APIC ANNUAL MEETING, Singapore

India – a new growth engine of petrochemicals?

Threat or Opportunity for Asian producers?

Clive Gibson
Vice President, Nexant
cgibson@nexant.com
19-20 May 2015
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2
Agenda
Macro Economic Fundamentals and Growth Drivers
Industry Landscape
Sector Challenges and Opportunities

5
Macro Economic Fundamentals and Growth Factors

6
 China and India have followed divergent economic paths
Comparison of Historical GDP GDP Sector Breakdown - 2015 GDP Growth
Agricultu 10
re China
9

Real GDP Growt, percent

8
Services
7
GDP PPP 2015$

6
5
Industry
4
3
India Agricultu
re 2
1
0
2011 2012 2013 2014 2015
Services
1990 1995 2000 2005 2010 2015
Industry
China India
China India

7
 Increasing consumer wealth is driving vehicle fleet growth in India resulting in higher fuels demand
India – Vehicles, Population and GDP Regional Vehicle Ownership vs GDP

Vehicle ownership per capita

in India is one of the fastest
growing in Asia

May 2016 8
 Indian transportation fuels demand remains in a high growth phase
Global Gasoline & Diesel Consumption Trends
5
India
4
Market Growth - percent CAGR 2015- 2020

China
3

2
Western Europe N America
1

-1
Japan
-2

-3
0 200 400 600 800 1000 1200 1400 1600 1800
Current Annual Consumption, Kg/Capita
Bubble size indicates total current demand

9
 Indian polymer growth trends remain well above the global average, albeit from a low demand base
Global Polymer Consumption Trends
10

9
Market Growth - percent CAGR 2015- 2020

India
8
China
7

4 United States

3 Western Europe
2 Japan
1

0
0 10 20 30 40 50 60 70 80 90 100
Current Annual Consumption, Kg/Capita
Bubble size indicates total current demand
Polymers include: LD, LL, HD, PP, PVC, PS, EPS, ABS, SBR, BR

10
 Tremendous growth potential exists for most polymers
India Polymer Consumption Pattern
14
PET
12
Market Growth - % CAGR 2015- 2020

10

SBR PVC
8 LDPE HDPE
LLDPE
ABS PP
6 LLDPE
BR
4
PS

2 EPS

0
0 1 2 3
Annual Consumption Kg/Capita
Bubble size indicates current demand

11
Industry Landscape

12
Primary Energy trends in India drive downstream industry development opportunities

Coal
 Third largest global consumer
 Accounts for nearly 60 percent of domestic primary energy

Oil
 Over 75 percent of demand is imported
 Accounts for around 30 percent of domestic primary energy needs.

Gas
 Accounts for less than 10 percent of domestic primary energy needs
 Partial reliance on LNG imports

13
Indian refining capacity is 4.2 million barrels per day (210 million tons per year)
Refinery Locations
 Most recent grass roots capacity additions include IOCL Paradip
(2015/6), HMEL Bathinda and BORL Bina (2012)

HMEL Bathinda, 180kbd  Over 50 percent of refining capacity in W India

IOC Panipat, 300kbd

Reliance DTA
IOC Mathura, 160kbd
IOC
Bongaigon,  Landlocked refineries must match local demand
IOC Barauni, 47kbd
Jamnagar, 660kbd
120kbd BPCL Numaligarh,
Reliance SEZ
60kbd
Jamnagar, 580kbd
BORL Bina, 120kbd  Refinery upgrading focused on FCC and coking
IOC Koyali 260kbd
Essar Vadinar, 400kbd  Refinery-Petrochemicals integration focused on propylene and
IOC Haldia, 150kbd
Essar HPCL Mumbai, 130kbd IOC Paradip, 300kbd aromatics
Vadinar, BPCL Mumbai, 240kbd
400kbd
HPCL Vizakh, 166kbd
 Ownership is domestically focused and mainly state owned.

CPCL, Madras 210kbd

MRPL Mangalore, 300kbd

New Refinery
BPCL Kochi, 192kbd Existing Refinery

14
 India – Asia’s global trading pivot in transportation fuels

India – The Asian Trading “Pivot”

(Gasoline and Diesel)
40

30

20
Million tons per year

10

-10

-20

-30
1995 2005 2015
Asia Asia ex india India Indonesia
15
Petrochemicals complexes are focused in West India and/or often integrated with refineries
Major Petrochemicals Site Locations

Butadiene
Propylene

Benzene
Ethylene

LLDPE

Phenol
HDPE
LDPE
MEG

SBR
PVC
ABS

PET
PP
PS
PX
Location

Panipat
Jamnagar        
Bhatinda Gandhar      
Mathura Hazira           
Auraiya Vadodara         
Nagothane       
Patalganga Panipat       
Jamnagar Koyali Vadodara Haldia
Dahej          
Dahej
Gandhar Auraiya    
Hazira
Haldia       
Thrombay Thrombay  
Mumbai
Nagothane
Visakhapatnam Koyali  
Bhatinda  
Mumbai   
Mangalore    
Kochi  
Mangalore
Chennai Chennai 
Visakhapatnam  
Paradip 
Kochi Patalganga   

Other standalone PET, ABS/SBR and Vinyls plants not shown

16
 The basic petrochemicals building blocks are growing in India
Combined Olefins Capacity Development Combined Benzene / PX
90 40

80 35

70 30

Million tons per year

60
Million tons per year

25
50
20
40
15
30
10
20
5
10

0 0
2005 2010 2015 2020 2005 2010 2015 2020

India SEA Other NEA China India SEA Other NEA China

17
 Indian Olefin derivatives trade - Increasing deficits in MEG and PVC, Declining surplus in PP and BD
Net Ethylene Derivatives Trade Net Propylene Derivatives Trade Net Butadiene Derivatives Trade
1
0.5 0.2

0
0.1
Million tons per year

Million tons per year

Million tons per year

-1 0.0 0.0

-2
-0.1
PP PO Phenol
LDPE LLDPE HDPE
ACN AA IPA
MEG PVC
-3 -0.5
2005 2010 2015 2005 2010 2015 -0.2
2005 2010 2015

Net trade shown on olefins equivalent basis

BR SBR ABS BD

18
 Indian Aromatics Derivatives trade – Limited benzene derivatives investments drive trade whilst
polyester driving PX chain deficits.
Net PX Derivatives Trade Net Benzene Derivatives Trade

1 1

0
Million tons per year

Million tons per year

0

-1

-2 -1
2005 2010 2015 2005 2010 2015
PET Bottle PTA Px SM Phenol CPL MDI LAB Cumene Benzene
Net trade shown on aromatics equivalent basis

19
Sector Challenges and Opportunities

20
 India does not have access to advantaged feedstocks
Global ethylene production cost curves versus crude oil price
3000 Oil Price
(US$ per bbl)
Liquids cracking
(Current US dollars per ton ethylene)

2500
140
Ethylene Cash Cost

2000
Lighter feedstocks 100
1500
70
1000
50
500

0
0 50 100 150 200
Ethylene Cumulative Capacity (million tons)

21
A number of challenges exist in the evolution of the Indian petrochemicals sector but the growth story is
compelling

 Sourcing competitive feedstocks

 Enabling effective decision making
Challenges

 Accessing appropriate technologies

 Attracting external investment
 Ensuring efficient project execution
 Upgrading logistics and infrastructure
 Managing exchange rate and other economic factors

 Increasing consumer wealth

 Geography
Opportunities

 Economies of scale
 Cost effectiveness
 Development of integrated industry clusters or hub based complexes
 Downstream differentiation and integration
 Closer collaboration between domestic and international companies

22
 Clive Gibson
Vice President
Energy & Chemicals Advisory

M: +66 89 890 6450

T. +66 2793 4600
E. cgibson@nexant.com

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