UOP Olefins Seminar; Efficient Monetization of Natural Gas and LPG UOP Limited Nigel Orchard December 2016 INTRODUCTION Enabling Iran s Future Through Partnership and Technology
UOP Creates Knowledge for the Oil and Gas Industry 1 Refining Petrochemicals Natural Gas Renewables UOP technology makes more than 60% of the world s gasoline, 70% of its polyester and 90% of biodegradable detergents, and processes more than 40% of its LNG Better Economics Continuous Innovation Reliability Expertise UOP technologies offer a high return on investment Continuous technology improvement allows customer operations to remain cutting edge UOP technologies are among the most widely proven in the world UOP has a century-long record leading technology development for the oil and gas industry Process Technology Catalysts Adsorbents Equipment Services 2,500 Engineers and scientists 3,000+ Active patents 200 with PhDs 800+ R&D employees 31out of 36 refining technologies in use today were developed by UOP Largest process licensing organization in the world 2016 by Honeywell International Inc. All rights reserved.
UOP Lines of Business A century of experience in refining, petrochemicals and natural gas Innovative solutions that make customers more efficient and profitable 2 Process Technology & Equipment Technology solutions and equipment for refineries and petrochemical plants Catalysts, Adsorbents & Specialties Enables the chemical reactions that make fuels and petrochemicals Gas Processing & Hydrogen Technology solutions and equipment for natural gas and hydrogen Transportation fuels Chemical feedstocks Additives Catalysts for refineries and petrochemical plants Adsorbents for separations and purification Natural gas purification Liquids recovery and upgrading Hydrogen Process recovery Measurement and purification & Control Solutions Renewable Energy & Chemicals Technology to make fuels and chemicals from renewable sources Software Solutions UOP/HPS software to advance project execution and improve plant operations Solutions powered by strong R&D and continuous innovation
Performance Materials & Technologies 3 Honeywell is a global leader in designing and creating high-quality performance chemicals, materials and process automation technologies UOP 31 of 36 today s refining technologies were developed by UOP UOP technology makes more than: 40% of the world s LNG 60% of the world s gasoline 70% of polyester 90% of biodegradable detergents UOP technologies offer a high ROI Process Solutions #1 in Refining & Petrochemical Automation Honeywell Process Solutions are installed at nearly half of the world s refineries helping to refine nearly 40 million barrels of oil a day Awarded Frost & Sullivan s 2014 Main Automation Contractor of the Year UOP and HPS together are an unmatched process technology provider
Outlook for Light Olefins Pricing 4 1,600.00 1,400.00 1,200.00 1,000.00 800.00 600.00 400.00 200.00 0.00 North East Asia Pricing, $/MT 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Ethylene, Spot CFR NE Asia US$ per Metric Ton Propylene (PG), Spot CFR NE Asia US$ per Metric Ton Current oversupply diminishes as NGL cracking and >C3= demand Impact 2015-2017 - Propylene capacity additions come on stream at a faster rate than demand growth. 2018-2020 Propylene pricing rises to Ethylene levels by 2020 due to: - Previous global propylene capacity overbuild outweighed by demand growth - Additional Asia Region Polypropylene capacity - Asia Region to become net exporter of polypropylene driving propylene demand & pricing up Pricing Outlook for Ethylene and Propylene is positive
Why are On-purpose Routes to Olefins Attractive MeOH, Naphtha, C2=, C3= Pricing Propane / C3= Price spreads North East Asia Pricing, $/MT North East Asia Pricing, $/MT 1,600.00 1,600.00 1,400.00 1,400.00 1,200.00 1,200.00 Propylene Propane Spread rises 5 1,000.00 800.00 Naphtha cost rises vs MeOH 1,000.00 800.00 600.00 600.00 400.00 400.00 200.00 200.00 0.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 0.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Methanol, Spot CFR NE Asia US$ per Metric Ton Ethylene, Spot CFR NE Asia US$ per Metric Ton Naphtha, Spot C&F Japan US$ per Metric Ton Propylene (PG), Spot CFR NE Asia US$ per Metric Ton Propylene (PG), Spot CFR NE Asia Propane, Spot CIF Japan US$ per Metric Ton Economic indicators are favourable to both MTO and PDH
Million Metric Tons Million Metric Tons Operating Rate Ethylene markets continue balanced 6 Global Ethylene markets are healthy: Demand growth, 3.7% Current utilization ~88% Demand and production aligned over period North East Asia and US are largest producers but Middle East investment propels them into third place. Investment in feedstock advantaged regions will displace traditional production (eg Europe) NGL feedstock usage growing due to Shale Growth at slightly higher than GDP in developed due to middle class expansion World: Ethylene Supply & Demand 250.0 100% Forecast 200.0 90% 150.0 80% 100.0 70% 50.0 60% 0.0 50% 10 11 12 13 14 15 16 17 18 19 20 25 Demand (3.0/3.7) Production (3.0/3.8) Total Capacity (2.2/3.7) Operating Rate (% AAGR = 10-15/15-25) Source: IHS 2015 IHS World: Ethylene Production by Feedstock 250.0 Forecast 200.0 150.0 100.0 50.0 0.0 10 11 12 13 14 15 16 17 18 19 20 25 Ethane Propane Butane Naphtha Gas Oil Methanol to Olefins Coal to Olefins Others Source: IHS 2015 IHS Middle Eastern production dominates and NGL use increases
Million Metric Tons Million Metric Tons Operating Rate Propylene market remains very attractive 7 On a global basis, propylene markets are healthy Demand growth, 4.5% Current utilization ~82% Demand growth begins to exceed capacity gains by 2019 Steam cracking propylene supply weakens Increase in Light cracker feedstocks reduces C3= from steam crackers. World: PG/CG Propylene Supply & Demand 200.0 100% Forecast 160.0 90% 120.0 80% 80.0 70% 40.0 60% 0.0 50% 10 11 12 13 14 15 16 17 18 19 20 25 Demand (4.0/4.1) Total Capacity (4.1/3.9) Operating Rate (% AAGR = 10-15/15-25) Source: IHS 2015 IHS On-purpose technology has grown rapidly and now has a significant share of the market (~20%) Natural Gas Liquids offer profitable route to on-purpose propylene World: PG/CG Propylene Production By Technology 150.0 100.0 50.0 Forecast Growth higher than C2= due to increase rate of new product applications 0.0 (% AAGR = 10-15/15-25) Source: IHS 10 11 12 13 14 15 16 17 18 19 20 Stm. Crackers Refinery On Purpose 2015 IHS Source: Independent Analysis UOP 7346A-7 On purpose propylene technologies key to meet market demand
8 Value chain uplifts MTO Route Market Price, $/MT PDH Route Market Price, $/MT 1600 1400 1200 $ lift for MTO 1600 1400 1200 $ lift for PDH 1000 1000 800 800 600 600 400 400 200 200 0 Natural Gas Methanol C3=/C4= PP/ PE EVA, EPDM, PVA, EDC etc Natural Gas Methanol 0 Propane C3=/C4= PP/ PE EVA, EPDM, PVA, EDC etc Propane C3=/C4= PP/ PE EVA, EPDM, PVA, EDC etc C3=/C4= PP/ PE EVA, EPDM, PVA, EDC etc 2020 Price Forecast Strongest value addition in olefin production step
Million Metric Tons Percent Fuel Use Million Metric Tons Operating Rate Methanol demand shifting to new applications Real methanol market globally is very small Uses are - Chemicals production eg Formaldehyde, Acetic Acid, Methyl Methacrylate, - Fuels blending eg MTBE, Biodiesel - MTO Feedstock Annual demand growth varies greatly by application: - Traditional chemicals 1-2% - Fuels 4-5% - MTO 9-10% Market price for Methanol does not grow in the same way as the olefin price World: Methanol Supply & Demand 200 160 120 80 40 0 (% AAGR = 10-15/15-25) Source: IHS Forecast 10 11 12 13 14 15 16 17 18 19 20 25 100% 90% 80% 70% 60% 50% Demand (7.7/4.8) Total Capacity (7.7/4.0) Operating Rate Global Methanol Consumption 100 80 60 40 20 0 08 09 10 11 12 13 14 15 16 17 18 0 2015 IHS 50 40 30 20 10 9 Other (4.1/4.9) MTO/MTP (0.0/46.5) Fuel (11.0/7.5) Percent Fuel Use Merchant Methanol (% AAGR = 08-13/13-18) Source: IHS 2014 IHS MTO is growth market for Methanol
Iran Gas and LPG availability 10 GAS Iran is rich in - Gas - Condensate - Oil Global gas price will limit LNG export Gas will continue to be available at advantaged pricing to ensure utilisation LPG 2015 - Condensate production 493K b/d - NGL production 215K b/d 2016 forecast - Condensate production 599K b/d - NGL production 215K b/d Continuing increase in C3/C4 Production - Assuliyah 20 trains produce up to 2000MT/SD of Propane each. Propane is abundant
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