Nexant APIC 2016

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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

    [email protected]

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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

    Sao Paulo

    Bahrain

    TokyoSeoul

    Shanghai

    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

    5

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    Industry Growth Drivers

    6

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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

    10

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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

    14

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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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    Nexant Asia Limited

    22ndFloor, Rasa Tower 1

    555 Phahonyothin Road

    Kwaeng Chatuchak,Khet Chatuchak

    Bangkok 10900,

    Thailand

    Telephone: + 66 2 793 4600

    Facsimile: + 66 2 937 0144

    www.thinking.nexant.com

    This presentation was prepared by Nexant Limited (Nexant). Except where specifically statedotherwise in the presentation, the information contained herein was prepared on the basis of

    information that is publicly available and has not been independently verified or otherwise examined todetermine its accuracy, completeness or financial feasibility. Neither NEXANT, nor any person acting on

    behalf of NEXANT assumes any liabilities with respect to the use of or for damages resulting from theuse of any information contained in this presentation. NEXANT does not represent or warrant that anyassumed conditions will come to pass.

    This presentation is integral and must be read in its entirety.

    The presentation is given on the understanding that the recipient will maintain the contents confidentialexcept for internal use. The presentation should not be reproduced, distributed or used without firstobtaining prior written consent by NEXANT. This presentation may not be relied upon by others.

    This notice must accompany every copy of this presentation.

    Nexant, Inc.

    San Francisco

    New York

    Houston

    Washington

    London

    FrankfurtBahrain

    Singapore

    Bangkok

    Shanghai

    Kuala Lumpur

    M: +66 89 890 6450

    T. +66 2793 4600

    E. [email protected]

    Energy & Chemicals Advisory

    Clive GibsonVice President

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