port works, which is estimated to
be worth more than US$500m.
300
Number of different
chemical products to
be produced by RITP
AOL starts up production
Aromatics Oman LLC (AOL) an-
nounced that it has successfully
started commercial production
in February after completing its
commissioning period success-
fully and is currently operating
at full capacity, the company said
in a statement.
The company started commis-
sioning in September 2009, and
exported the
rst paraxylene and
benzene shipment on December
24 and 30 respectively.
AOL produces 819 000 tpa of
paraxylene (PX) and 210,000 tpa
of Benzene (BZ) which are used
to produce a wide range of pet-
rochemical intermediaries. The
feedstock to the plant is straight
run naphtha which is received
Algeria methanol
project on track
The US$1 billion methanol proj-
ect in Algeria is on track and ex-
pected to go on stream in 2013,
according to sources close to the
Almet consortium.
Sonatrach awarded Almet the
contract to build a methanol pro-
duction facility at the Arzew indus-
trial zone in July 2007. The amount
of the investment is estimated
at $1 billion, and annual produc-
tion is estimated at 1 million tonnes
of methanol, destined for interna-
tional markets.
The consortium comprises Ku-
waiti company Qurain, German
company Lurgi, Trinidad’s PPSL,
Japan’s Mitsui, and Algerian com-
pany Sotraco..
Lurgi will be the lead EPC con-
tractor for the plant. The front-end
engineering and design (FEED)
work was almost completed. Con-
struction work will take 32 months,
said the source. Sonatrach will pro-
vide the feedstock to the project
with a subsidised price, and will
hold 51% of the company.
from Sohar Re
nery, with the
balance imported from abroad.
AOL is a joint venture with
Oman Oil Company (OOC –owns
70% of the shares), Oman Re
n-
ery & Petrochemicals Company
(ORPC – owns 20% of shares)
and LG International, Korea
(LGI which holds the remaining
10% share). Both OOC and ORPC
are wholly owned by the govern-
ment of Sultanate of Oman.
155 000
AOL’s production of
PP since start up
(metric tonnes).
www.arabianoilandgas.com

JBF joins Oman PTA project
New multi-million dollar plant slated for Sohar’s industrial port zone
India’s JBF Industries has
signed a memorandum of un-
derstanding (MoU) with the
state-owned Oman Oil Com-
pany that will see the two
companies build and operate
a US$680 million purified
terephthalic acid (PTA) plant
in Oman.
The joint venture will have a
capacity of 1.2 million tonnes per
annum of PTA and will use par-
axylene produced by the Oman
Oil Company as a feedstock.
The project will be co-located
in the premises of Oman Aromat-
ics to enable transportation of
the paraxylene to the PTA plant
by a dedicated pipeline.
$680mn
Cost of the new joint
venture project in Oman
Qapco signs ethylene shipping contract
Qatar Petrochemical Company
(Qapco), and Norwegian ship-
ping company Norgas have
signed a contract of affreight-
ment (COA) for the transporta-
tion of ethylene from Mesaieed
to various international destina-
tions in 2010.
“Norgas will transport be-
tween 54 000 and 65 000 tonnes
of ethylene from Mesaieed in
2010,” Qapco said in statement
published in the stockmarket.
The quantity could double af-
ter the start up of Qapco’s new
ethylene cracker at Ras Laffan.
The approximate value of the
contract for the base volume
is US$6.87 million. Qapco’s
main products are ethylene, low
www.arabianoilandgas.com
Oman aims to diversify its economy by establishing strong petrochemical industry.
The new plant would take
around 30-36 months to be
ready to begin operations. JBF
Industries plans to market
product from the new plant
in the Arab Gulf Cooperation
Council (GCC) countries, the
density polyethylene (LDPE)
and sulphur. It also produces
410 000 tonnes per year of LDPE
and marketed under the Lotrene
brand name.
Qapco’s current ethylene
production capacity reached
800 000t/y. Qapco consumes
about 410 000 tonne ethylene for
manufacturing LDPE and also
supplies about 220 000 tonnes
of ethylene to its subsidiary Qa-
tar Vinyl Company (QVC) for
manufacturing EDC /VCM and
the balance is exported into in-
ternational markets mainly for
customers in Indian subconti-
nent, Asia and Europe.
Qapco will also market and
sell the surplus ethylene from
source said, adding that a ma-
jor part would be sold in the
United Arab Emirates and in
the Sultanate of Oman.
JBF Industries is a Mumbai-
based synthetic yarn and poly-
ester chips manufacturer.
its subsidiary Qato
n Company
after the startup of the new Ras
Laffan Cracker (RLOC) in which
QATOFIN is a shareholder with
QP and Q-CHEM II.
Total ethylene export by Qap-
co including QATOFIN’s surplus
would be in the range of 300 000-
350 000 tonnes per year.
Mesaieed serves as an export hub in Qatar.
Refining & Petrochemicals Middle East March 2010
News 7
Briefs
Kuwait Aromatics (KARO)
is expected to raise the
operating rates at its 820 000
tonne/year paraxylene (PX)
unit in Shuaiba to 100% as
soon as the early-March. The
company lifted the force
majeure on both PX and
benzene supplies from 7
February and had already
notified downstream purified
terephathalic acid (PTA)
makers.
Dow Chemical Company
reported revenues of US$12.5
billion for the fourth quarter
of 2009, an increase of 15%
compared to the
corresponding period of
2008. The company also
reported full 2009 revenues
of $44.9 billion, down from
$57.5 billion in 2008.
US super major
ExxonMobil has announced
that its 2009 profits have
plummeted from US$45.22
billion in 2008 to US$19.42
billion, a year-on-year
decrease of 57%. Exxon said
lower prices for oil and gas
compared to the previous
year as well as a slump in
global demand for
hydrocarbon products were
the reasons for its worst
performance in seven years.
Qatar Fuel Additives
Company (QAFAC) is likely
to take its MTBE and
methanol plant offstream for
scheduled maintenance. The
maintenance turnaround
would take 40 days starting
from early April. The MTBE
plant and the methanol plant
have a capacity of 610 000
tonnes per year and 1 million
tonnes per year respectively.
8 News

Snapshot Yansab starts up production

Kuwait to spend
US$15 billion
upgrading
refineries
The head of the state-owned Ku-
wait Petroleum Corp, Abdulaziz
Al Attar, said that the Gulf state
is planning a US$15 billion
ve-
year investment programme for
its existing oil re
neries .
Al Attar said that Kuwait is
looking to signi
cantly increase
its re
ning capacity to 1.4 mil-
lion barrels per day (bpd) from
its existing level of 940 000 bpd.
Kuwait recently announced that
it plans to spend $87.6 billion
on its hydrocarbon sector over
the next two decades.
Borouge
reconsiders
expansion
Abu Dhabi Polymers Company
Commissioning of eight plants of the complex started in July 2009
The chairman of Yanbu National col, 250 000 mtpa of benzene, Yansab is a Saudi joint-stock
Petrochemical Company (Yans- and a mix of Xylene and tolu- company controlled by Saudi
ab) has said that the company ene, 100 000 mtpa of combined Basic Industries Corp (SABIC)
is set to start full commercial of butane-1 and butane-2, and (51%) and the rest is oated on
production of its petrochemical 25 000 mtpa of MTBE. the Saudi stock market.
products from March 1.
Mutlaq Al-Morished said that
the $5.65bn project started com-
missioning in July 2009, and ex-
ported the
rst MEG shipment to
European market in September.
The
rst MEG shipment was of
5000 metric tonnes.
The Yansab complex compris-
es eight world-class plants and
will have a total capacity of more
than 4 million metric tonnes per
annum (mtpa) of petrochemical
products when fully operational.
The facility will produce
1.3 million mtpa of ethylene,
400 000 mtpa of propylene,
800 000 mtpa of polyethylene
(both low and high-density),
400 000 mtpa of polypropylene,
770 000 mtpa of ethylene gly- Al-Morished said that Yansab has exported its first commercial shipment of MEG to Europe.

(Borouge) is considering a
fourth phase of expansion ac-
cording to sources close to the
company. “We are still thinking
about this step, nothing is of-

cial yet,” said the source, who
requested anonymity.
“Currently we are complet-
ing the second expansion, and
starting the third expansion,”
he added. If approved, the feasi-
bility study for the plant would
be launched in early 2011, but,
it seems that the project would
face many challenges mainly in
sourcing the feedstock, as it will
require allocation from Adnoc.
The company said earlier
that it expects the commission-
ing of Borouge 2 in the
rst half
2010, while the third expansion
would start production in 2013.
Borouge production will reach
4.5 million t/y by 2013.
SABIC plans to expand its PTA affiliate
Saudi Arabian Basic Industries
Corp (SABIC) plans to expand
its af
liate Arabian Industrial
Fibers Co (Ibn Rushd), its chief
executive said.
SABIC, the world’s top chemi-
cal company by market value,
holds 47.2% of Ibn Rushd, ac-
cording to its 2008 annual re-
port, while the rest is controlled
by private Saudi shares holders.
Ibn Rushd’s complex in Yanbu,
on Saudi Arabia’s Red Sea coast,
produces aromatics, puri
ed
terephthalic acid (PTA), which
is used in making polyester, and
polyester staples.
After the expansion, Ibn
Rushd’s PTA capacity would rise
to 700 000 t/y from 350 000 t/y
currently, chief executive Mo-
hamed al Mady said.
The expansion would also in-
crease output capacity of poly-
ethylene terephthalate (PET) to
750 000 t/y from 330 000 t/y as
well as boost aromatics capacity
to 600 000 t/y from 350 000 t/y,
Al Mady said.
“We are doing this (expansion)
to improve the economic basis of
the project,” Al-Mady told report-
ers in Riyadh. “We are working
on the engineering studies now…
and we will go to the market (for
bids) afterwards,” he added.
The engineering work is being
handled by a number of
rms as
various technologies would be
implemented.
State controlled SABIC plans
to boost total production to 130
million tonnes of petrochemi-
cals by 2020, up from 56 million
tonnes in 2008. It is focusing
now on growing its business in
the kingdom, China and the Far
East, Mady said in December.
SABIC bene
ts from access
to cheap energy feedstock in the
world’s top oil exporter, giving
it a competitive advantage over
global rivals.
350 000
The current capacity
of PTA produced by
Ibn Rushd plant.

Refining & Petrochemicals Middle East March 2010 www.arabianoilandgas.com

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10 Gas Arabia Summit

GAS CRUNCH
DOMINATES
UAE SUMMIT
Subsidised prices for gas are hampering
much needed investment in local gas
markets. Abdelghani Henni reports
from Abu Dhabi

Refining & Petrochemicals Middle East March 2010 www.arabianoilandgas.com


he Gas Arabia Summit held in Abu
T Dhabi in last month attracted senior
executives and industry experts to
discuss the availability, supply and
demand of gas in the GCC.
The combined gas reserves in the GCC is
about 1 500 trillion ft³, but much of the
reserve is associated gas and expensive to
extract, according to Yousuf Al Ojaili, CEO of
the state-owned Oman Gas.
Speaking at the event, Al Ojaili said that the
GCC countries have enough cash and gas to
develop a regional gas pipeline network, but
only if prices rise to justify the necessary level
of investment. “Governments have to start
accepting that the gas price will have to be
higher. They are going to have to be much
higher than US$5/mn btu,” he said.
Production costs of deep and mildly sour gas
projects in the Gulf are between $5-6/mn btu,
but domestic sales prices range from $0.75 to
$2, with negligible prices for households. “The
result of this market distortion has forced Gulf
countries to burn diesel in power plants at a
cost equivalent $7-8/mn btu, look at
importing coal at $10/mn btu equivalent and
launch a nuclear power programme – which is
even more expensive,” he added.
Qatar, the Gulf’s only net gas exporter, is
reluctant to sell more gas to its neighbours
when it can get $10/mn btu in the Asia Paci
c
LNG market. Its last direct sale contract to
another Gulf country was to the UAE and
Oman via the Dolphin Energy pipeline at
$1.35/mn btu, setting a precedent for low
intra-Gulf prices. The UAE and Oman sell
www.arabianoilandgas.com
LNG to Asia Paci
c at market price, making
Qatar’s exports to them a bad deal for Doha.
Ojaili says the Gulf will have to link its prices to
LNG if it wants to increase supplies – Kuwait,
Dubai and Bahrain all import or are
considering importing gas.
People in the region are used to getting
subsidised energy prices, and many feel they
have a right to cheap energy. “The whole
political system is based on providing
subsidised services, including gas to the
people,” said JBC Energy’s managing director
Johannes Benigni, at the conference.
Supply insecurity, due to project delays,
and political uncertainty have also hampered
gas project development.
Bahrain is in LNG talks with Qatar, Egypt,
and Russia and its oil minister visited Tehran
on February 2nd, aiming to resume stalled
talks over importing 500mn ft³/d of pipeline
gas from Iran. Oman also hopes to import
pipeline gas from Iran to Oman’s LNG trains.
“We are only using 8mn t/yr of their 11mn t/
yr capacity,” Brian Buckley, Oman LNG’s
chief executive said.
Oman also faces project delays to its
planned 1.5bn ft³/d BP-operated BP Khazzan
and Makarem tight gas
elds, which won’t
reach full output until 2017, back from the
original goal of a 2010 start up, although the
expected amount is now 500mn ft³/d more
than originally planned. “Oman’s production
meets demand, but in future it will be tight,”
said Buckley.
Kuwait is also struggling to ramp up
production at its planned 1bn ft³/d northern

elds non-associated gas development.
“Production is stuck at 155mn ft³/d,” said
Mohammad Husain, deputy chief of
state-owned KPC’s upstream planning
division. The project, which had an
original target of 2015, is 18 months
behind schedule due to engineering
problems in the processing plant. KPC
cannot say when the problems will be
overcome. Abu Dhabi’s state-owned
ADNOC produces 6bn ft³/day, of
“OUR LNG IS PRIMARILY SOLD THROUGH
TERM CONTRACTS IN ASIA, THOUGH
OCCASIONALLY SOME QUANTITIES ARE
OFFERED FOR SALE ON THE SPOT MARKET”
HASAN AL MARZOUQI, ADGAS DEPUTY GM (PICTURED LEFT)
Refining & Petrochemicals Middle East March 2010
Gas Arabia Summit 11
Gas Arabia was held in Abu Dhabi last month.
which 2bn ft³/day is reinjected into oil
elds,
600 – 700mn ft³/d is exported as LNG for
which there are no plans to change export
quantities - and the rest sold as sales gas. The
ADNOC group subsidiaries GASCO and
ADGAS provide 90% of the UAE’s gas
production. The country imports 2bn ft³/d
from Qatar and faces a de
cit of 2bn ft³/d
during the peak summer season. It is
estimated the UAE will need a further 5bn
ft³/d for extra power capacity by 2019.
Hasan Al Marzouqi, ADGAS deputy general
manager said that his company produces
5.4mn t/yr of LNG and the rest is natural gas
liquids. “LNG is primarily sold through term
contracts, mainly to Japan and Korea, though
occasionally some quantities of LNG are
offered for sale on the spot market,” he said.
“We are exporting 350 000 tonnes to 400 000
tonnes of lique
ed petroleum gas (LPG) each
year,” he added.
Iraq also boasts signi
cant reserves which
could one day be piped around the region.
“The current Iraqi gas reserve is around 3.1
tcm (112tcf),” said Dr Jennifer Coolidge,
executive director of CMX Caspian and Gulf
Consultants. “About 2.2tcm (71%) of the
reserves are associated, 620 bcm (20%) are
non-associated, mainly in Kurdistan region,”
she added. The majority of attendees agreed
that GCC governments should intensify
investments to develop the region’s gas
elds
to meet increasing demand from domestic
and industrial sectors.
12 CEO Interview

S ON
YEAR Ahm
ed Al Oh
ali

10
EO
rsary, C ast
e
th anniv iddle E
its ten icals M
s
brate Petroch
em
c ele
ipchem sively to
As S ks exclu
spea

methanol and butenol plant which started

ompetition between private Saudi
Petrochemicals Middle East, and revealed
what he sees as his major achievements
with the company after its first ten years,
along with its future expansion plans.
“At the time of its formation in
December 1999, Sipchem had a modest
commercial production in 2004, while the
most recent phase is set to go on stream by
2013. “The successful implementation of
phase-I (methanol and butanediol plants)
which started up in 2004 and 2005
respectively, followed by the recent start
up of the Phase 2 (acetyls complex) make
us proud and confident about our strategy
and its execution. Phase 3 is progressing
very well with start up planned for 2013,”

C petrochemical producers is
intensifying. One of the fastest
growing companies in the
kingdom is Saudi International
Petrochemical Company (Sipchem), which
completed its first decade of existence in
December. Ahmad Al-Ohali, CEO of the
company talked exclusively with
paid up capital of US$133m (SR 500m).
This has now grown to $880m (SR 3.3bn).
During the first ten years our employees,
who form the backbone of our success,
grew from just a handful to more than
700,” says Al-Ohali.
The company’s operations have grown in
three phases. The first phase was a
explains Al-Ohali.
The CEO of Sipchem also revealed that
Sipchem is in the process of building a
corporate product application and
technology centre in Dhahran. “The
state-of-the-art world-class technical
centre, that is scheduled to start in 2013,
will support the development of the

Refining & Petrochemicals Middle East March 2010 www.arabianoilandgas.com


products and the process technology of the
polymer and other products of Sipchem,”
notes Al-Ohali.
Sipchem was the last company to receive
subsidised ethane gas feedstock from
Saudi Aramco in 2007. Looking ahead,
Sipchem anticipates awarding the
Ahmed Al-Ohali, CEO of Sipchem.
www.arabianoilandgas.com
contracts related to its joint venture
project with Hanwah from South Korea by
the end of 2010. “The projects being
considered with Hanwha are targeted to be
awarded in late 2010 and early 2011. Other
projects under consideration could be
awarded in a similar time frame,” says
Al-Ohali. “The projects are progressing as
per plan with engineering work and
preparation for tendering the EPC work,”
he reveals.
The joint venture with Hanwah is set to
produce 200 000 t/y ethylene vinyl acetate
(EVA) plant and a 125 000 t/y of polyvinyl
products. Sipchem will hold a 75% stake in
the joint venture, with Hanwha holding
25% of the company.
Financing the joint venture project is
expected to come in the form of procured
senior debt commitments from SIDF, PIF,
ECA’s, and commercial banks. “The
“THE PROJECTS BEING CONSIDERED WITH
HANWHA ARE TARGETED TO BE AWARDED IN
LATE 2010 AND EARLY 2011. OTHER PROJECTS
UNDER CONSIDERATION COULD BE AWARDED
IN A SIMILAR TIME FRAME”
AHMED AL-OHALI, CEO OF SIPCHEM
Refining & Petrochemicals Middle East March 2010
CEO Interview 13
financing plan is being developed,” says
Al-Ohali. “Whereas some equity for this
project was procured in the March 2008
rights issue, additional equity funds will be
required for this project and other
Sipchem projects being considered. The
amount of funding required as equity for
Phase III projects is expected to be
finalized in the first half of this year as the
projects being considered are approved by
the board of directors,” Al-Ohali adds.
The company inked in May 2009, a deal
for mutual cooperation on new plants
worths $4bn. “The agreement with Saudi
Arabia Basic Industries Corporation
(SABIC) is a positive move in the Kingdom
toward rationalisation and use of the
installed assets and right synergies,”
explains the CEO. “The ministry of
petroleum and minerals resources is
behind this concept as there are several
crackers in Al-Jubail industrial city that
are not fully utilised to the maximum
capacity,” he reveals.
Under the MoU, SABIC will implement
seven plants worth $3.2bn, while Sipchem
14 CEO Interview
Sipchem used King Fahd industrial port in Al-Jubail industrial city to export the first commercial shipment of acetic acid to Asian markets in December 2009.
“THE DUTY ON METHANOL IS STILL UNDER
INVESTIGATION, BUT WE ARE CONFIDENT THAT
THIS MATTER WILL DISAPPEAR SHORTLY”
AHMED AL-OHALI, CEO OF SIPCHEM
will build two plants worth $800m. “The
idea is to utilise idle capacity in existing
crackers to process or crack ethane for
other users. Both parties will end up
benefiting from this arrangement as it
adds value to the cracker owner and the
user,” he observes.
Chinese tax breaks
Though the company’s methanol and
butandiol products are subject to anti
dumping duties in China, the company is
con
dent that these measurements will be
lifted soon.“The duty on methanol is still
under investigation, but we are con
dent
that this matter will disappear shortly.
However, in a signi
cant and positive
development, China’s ministry of commerce
has recently announced a reduced anti-
dumping duty of 4.5% instead of 20.0% on
butanediol (BDO) imported from Saudi
Arabia (KSA),” says Al-Ohali. “We are eager
Refining & Petrochemicals Middle East March 2010
offset by increased demand as the product
cycle reverses. Additionally, older plants
are removed from the supply curve as they
become less competitive which will reduce
supply for the new plants coming on line,”
he concludes.
to continue working with Chinese regulatory
authorities to reach a better terms than the
4.5% that allow free trade between the two
countries,” he adds.
Even with the huge capacities coming on
stream from the region, the CEO of the
company remains con
dent about future of
the industry in the region due to the
abundance of the feedstock across the
region. “The downstream industry in the
region remains poised for more growth
despite the recent downturn trend of
product cycles. The Middle East region
feedstock pricing provides an opportunity
for local companies to get creative on new
or expansion downstream products during
the bottom of a product cycle as there is the
opportunity to build plants at a lower
construction cost,” he says.
A positive future ahead for producers in
the region, according to Al-Ohali. “New
plants will increase supply but this will be Sipchem’s new project will strengthen its position in KSA.
www.arabianoilandgas.com
 ID C ’10
International Digital Oilfield Conference
Best Practices for Design and
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April 20–21, 2010
Hilton Hotel, Abu Dhabi

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Dave Cobb ADMA-OPCO Bart Stafford SAIC
Nicolas Kessler TOTAL Suresh Jacob Well Dynamics
Fahad Meshal Saudi Aramco Horia Orenstein SAS Institute
Elie Daher Schlumberger Tony Edwards Step Change Global
Damon Brady SAIC Grant Paterson Weatherford
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Mohammad Kurdi SAS Institute Omar Saleh Microsoft
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16 Oman Country Profile
Oman’s 2020 vision
Government support and strong logistics links are helping
drive Oman’s downstream diversification plan
hen oil prices fell below $10
W per barrel in 1998, the Omani
authorities launched a
diversi
cation programme
known as Vision 2020, which involved gas
sales to
nance infrastructure projects. In
the meantime, Oman has opened a
high-tech transshipment seaport to tap
container traf
c like in Salalah and Sohar,
as a part of its long term ambition to
attract international petrochemical
producers to the Sultanate to bene
t from
the well developed logistics infrastructures.
Oman used to export gas to the UAE
starting from 1994, but since 2008 this
situation been reversed, after it started
importing gas from Qatar via the UAE
through the Dolphin Energy pipeline to
meet the increasing domestic demand. “We
have been supplying Ras Al Khaimah with
offshore Omani gas from 1994, and then we
signed three years contract in January
2004 to supply it with gas from our
onshore gas
eld,” says Yousuf Mohamed
AL Ojaili, CEO of Oman Gas Company.
Refining & Petrochemicals Middle East March 2010
Yousuf Mohamed AL Ojaili, CEO of Oman Gas Company.
“THE PORT OF SALALAH AND THE SALALAH FREE
ZONE (SFZ) ALSO PLAYED A MAJOR ROLE IN OUR
DECISION TO INVEST IN OMAN”
NICOLAS BARAKAT, OCTAL PETROCHEMICALS
“This was necessary to cover gas
requirements in the UAE till Dolphin gas
started operation,” he adds.
But the growing demand for gas in Oman
from the industrial and the domestic
sectors, led the Sultanate to import gas
from Qatar. “We started importing gas
from Qatar using the existing export
pipeline of the Dolphin project,” he adds.
“The Dolphin gas complements Oman’s
domestic gas consumption, and is also
consumed in Sohar’s large industrial
complex,” he explains.
Early Dreams
Oman has been keen on having a
petrochemicals industry since the early
1990s. But in view of the huge costs and
www.arabianoilandgas.com
 Oman Country Profile 17

market risks involved, along with the

feedstock limitations, the Sultanate has been
extremely cautious on this. It had a big
setback in October 1999 as BP Chemicals
pulled out of a JV with Oman Oil Company
(OOC) to have a polyole
ns complex built at
Sohar. BP withdrew mainly because OOC
was insisting that it build and own a costly
gas separation plant nearby to provide the
complex with ethane feedstock.
Since then, the scale of investment in the
petrochemical industry has increased,
Oman Oil Company plays a major role in
the sector, investing in many petrochemical
projects inside the Sultanate as well as
outside its national borders.
The start up of the Oman
Polypropylene’s 340 000 tonne per year
grassroots facility in 2006 was the
rst of
more than half a dozen petrochemical Octal’s state of the art facility in Sohar uses patented process technology to improve both efficiency and overall PET quality.
projects under development at Sohar
industrial port, in what the government Foreign presence But, the logistics element for the
hopes will be a vibrant petrochemicals Though Oman can’t compete with Saudi petrochemical industry is not as vital as
cluster and a key element in its Arabia and other GCC countries from a feedstock. The whole industry is based on
diversi
cation drive, Propylene feedstock feedstock price perspective, some foreign feedstock availability. “The production cost
for Oman Polypropylene is supplied by companies prefer the Sultanate for other depends heavily on gas price,” says Sanjay
Sohar Re
nery Company (SRC), which is reasons, especially for those whose primary Sharma, Dubai-based project manager at
currently constructing a new 116 000 feedstock is not based on gas. “Government US petrochemicals consultant Chemical
barrels per day deep steam conversion support to industries, the strength of the Markets Associates Incorporated (CMAI).
re
nery on an adjacent site. rule of law, strong contractual laws, “Oman has varied gas pricing for different
Oman Polypropylene is typical of the property rights, and the Free Trade projects unlike Saudi Arabia,” he adds.
model used for the
rst round of agreement between Oman and the United “Oman ports like Salalah do boast a
investments in the regional petrochemical States are all important factors that strategic location, but I do not believe any
grassroots projects. contribute to the value of OCTAL’s location investment decision is driven by port
The shareholder structure OP is a mix of in Oman,” says Nicholas Barakat, location alone, though it does form an
government and international companies, managing director, OCTAL Petrochemicals. integral part of decision making; for
Oman Oil Company has 60%, South “We selected Oman because it offers a majority of commodity petrochemical
Korea’s LG International (LGI) 20% and strategic location for receiving raw products logistic costs are too low to
Kuwait based Gulf Investment Corporation materials from the Middle East and Asia, inuence the investment decision. Large
controls the remaining 20%; the product and access to key markets in Europe and petrochemical investments are driven
marketing is split between Oman the US,” he explains. “The proximity of the mainly by feedstock pricing” he added.
Polypropylene and LGI, about 35% to 40% location to the trade routes was critical, as
of the polypropylene to be produced is the position of Salalah outside the Straits Major Petrochemical Investments
destined for China and about a third for of Hormuz allows for ready access to of Oman Oil Company
European markets. international shipping lanes circling the Investment Country OOC Share
globe,” he adds.
Aromatics Oman (AOL) Oman 70%
“The port of Salalah and the Salalah Free

116 000
La Seda De Barcelona Spain 6%
Zone (SFZ) also played a major role in our
Oman India Fertilizer (OMIFCO) Oman 50%
decision. Less congested than typical
Oman Polypropylene (OPP) Oman 40%
import-export ports, the port of Salalah has
PTT Chemical (PTTCH) Thailand 1.12%
faster turnarounds for OCTAL shipments
bbl/day of crude oil and fewer delays from where it can access Qingdao Lidong Chemical China 30%

The capacity of Sohar Refinery Company most markets within 14 days,” Barakat Salalah Methanol (SMC) Oman 100%

explains. Source: Oman Oil Company

www.arabianoilandgas.com RefiningPetrochemicals
& Petrochemicals
Middle
Middle
East
East
February
March 2010
18 Oman Country Profile
The Fisher control valve solution from Emerson.
OCTAL plans to become the world’s largest producer of amorphous (transparent) polyethylene terephthalate (APET) sheet packaging, with a 20% market share. (Photo taken 2009).
Integrating downstream projects
Omani companies try to overcome the
problem of high cost of the feedstock, by
integrating their project with re
neries
such as Oman polypropylene. “The Oman
Polypropylene (OPP) plant and the Sohar
Nicholas Barakat, managing director, OCTAL Petrochemicals.
Refining & Petrochemicals Middle East March 2010
Re
nery which produces its feedstock were
conceived as value addition to the crude
and long residue from existing re
nery,”
says Dr Hamed Al-Dhahab, CEO of Oman
Polypropylene. “The OPP plant is also
meant to serve as a platform for further
downstream polypropylene converting
industries to create jobs and business
opportunities,” he adds.
Boosting this trend, Oman is currently
considering building a large re
nery and
petrochemical complex at Al Duqm in
southern Oman, which would be geared
toward export markets.
Duqm Re
ning & Petrochemical
Complex is also expected to include a
cracker, one of the world’s largest
polypropylene plants and mixed feedstock
aromatics facilities. Commercial
production is planned for 2012.
“WE ANTICIPATE COMMISSIONING THE
NECESSARY STUDIES, INCLUDING IMPORTANT
FEASIBILITY AND MARKETING ANALYSIS FOR
DUQM, IN THE VERY NEAR FUTURE”
AHMED AL WAHAIBI, CEO OF OMAN OIL COMPANY
The project is being developed by Oman
Oil Company and Abu Dhabi’s
International Petroleum Investment
Company.
The future of the Duqm re
nery had
been in doubt because of rising costs. In
2007, it was feared that its planned
capacity of 300 000 bbl/day would be
slashed to 150 000 bbl/day. However,
government support for the project is
strong. It is the fourth economic zone to be
developed, after similar projects at Sohar,
Salalah and Muscat.
Last October, Oman Oil Company and
Abu Dhabi’s International Petroleum
Investment Company announced
agreement to assess feasibility to develop
Duqm complx. “We anticipate
commissioning the necessary studies,
including important feasibility and
www.arabianoilandgas.com
 Oman Country Profile 19

marketing analysis for the project, in the

very near future,” said Ahmed Al Wahaibi,
CEO of Oman Oil Company, during the
signature of the agreement.
Ambition of Oman doesn’t stand in
investing only inside the country, as Omani
companies are also investing in gas rich
countries, such as in Algeria, where Suhail
Bahwan Group has entered into a joint
venture with Sonatrach for a world scale
fertiliser plant in Algeria.
The 2020 vision will certainly put Oman
on the right track and reach its ambition in
building an oil independent economy.

300 000
Annual capacity of Octal’s
$350mn PTA plant (tonnes p/y)
Strong port and overland links have been decisive in downstream firms choosing Oman for new downstream projects.

www.arabianoilandgas.com Refining & Petrochemicals Middle East March 2010

Official Show Daily Publisher

THE 3RD SAUDI ARABIA

INTERNATIONAL
OIL & GAS EXHIBITION
& CONFERENCE

10–12 OCTOBER 2010

Join the exhibitors of the largest
oil & gas event in Saudi Arabia DAMMAM,
KINGDOM OF
WWW.SAOGE.ORG SAUDI ARABIA

Knowldege transfer:
BRIDGING
THE GAP
Technology can improve efficiency and help overcome a
shortage of new engineers in the petrochemicals sector
Processing feedstock to another building
block product is the core business of
petrochemical and re
ning industries. This
operation requires tight control and
optimisation of the energy used during the
process as well as a customizations of work
ow to increase pro
tability of the plants.
With the booming downstream industry in
the Middle East, process control equipment
providers are ocking to the region looking for
a slice of the action. AspenTech has recently
opened its
rst branch of
ce in the region,
and says more will follow. “We offer several
range of products to petrochemical companies
including process engineering tools in terms
of process optimisation and simulation, from
the early phase of the project design to
Frederic Gobin, business consulting director at AspenTech.
www.arabianoilandgas.com
Gobin says multi-million dollar savings can be made.
detailed equipment design and engineering,”
Frederic Gobin, business consulting director
at AspenTech told Petrochemicals Middle
East. “We also have business unit focusing on
what’s going inside the plant in terms of data
history, advanced data control, real time
optimisation and also looking into the supply
chain.” The company has been serving major
clients in the region for many years without
having an of
ce in the region.“We have
worked with a number of Middle East
customers such as Saudi Aramco and SABIC.
Aramco has used our cost estimation software
for more then 20 years,” said Gobin. “Both
companies use our process simulation tools
such as Aspen Plus,” he said.
The company’s new of
ce in Bahrain is
strategically located so the team can be close
to that Saudi Arabian market. Gobin says it
also aims to expand and enhance its presence
in the region. “We will soon open of
ces in the
UAE and in Qatar to be nearer our key
clients,” he revealed.
Refining & Petrochemicals Middle East March 2010
21
Fingertip Facts
Company: AspenTech
Founded : 1980
Regional of
ce in the Middle East:
Manama, Bahrain.
Products: Process Solutions
The company provides integrated solutions
that are set to tackle inef
ciencies end-to-end
throughout engineering, planning and
scheduling, and plant operations processes.
Recently the company revealed the results of
South Korean’s LG Chem Company deployment
of aspenONE advanced process control. “In a
single plant - the Daesan ethylene facility - the
AspenTech services team’s implementation of
aspenONE APC delivered a 2% increase in
ethylene and propylene production, and
reduced total energy consumption 1.5% while
meeting plant constraints,” said Gobin. “The
solution helped LG to save US$4 million
annually,” he added.
Knowledge Transfer
One of the challenges facing petrochemical
companies is related to the skills shortage.
Thousands of engineers are on the verge of
retirement and there is a a shrinking pool of
labour with suf
cient skills to replace these
employees. AspenTech also faces the same
problem. “The shortage of engineers is one of
the challenges that we face. It is a major issue
for us and for our customers as well,” he
explained. To optimise knowledge transfer
from one generation of engineers to the next,
the company has developed a simpli
ed
“expert-in-a-box” training sessions and offers
90-minute “lunch and learn” sessions.
“Automated knowledge transfer solutions
that effectively close the skills gap and deliver
a powerful combination of rich functionality
and ease of use are likely to become ever
more popular,” he concluded.
22 Heat Exchangers

EXCHANGE GAME
The temperature transfer technology market is heating up again on the back of
strong project pipelines in the Middle East

ownstream production

D necesitates heat transfer to

process uids and gases into
nal
products. Controling that critical
process falls to heat exchengers which are
often tailor-made for individual projects.
“Heat exchangers are custom built
equipment used for the processing of various
uids and gases by increasing or decreasing
their temperature and or phase,” explains
Moiz Jetpurwala, sales director at Dolphin
Heat Transfer.
There are various types of heat
exchangers including shell and tube type,
air cooled, plate and frame, reboilers, waste
heat recovery units, heat pipes, direct
contact heat exchangers, classi
cations
based according to ow arrangement.
Shell and tube heat exchangers (S&T) are
the most popular type in petrochemical
processing. These work by passing one uid
through the tubes, with the other uid
passes through the shell. The design is ideal Moiz Jetpurwala, sales director, Dolphin heat transfer urges end users to provide manufaturer with correct data to design HE.
for downstream processing because it can
handle extreme operating conditions such
as very high pressures and temperatures.
“THERMAL DESIGN IS THE MOST IMPORTANT
Plate heat exchanger (PHE), are made of ASPECT OF A HEAT EXCHANGER AS THIS
plates pressed in complex patterns which PROCESS DETERMINES THE SIZE AND
form ow channels. When set against each
other, the arrangement is highly ef
cient
CONSTRUCTION DETAILS”
and much more compact in size than S&T MOIZ JETPURWALA, SALES DIRECTOR AT DOLPHIN HEAT TRANSFER
or air cooled heat exchangers. However,
PHE’s can usually only be used at and speci
cations are provided so that the without failure. “The purchaser should also
comparatively lower pressures (up to 30 manufacturer can carry out the thermal and verify the credentials of the manufacturer
bar), and need frequent cleaning to prevent mechanical design of the heat exchangers. like certi
cations, previous experience, in a
fouling. “Plate heat exchangers are suitable “Thermal design is the most important prequali
cation process,” says Jetpurwala.
for offshore platforms or areas where space aspect of a heat exchanger as this process Heat exchangers can be manufactured
is at a premium,” says Uttam Vishwasrao, determines the size and construction details from carbon steel, stainless steel, copper
service manager at Tranter Heat Exchanger. like tube size, length, quantity, bafe and nickel alloys, and more exotic materials
quantity, location, shell diameter and such as titanium. “Each metal has its own
Buyer’s Guide length,” says Jetpurwala. characteristics which require different
Heat exchanger procurement is a complex Mechanical design is important because handling and hence the past experience and
process. Units are typically custom built all the components have to withstand the track record of the manufacturer is very
and it is vital that the correct process data operating pressures and temperatures important,” adds Jetpurwala.

Refining & Petrochemicals Middle East March 2010 www.arabianoilandgas.com


Heat exchanger’s are typuically custom built for petrochemical clients and represent a significant investment in new projects.
“Price and delivery schedules always
play an important role and need to
be included in the overall evaluation,
as this has a direct effect on the budgets
and completion schedule of the projects,”
he adds.
Maintenance of heat exchangers is
necessary as it prevents unplanned down
time, and keeps plants running ef
ciently.
Shell and tube heat exchanger being lowered into place.
www.arabianoilandgas.com
Heat Exchangers 23
Dolphin Heat Transfer’s
shell and tube heat
exchanger is popular in
downstream processing.
12.7bn
The annual global market size for heat
exchangers by 2012 (in US dollars).
Source: Global Industry Analysts.
“Good maintenance of heat exchangers countries like US, Europe, Japan dropped
would prevent the eventual breakdown and signi
cantly which has slowed down the
improve the heat transfer between the pace of new projects as well as expansion
exchangers,” says Mike Watson, managing projects,” he adds.
director of Tube Tech International. However, demand is expected to pick up
As with any equipment used in the again from the second half of 2010 as
energy sector, heat exchangers are subject energy prices have bounced back smartly
to a number of speci
cations dictated by a from their 2009 lows, and several new
host of international organisations. This projects and large contracts have been
includes the ASME (American Society of awarded recently by the major companies
Mechanical Engineers), AD-Merkblatter, based in the GCC and Africa.
and API Standards. “CE certi
cation is also
very popular and in fact it is mandatory for
all heat exchangers that are exported to
European Union countries. European
standard pressure equipment directives are
also frequently used here,” says Jetpurwala.
In addition to these international
standards, upstream companies such as
Saudi Aramco and ADNOC standards will
often have their own standards.
Demand is bouncing back
The heat exchangers market is expected to
cross the US$12.7 billion threshold in 2012.
“The market was very buoyant until the
beginning of 2009, after which it has been
impacted quite hard due to the recession
and a steep fall in energy prices,” reveals
Jetpurwala. “The demand in the major user Mike Watson, managing director at TubeTech International.
Refining & Petrochemicals Middle East March 2010
24 Energy efficiency
Introducing energy efficiency programmes
drives down cost, reduces harmful emissions
and improves production says
Abdelghani Henni
etrochemicals producers are
P struggling to reduce greenhouse
gas emissions and production
costs, and implementing major
energy efficiency initiatives is delivering
tangible results according to the industry’s
leading technology providers.
Energy is a significant cost factor in
downstream business. “The petrochemical
industry is responsible for 70% of the
chemical industry’s expenditures on fuels
and 40% of the expenditures on
electricity,” explains Shunsuke Takagi,
planning group, Mitsubishi Heavy
Industries. “The costs of energy and raw
materials make up roughly two thirds of
the total value of shipments of the
petrochemical industry. Because energy is
such an important cost factor, energy
efficiency is a very important opportunity
for cost reductions,” he adds.
Throughout the production process,
feedstocks are converted to olefins,
polyolefins and other products at high
temperatures, requiring huge energy
consumption. “A lot of the chemical
conversions are exothermic but in many
cases, the reaction heat can be recovered
to be used elsewhere in the plant,” says
Takagi. These separation steps consume
electricity and heat. “Heat is either
supplied by direct heating or by steam
produced in stand-alone boilers or via
cogeneration of electricity and heat,” he
explains.
Refining & Petrochemicals Middle East March 2010
Shunsuke Takagi, Mitsubishi Heavy Industries.
Efficiency Opportunities
A large variety of opportunities exist within
the petrochemical industries to reduce
energy consumption while maintaining or
enhancing the productivity of the plant.
Studies by several companies in the
petrochemical industries have demonstrated
the existence of a substantial potential for
“AN EXTENSIVE ENERGY MANAGEMENT
PROGRAMME CAN BE EXPECTED TO YIELD
BENEFITS OF BETWEEN 10% AND 25%
REDUCTION IN ENERGY CONSUMPTION”
ANDY COWARD, HONEYWELL PROCESS SOLUTIONS
energy ef
ciency improvement in almost all
facilities. “Improved energy ef
ciency may
result in co-bene
ts that far outweigh the
energy cost savings, and may lead to an
absolute reduction in carbon dioxide and
other fuel-related emissions,” says Takagi.
“Major areas for energy-ef
ciency
improvement are utilities (30%),
red
heaters (20%), process optimisation (15%),
heat exchangers (15%), motor and motor
applications (10%), and other areas (10%),”
says Rexi Chacko, project manager at
Toshiba. “Of these areas, optimisation of
utilities, heat exchangers and
red heaters
offer the lowest investment opportunities
for improving energy ef
ciency.
Experiences of various chemical
companies have shown that most
investments in the
eld of energy ef
ciency
are relatively modest. However, all projects
require operating costs as well as
engineering resources to develop and
implement any ef
ciency initiative. “Every
petrochemical plant will be different. Based
on your unique situation the most
favourable selection of energy-ef
ciency
opportunities should be made,” says
www.arabianoilandgas.com

Shojiro Ishigaki, overseas business division
at the Tokyo based Xenesys.
Energy use is the major source of
emissions in the petrochemical industry,
making energy-efficiency improvement an
attractive opportunity to reduce emissions
and operating costs. “Energy efficiency
should be an important component of a
company’s environmental strategy.
End-of-pipe solutions can be expensive
and inefficient while energy efficiency can
be an inexpensive opportunity to reduce
pollutant emissions,” says Ishigaki.
GPIC Experience
In the Middle East, Bahrain’s Gulf
Petrochemicals Industries Company
(GPIC) has adopted a wide-ranging energy
ef
ciency initiative at its complex and is
the
rst petrochemical company in the
Middle East to use a carbon dioxide (CO2)
recovery plant, in order to recycle carbon
emissions. “The recovery unit can capture
450 metric tonnes of CO2 per day, one of
the world’s largest capacity units for the
chemical application,” says Abdulrahman
Jawahery, GPIC general manager.
“Captured CO2 will be used as feedstock
for urea and methanol synthesis processes.
The technology can recover approximately
90% of the CO2 in ue gas,” he explains.
Solutions
Introducing new process technologies and
integrating utilities help producers to
reduce the greenhouse gases emissions,
Rexi Chacko, project manager, Toshiba.
www.arabianoilandgas.com
Energy Efficiency 25
GPIC is the first petrochemical company in the Middle East to intoduce a carbon recovery plant at its complex.
whilst at the same time improving conserve energy, changes in staff behavior
production. “One of the major bene
ts we and attitude can have a great impact.
are capable of offering is setting up an “Staff should be trained in both skills
integrated energy solution across industrial and the company’s general approach to
sites (including buildings, utilities, plants energy ef
ciency in their day-to-day
and power plants) which provide optimum practices. Personnel at all levels should be
solution levels in a single, holistic aware of energy use and objectives for
approach,” says Andy Coward, advanced energy ef
ciency improvement. Often this
solutions sales manager, Honeywell information is acquired by lower level
Process Solutions (HPS). managers but not passed to upper
“An extensive energy management management or down to staff,” says
programme incorporating both software Chacko. “Though changes in staff behavior,
technology and focused hardware upgrades such as switching off lights or improving
can be expected to yield bene
ts of between operating guidelines often save only very
10% and 25% reduction in energy small amounts of energy at one time, taken
consumption. For a re
nery this can easily continuously over longer periods they can
equate to millions of dollars per year,” have a great effect,” he observes.
Coward adds.
The cost of installation varies depending
on the scale of the implementation. “A
reasonable rule of thumb is that control
and automation projects will typically have
a payback period in the order of 9 months
to a year for an investment of between
US$200 000 and $1 million. Energy
ef
ciency projects that require capital
investment will typically have a somewhat
longer payback period,” reveals Coward.
Toshiba offers other vehicle for payment.
“If we save a particular company one
million dollars per month, we would take a
percentage of that saving as payment for
our services,” says Chacko. Although
technological changes in equipment Abdulrahman Jawahery, general manager, GPIC.
Refining & Petrochemicals Middle East March 2010
26 Contax Partners Report
Market analysis
Evolutionary theory
The changing subcontractor
landscape in the Gulf region
JAIVIME EVARISTO,
BUSINESS ADVISORY
PRACTICE, CONSULTANT,
CONTAX PARTNERS
With 8 years of consulting and research experi-
ence, Jaivime is a consultant in the Business
Advisory Practice at Contax Partners. He has
worked with globally renowned companies such
as GlaxoSmithKline. In addition to his FMCG
experience, he has a strong background in the
energy, utilities, construction sectors within the
Middle East.
Refining & Petrochemicals Middle East March 2010
2009 marked the bicentenary celebration of
the birth of English naturalist, Charles
Robert Darwin, who postulated that: It is not
the strongest of the species that survives…
nor the most intelligent that survives. It is
the one that is the most adaptable to change.
As with many great 19th century thinkers,
perhaps, Darwin too did not expect that his
works would transcend the boundaries of
natural science and seep deep into the
crevices of economics. At no point in recent
times can this be seen more evident than the
impact of the Great 2008-2009 Recession to
businesses and their struggles for survival.
In the GCC hydrocarbon sector, for
example, the impact of c.US$30-35bn worth of
capital projects that have been cancelled or
put on hold following the crisis, which was
severely felt in Q3/Q4 2008, cannot be
overstated. Aggravated by cash flow
constraints that seem to worsen as one goes
down the EPC value chain, the 80/20
principle could in no circumstance be
neglected. The emphasis grows more
profoundly especially in small and medium-
sized contractors who by nature need to
defend themselves from bad debts by
expanding their customer base and thus
reduce dependence on limited sector clientele.
Hence, in recent months we have seen market
trends where traditional subcontractors have
carefully extended their wings into relatively
new disciplines and functions by employing
either vertical (inter-functional) or horizontal
(inter-disciplinary) integration strategies.
Inter-functional Integration
Specialty discipline contractors such as
Kentz and Larsen & Toubro (L&T) have
recently proved themselves highly capable
of carrying out full EPC projects. With
project values in the range of US$50-250mn,
Kentz and L&T appear well positioned to
capitalize on their in-house engineering
capabilities in the execution of relatively
small-sized EPC projects. The value
proposition for the project owner is
straightforward and simple: reduce the
client-contractor interface complexity and
risk through a single-point EPC
responsibility. Conversely, the contractors
benefit from the approach as it enables them
to capture more of the pie and move up the
value chain by building their full EPC
capabilities albeit on a relatively more
specialised and smaller scale.
The timing for a single-point
responsibility value proposition appears
most suitable in the conditions that have
shaped the GCC Capex market in the last 14
$79bn
Current Saudi Arabian private sector
investment in energy projects.
Source: www.sagia.gov.sa
www.arabianoilandgas.com
 Contax Partners Report 27

15%
GCC operations and maintenance market
is expected growth 15% each year to
US$17.7bn by 2014 - more than double its
current level of $8.8bn. Source: Contax Partners

management company, AMEC, to offer local

asset support services, still in the O&M
sector. The growing attractiveness of the
GCC O&M market to contractors is also
reflected in project owner trends elsewhere
worldwide.
Globally, recent results from a study
conducted by US-based FMI entitled
Inflection Point: Defining the Future of the
Worldwide Construction Industry found a
30% increase in outsourcing O&M activities
Contractors are meeting the new challenges by employing vertical or horizontal integration strategies. by project owners since 2006. The trend is
more likely to increase further between now
months. On a business development level, Arabia, the UAE and Qatar. To take and 2014. Although the propensity to
whilst both Kentz and L&T have shown advantage of this, we have recently seen the outsource O&M in the GCC varies largely
great strides in fortifying their respective likes of Athens-based CCC forming a JV by country and by project owner, potential
full EPC capabilities, the performance to with UK’s Wood Group covering the GCC opportunities are in no doubt up for grabs in
date suggests that neither has a “strike and Yemen. In addition, Qatar’s Black Cat the coming years. Local contractors with
anywhere” approach. In fact, the strategic early this year formed a joint venture with high quality resources on the ground, which
intent of their business development international engineering and project are able to forge partnerships with well-
efforts looks clear: Kentz wishes to carve a
niche in specialist EPC services for onshore
modular production, turnkey temporary
and O&U facilities with focus in upstream
oil and gas sectors; L&T, on the other hand,
looks bent on maximizing the economies of
scale in the execution of power sector
projects, particularly substations and
transmission lines.
Similarly, other contractors have
expanded further downstream in the vertical
value chain of industrial facility
development, particularly in the area of
Operations and Maintenance (O&M).
Contax Partners has long communicated
that the next growth market for contractors
in the GCC will be in the operations and
maintenance of existing and future oil and
gas assets. It is estimated that the GCC O&M
market will grow by a CAGR of 15% to
c.US$17.7bn by 2014 from c.US$8.8bn this
year, driven largely by new assets in Saudi The multi billion dollar petrochemical projects in Abu Dhabi have attracted international contractors.

www.arabianoilandgas.com Refining & Petrochemicals Middle East March 2010

28 Contax Partners Report

reputed international service providers, will

no doubt lead the pack within the upcoming
GCC O&M market.

Inter-disciplinary Integration
Although not all contractors have the
capability of integrating vertical functions
such as engineering, procurement,
construction, operations and maintenance
quickly, others are pursuing horizontal
expansion and integration by developing
new capabilities across disciplines. Some
contractors specialized in mechanical
installation and fabrication have recently
expanded into offshore marine and E&I.
Conversely, others that are traditionally
focused in E&I are now considering
expanding its mechanical and piping
capabilities to complement the existing suite
of E&I services.
Moreover, other contractors that used to
subcontract non-core disciplines out are now Local contractors with high quality resources on the ground need to join forces with foreign partners.

considering carrying out multi-discipline

activities in-house either through
“synergies” with respective contractors that
belong to the same holding company or
investing in assets that, on a more long-term
scale, provides the basis for further
integration.
These trends support the level of
innovation that firms are undertaking in the
hope of achieving economies of scope and
improved market power over competitors.
“The only thing constant is change”
Firms resort to a myriad of combinations in
trying to maximize the value of horizontal
and vertical integration. Some streamline
their focus to gain superior advantage in a
given niche while others broaden their
portfolio to spread risks more evenly and
enhance their bottomline from different
revenue streams. Whichever route a firm
decides to take, its ability to acquire critical
market information, identify scenarios and
analyse the implications of each option,
formulate strategies and value propositions
that are aligned to the customer needs and
and execute tactical and strategic plans
flawlessly with a high degree of flexibility
could well stand the practical definition of
business adaptation, specifically in the
context of the ever changing EPC market
in the GCC.
Whether the aforementioned contractor
trends will shape the future of the
prevailing projects market in the GCC, or
if the market is only responding to the
needs of the times, is a worthy topic of
debate. Whichever market force comes
first, it is clear that what remains
pragmatically compelling is the fact of
nature which favours those that are
“adaptable to change”.

To further discuss how the Contax

Partners’ Business Advisory Team can
help you fully understand the current
subcontracting environment and support
you in planning for and executing your
Capex projects successfully, please contact
Ann-Marie Carbery at AnnMarie.
Carbery@contaxpartners.com.
Operations and maintenance outsourcing by project owners has increased 30% since 2006.

Refining & Petrochemicals Middle East March 2010 www.arabianoilandgas.com

 The Middle East Downstream Week
11th Annual Meeting
Abu Dhabi UAE · 22-25 March 2010
The Middle East Downstream Week (MEDW 2010) is a unique
concept combining five events over four days. At MEDW 2010,
you will get access to:
2-day strategic conference s 1-day fuels symposium s
Refining seminar s Refinery and petrochemical master-class s
Ruwais site visit
It will bring you together with the entire downstream
community, to discuss and debate the key issues, to identify
and compare business strategies and to meet the people
you need to, to drive your organisation forward.
MEDW 2010. The meeting place for the Middle East Downstream community.
For more information visit www.wraconferences.com/medw11 or call +44 (0)20 7067 1800
CO HOSTS: SPONSORED BY:
Key panel members include:
Jasem Ali Al Sayegh, General Manager
ABU DHABI OIL REFINING COMPANY (TAKREER)
Salem Shaheen, President and Chief Executive Officer
SAUDI ARAMCO TOTAL REFINING COMPANY (SATORP)
Bryan Chen, Executive Director, MASHAEL GROUP
Guruswamy Raghunathan, General Manager, Refinery
EMIRATES NATIONAL OIL COMPANY (ENOC)
Maurice Bannayan, Senior Vice President, RELIANCE INDUSTRIES
Saleh Fahad Al Nazha, President and Chief Operating Officer
NATIONAL INDUSTRIALISATION COMPANY (TASNEE)
Ebrahim Talib, General Manager, Refining Division
THE BAHRAIN PETROLEUM COMPANY (BAPCO)
30 Number Cruncher

Downstream
Data Weak annual results saw Saudi Arabia’s petrochem
producers share prices decline, but Kuwait’s top firms
posted significant gains.

LISTED COMPANIES IN THE SAUDI STOCK MARKET

Price on Jan,19th (US$ Price on Feb,19th (US$ Change %
per share) per share)

Saudi Basic Industries Corporation (SABIC) 23.93 23.73 -0.84

Saudi Arabian Fertilizer Company (SAFCO) 33.73 36.40 7.33

Saudi Kayan Petrochemical Company (Kayan) 5.05 4.88 -3.55

Rabigh Refining and Petrochemical Company (Petrorabigh) 9.31 8.80 -5.76

Yanbu National Petrochemical Company (YANSAB) 9.47 9.97 5.05

National Industialization Company (TASNEE) 7.52 7.52 0.00

Saudi Industrial Investment Group (SIIG) 5.92 5.88 -0.68

Saudi International Petrochemical Company (SIPCHEM) 6.37 6.16 -3.46

Sahara Petrochemical Company (SAHARA) 5.68 5.65 -0.53

Advanced Petrochemicals Company (Advanced) 6.56 6.28 -4.46

Nama Chemicals Group (NAMA) 2.81 2.64 -6.57

Alujain Corporation (ALUJAIN) 4.92 4.49 -9.58

Methanol Chemicals Company (CHEMANOL) 4.15 4.04 -2.64

Petrochem 4.13 4.13 0.00

LISTED COMPANIES IN THE KUWAITI STOCK MARKET

Price on Jan,19th (US$ Price on Feb,19th (US$ Change %
per share) per share)

Qurain Petrochemical Industries Company (AL-QURAIN) 0.67 0.71 4.95

Boubyan Petrochemical Company (BOUBYAN) 1.49 1.79 16.67

Ikarus Petroleum Industries (IKARUS) 0.47 0.47 0.00

LISTED COMPANIES IN THE QATARI STOCK MARKET

Price on Jan,19th (US$ Price on Feb,19th (US$ Change %
per share) per share)

Industries Qatar 30.33 30.13 -0.66

LISTED COMPANIES IN THE OMANI STOCK MARKET

Price on Jan,19th (US$ Price on Feb,19th (US$ Change %
per share) per share)

Oman Chlorine S.A.O.G. (CHLORINE) 1.01 1.01 0.00

LISTED COMPANIES IN THE EGYPTIAN STOCK MARKET

Price on Jan,19th (US$ Price on Feb,19th (US$ Change %
per share) per share)

Abu qir Fertilizers 40.92 41.67 1.80

Sidi Kerir Petrochemicals Company 2.09 2.32 9.81

Refining & Petrochemicals Middle East March 2010 www.arabianoilandgas.com

 Number Cruncher 31

1100 1350 Benzene prices edged

BENZENE (FOB FAR EAST) ETHYLENE (FOB FAR EAST) to US$950 per tonne
1000 1250
supported by a surge
900 1150 in US and European
800 1050 benzene values due to
US$/tonne

US$/tonne
700 950 an outage at a key
producer in the
600 850
Netherlands.
500 750
400 650 Ethylene prices have
declined to $1220 per
300 550

07/01/09

11/02/09

18/03/09

22/04/09

27/05/09

29/06/09

03/08/09

06/09/09

11/10/09

14/11/09

26/12/09

30/01/10
07/01/09

11/02/09

18/03/09

22/04/09

27/05/09

29/06/09

03/08/09

06/09/09

11/10/09

14/11/09

26/12/09

30/01/10
tonne. Buyers are
CFR: Cost and Freight FOB: Freight On Board holding off in
anticipation of further
1380 1250 price declines,
PPF (CFR FAR EAST) PROPYLENE (FOB FAR EAST) confident of further
1280 1150
reductions due to the
1050 new production
1180
coming on stream.
US$/tonne

US$/tonne

950
1080
850 MEG prices remained
980 stable at $980 per
750
tonne. The majority of
880
650 the market players
780 were away for the long
550
07/01/09

11/02/09

18/03/09

22/04/09

27/05/09

29/06/09

03/08/09

06/09/09

11/10/09

14/11/09

26/12/09

30/01/10

07/01/09

11/02/09

18/03/09

22/04/09

27/05/09

29/06/09

03/08/09

06/09/09

11/10/09

14/11/09

26/12/09

30/01/10
lunar new year
holidays in China.

1050 850 Propylene prices

PVC (CFR FAR EAST) 800
NAPTHA (CRF FAR EAST)
traded around $1200
1000
750 per tonne throughout
950
700 February.
900
650
US$/tonne

US$/tonne

850 Polyethylene prices

600
800 reached $1300 per
550
750 500 tonne last month
700 450
thanks to concerns that
650 the new credit
400
tightening measures
600 350
07/01/09

11/02/09

18/03/09

22/04/09

27/05/09

29/06/09

03/08/09

06/09/09

11/10/09

14/11/09

26/12/09

30/01/10
07/01/09

11/02/09

18/03/09

22/04/09

27/05/09

29/06/09

03/08/09

06/09/09

11/10/09

14/11/09

26/12/09

30/01/10

announced in China
might dampen China’s
import capacity.
1350 1100
HDPE (CFR FAR EAST) MEG Polypropylene prices
1250 1000
stablised around $1300
900 per tonne amid
1150
continued tight supply
US$/tonne

800
US$/tonne

1050 and strong demand

700 from key markets.
950
600
PVC prices stablised
850 500 around $1010 per tonne
750 throughout February.
400
07/01/09

11/02/09

18/03/09

22/04/09

27/05/09

29/06/09

03/08/09

06/09/09

11/10/09

14/11/09

26/12/09

30/01/10

07/01/09

11/02/09

18/03/09

22/04/09

27/05/09

29/06/09

03/08/09

06/09/09

11/10/09

14/11/09

26/12/09

30/01/10

(HDPE Injection)

Source: www.argaam.com

www.arabianoilandgas.com Refining & Petrochemicals Middle East March 2010

32 Face to Face
REDUCING
DOWN TIME
Peter Venn, regional director at SAS, says predictive
maintenance can reduce down time at production plants
In a nutshell, what does SAS offer the
downstream industry?
We offer software and solutions to assist our
clients in ef
ciency, effectiveness and
optimisation around their operations,
particularly focusing on the optimisation of
asset operations. We also help clients with
predictive asset maintenance, predicting
when equipment will fail, and assisting the
maintenance organisation. Also, we provide
companies with demand forecasting models
and solutions. In one sentence: We leverage
our customers with data and knowledge,
solutions and intellectual property to help
them improving their operations.
Who are your major clients in the
Middle East?
We have a number of clients in the region
and we are particularly strong in Saudi
Arabia. We have huge success stories with
them around the asset operations
optimisation. The tough environmental and
climate conditions in the region plus the
vast desert stretches affect a large number
of equipment and critical assets. Quite often
the equipment and asset doesn’t operate
within its de
ned operational envelope. So,
we assist companies to understand the true
operational envelope and how to operate
them ef
ciently and correctly. Our solutions
can help clients predict equipment failure
before it occurs. We help them by saving
down times. For example, last year a piece
of equipment went down eight times. If we
are able to reduce the number by just one of
those eight times, what would be the
additional bene
ts for the organisation?
The down time could cost a facility up to
Refining & Petrochemicals Middle East March 2010
US$10 million, and being down may impact
other phases of the production chain. So
helping companies in saving one of these
down times would save huge money. We
have a lot of options to help companies in
this regard.
Is awareness building around this issue?
I think that there is big awareness among
our clients regarding the move to
predictive maintenance. All companies are
currently undertaking preventative
maintenance, but they would like to move
to predictive maintenance, as they want to
Predictive maintenance can reduce downtime.
PETER VENN
REGIONAL DIRECTOR,
OIL AND GAS, SAS
be more efficient in their operations and
reducing their operational cost.
What are the challenges facing companies
to move to predictive maintenance?
The
rst thing is to get a handle on the data
that they have. They need to collect it into
one place and understand what that data
means with regards to the equipment and
make sense of it. We have been doing this
for different industries that have a lot of
data but they don’t know what to do with it.
The biggest challenge is that it’s hard for
somebody to trust software to tell you that
your equipment will fail tomorrow. You
have to trust
rst and then you have to put
it in the process to be able to say: Okay, I
trust that this equipment is going to fail
tomorrow, now I am going to take some
proactive and preventative maintenance
based on this information. At the end of the
day, it is a belief in the data model and it
takes time to overcome this challenge.
What’s your pedigree?
I’ve been working for SAS for almost eight
years. My experience is on the business and
information technology side. I have been
working with several major oil, gas and
utilities companies for ten years now. I
worked in South Africa with utilities
companies, and have great passion and
determination for what our solutions can
offer our clients.
www.arabianoilandgas.com
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Applications For Use In Potentially
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Okazaki designs and build

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By Petro Middle East
PO. Box 802, Abu Dhabi
Tel: +971 2 6212140 Email: pme@pme.ae

OKAZAKI MANUFACTURING COMPANY, EUROPEAN OFFICE : Ashwood House, 66 Cardiff Rd, Glan-Y-LLyn, Taffs Well, Cardiff, CF17 7AF, Wales, UK
Tel: +44 (0) 2920 814 333 | Email: Sales@okazaki-mfg.co.uk | www.okazaki-mfg.co.uk