Mr. Steve Jenkins Head Global PX and Derivatives PCI X&P Malaysia

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1 Mr. Steve Jenkins Head Global PX and Derivatives PCI X&P Malaysia Recognized as a leading global authority in the commercial analysis of the paraxylene and derivatives industry sector, Mr. Steve Jenkins, has broad experience in the petrochemical industry gained during the past 28 years in a range of functional and product management roles within ICI and the specialist polyester and intermediates consultancy PCI. He has managed many assignments for clients in the petrochemical sector and works closely with producing and consuming companies in the fields of paraxylene and PTA, providing strategic, commercial and technical analysis and recommendations. A graduate from Oriel College Oxford, he has conducted several major industry-wide studies analyzing the commercial development of paraxylene and feedstock markets and their impact on future corporate operating strategies.

2 Paraxylene Is the Tail Wagging the Dog? IOC Petrochemical Conclave Steve Jenkins PCI Xylenes & Polyesters Asia Sdn Bhd March 18th, 213

3 About PCI Xylenes & Polyesters Formed in 1988, PCI Xylenes & Polyesters provides integrated consultancy services in the polyester and upstream raw material sector Team of 1 industry consultants, each with over 2 years industry experience in refining / aromatics / PTA / polyester EO and glycols Expertise in all aspects of the refinery/cracker polyester business (commercial/strategic/technical/investment) Located in Guildford, UK and Kuala Lumpur, Malaysia with representatives in India, Pakistan, Taiwan, Korea, China, USA and Brazil

4 Agenda Paraxylene Supply - Demand Review Paraxylene Trade Development Evolution of Aromatics Feedstocks Sources Polyester Chain and Refinery Challenges

5 Million Tonnes World Paraxylene Supply-Demand Asset Utilisation 6 5 9% 88% Expect 213 to remain tight until new capacity coming on line is fully established North America Europe Asia/Far East South America Middle East/Africa Utilisation (RHS) 86% 84% 82% 8% 78% forecast growth at trend level of 6 to 7% (approx 2.5 million tonnes per annum). Capacity additions in excess of demand growth from 214 onwards. Supply based on several varying sources of feed

6 Tonnes Asia Paraxylene Supply-Demand Asset Utilisation 45 1% % % 2 85% % 5 75% % Production Capacity Consumption Net Trade Utilisation (RHS) Asian system running hard until the end of 213 when more capacity fully on line. Most PX projects are major investments ($1bn+) usually associated with new or re-vamped refineries - inevitably taking longer than expected to completion The region will gradually import increasing quantities from the Middle East. Constraints on feedstocks supply currently encouraging JV s with existing mixed xylenes suppliers thus avoiding heavy investment in reforming.

7 Tonnes China Paraxylene Supply-Demand % 2 95% % 5 85% 8% % -15 7% Production Capacity Consumption Net Trade Utilisation (RHS) Chinese paraxylene consumption continues to vastly outpace the ability to produce. Trade gap will grow to over 7 million tonnes in 213. Three major projects scheduled in 213 either linked to major refining project completions, have other significant feedstock supply challenges or are deploying new Chinese technology Trade gap filled by suppliers in South Korea and the Middle East. It remains challenging for Chinese private investors to fill the gap between the state run refining industry and a dynamic polyester chain.

8 Tonnes Middle East Paraxylene Supply-Demand Asset Utilisation 9 8 1% 95% SATORP JV in 213 first new paraxylene unit in the region for 4 years - also slightly delayed into Q % 85% 8% 75% 7% Four major investments scheduled from 216/17 by Saudi Arabia and Qatar adding almost 4 million tonnes of paraxylene capacity. Limited in-region demand growth with only one PTA project forecast to be completed by % 6% Strategy of new paraxylene units aimed at the Asian deficit but capable also of servicing Europe and South America. Production Capacity Consumption Net Trade Utilisation (RHS)

9 Tonnes North America Paraxylene Supply-Demand Asset Utilisation % 95% 9% 85% 8% North America assumed not to add any additional capacity through this period although BP is expected to restart Decatur. Trade flow from South America reverses from 213 with the start up of the PQS PTA plant. NA also assumed to export to Asia as and when economics will support. 75% % Production Capacity Consumption Net Trade Utilisation (RHS)

10 Tonnes EU27 Paraxylene Supply-Demand Asset Utilisation % 95% 9% 85% 8% 75% Modest consumption growth in 213 but critically dependant on PTA exports. Net trade peaks at around.4 million tonnes by 214 with assets running relatively hard through the period. The region remains long on aromatics feedstocks providing an incentive to divert from a long gasoline market to a short paraxylene market % Production Capacity Consumption Net Trade Utilisation (RHS)

11 Regional Paraxylene Net Trade EU North America Middle East China South America Other Asia

12 OX Column Xylene Column Deheptanizer Reformate Splitter Benzene Column Toluene Column Aromatics Complex Hydrogen LPG C5 minus Raffinate Benzene Toluene Aromatics Extraction C7 & C9 Conversion Naphtha CCR Paraxylene Recovery Metaxylene Recovery Paraxylene Metaxylene Imported Mixed Xylenes Xylenes Isomerisation Orthoxylene Gasoline Blending Heavy Aromatics

13 Tonnes Cumulative Paraxylene Feedstock Trends Mixed Xylenes Existing Reformer Toluene Disproportionation Heavy Naphtha New Reformer C7/C9 Aromatics Transalkylation Condensate New Reformer Other

14 Polyester Fibre Mill Consumption Growth to 22

15 Ktes World Polyester Production Long-term Forecast (excludes Recycle) 18, 16, Long-term global growth trends towards approx 1.3x GDP 9% 8% 14, 7% 12, 1, 8, 6, 4, 2, 6% 5% 4% 3% 2% 1% % Staple Filament PET Film Polyester Growth Rate (AAGR)

16 Polyester Polymer Production by Region 2-23 Asia continues to capture market share of global production 2 2% 23 18% 2% 5% 6% 4% 65% 12% 3% 83% North America Europe Asia/Far East South America Middle East/Africa

17 Tonnes Global Paraxylene Capacity & Consumption The Market Gap 1, 9, 8, Gap analysis indicates >3m tes new PX capacity needed in next 15 years (5% of current global capacity!) 7, 6, 5, 4, 3, 2, 1, PX Capacity Speculative Capacity PX Consumption

18 New PX Capacity Development C8 s now have to be created. Existing MX pools have dried up. Capex therefore much higher for new investment

19 Top 2 PX Producer Groups 212 ( Tonnes) Currently a relatively even spread of production

20 Top 2 PX Producer Groups 22 ( Tonnes) 9, 8, 7, 6, Chinese, Middle East and NE Asian producers exploiting growth by 22 5, 4, 3, 2, 1,

21 Paraxylene Conclusions Polyester chain set to deliver strong long-term growth Long-term issues regarding availability of feedstocks for the polyester chain in N Asia Opportunities exist to upgrade heavy naphtha and condensates to aromatics in South Asia The emergence of US shale oil & gas not as positive for the US Aromatics industry due to the impact on naphtha composition and reforming economics JV s currently being established between Japanese mixed xylenes aligning with new paraxylene capacity in South Korea, avoiding large capex and timing delays to plug short-term gap Most new projects will need significant access to feedstock (FRN/HVN/condensates) Investment options come with wide range of capex and risk

22 Steve Jenkins PCI Xylenes & Polyesters Asia Sdn Bhd