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NEW DIRECTIONS FOR
REFINING – IMPLICATIONS
FOR PETROCHEMICALS
CLIVE GIBSONVICE PRESIDENT
NEXANT
THAILAND
APIC 2018 1
Petrochemicals demand growth likely to significantly outpace oil demand in percentage terms
5
Global Annual Average Growth Forecast (2018-2030), percent
-5
0
5
Transport Fuel Fuel Oil Olefins & Aromatics
APIC 2018
Near Term
Fuel oil demand to be significantly reduced
due to IMO regulations as shippers consider
alternative fuels to meet sulphur restrictions
Longer Term
Transport fuels growth curtailed by impact of
EVs and autonomous vehicles as well as
selective restrictions on diesel use
Despite increasing environmental pressures
on petrochemicals usage, strong growth
expected to continue
For refining industry, short term challenges focus on IMO bunker fuel regulations
APIC 2018 6
2016 2020 2025
Bun
ker
Fue
l Typ
e
HSFO LSFO Diesel/Gas Oil LNG
Potential IMO impact to bunker fuel demand
▪ Shortage of low sulphur bunker fuels
▪ Limited availability of alternative fuels
▪ Higher refinery operating rates
▪ Surplus high sulphur fuel
▪ Price volatility particularly focusing on low sulphur crude
oils, diesel/gas oil and high sulphur fuel oil
▪ Higher logistics costs for many industries
▪ Selective investment in ship scrubbers and refinery
upgrading
Potential short term impacts
In the medium term, EVs will have a limited impact on transportation fuels demand but ongoing
efficiency improvements will restrict transportation fuels demand growth
APIC 2018 7
EV Outlook: Little industry consenus
Managing molecules to maximize value via integration has been a key industry driver
8APIC 2018
REFINERY PETROCHEMICALS
Gases
Naphtha
Reformate
Kerosene
Gas Oils
Propylene
Hydrogen
Fuel
Gasoline compts
C4s
OLEFINS
AROMATICS
OTHERS
Advantaged refining and petrochemicals portfolios leading recent value chain returns
Company Financial Performance by Sector - ExxonMobil
0
10
20
30
40
50
60
2005 2007 2009 2011 2013 2015 2017Ret
urn
on A
vera
ge C
apita
l E
mpl
oyed
per
cent
Upstream Downstream Chemicals
9
Source: Nexant, Company Results
APIC 2018
Current levels of integration reflects geographical drivers such as feedstock availability, technology,
market dynamics and industry structure
10
S Asia SE Asia NE Asia Europe AmericasMid East Integrated Non-Integrated
Refinery Integration – Ethylene Capacity
Refinery Integration – Propylene Capacity
Refinery Integration – Major Petrochemicals Capacity
Ethylene
Paraxylene
Propylene
S Asia SE Asia NE Asia Europe AmericasMid East Integrated Non-Integrated
APIC 2018
Demand Simple Complex Deep
11
Conventional Refining
Demand Simple Complex Deep
Heavy Products Other Light Products Petrochemicals
Indicative Refinery Yield versus Global Demand (weight basis)
Integrated Complexes
IntegratedAromatics
IntegratedOlefins
The development of grass roots world scale integrated refinery-petrochemicals complexes has allowed
refiners to diversify product portfolios and balance supply-demand dynamics
Global
APIC 2018
Simple Complex Deep IntegratedAromatics
IntegratedOlefins
The primary driver of integrated refinery-petrochemicals complexes is improved investment returns
12
Conventional Refining Integrated Complex
Indicative Gross Margins, Singapore US$/bbl
Allowed refiners to diversify product
portfolios into petrochemicals
Significant increase in investment costs
offset by improvement in returns
Recent grass roots developments typically
involve national oil companies due to scale
Recent projects typically employing FCC
technologies to maximise petrochemicals
integration via propylene
APIC 2018
Demand Simple Complex Deep
“Crude Oil to Chemicals” represents a major shift in the degree of refinery-petrochemicals integration
13
Conventional Refining Refining – Petrochemicals integration
IntegratedAromatics
IntegratedOlefins
Crude oil toChemicals 1
Crude oil toChemicals 2
Demand Simple Complex Deep
Heavy Products Other Light Products Petrochemicals
Indicative Refinery Yield versus Global Demand (weight basis)
APIC 2018
“Crude Oil to Chemicals” reconfigures conventional technologies to maximise petrochemicals yield
Olefins/Aromatics Complex
UtilitiesResidue
Upgrading
Hydrocracking/ Fluidised
Catalytic Cracking
Hydrotreating
Crude Distillation
Fuels
APIC 2018 14
“Crude Oil to Chemicals” can employ both carbon rejection and hydrogen addition technologies,
and may employ direct crude processing
Solvent Deasphalting
Residue Hydrocracking
Gasification
CokingResidue
Hydrocracking
Flexicoking
FluidisedCatalytic Cracking
Residue Hydrotreating
Fluidised Catalytic Cracking
Hydrocracking
APIC 2018 15
16APIC 2018
World scale “Crude Oil to Chemicals” projects are already in planning, execution and operations
▪ China, 2019-2021
▪ 2 integrated complexes
Dalian
Zhoushan
▪ 400kbd refineries (Phase 1)
▪ Conventional crude oils
▪ >4 mmta paraxylene plus
olefins derivatives
▪ Back-integration from polyester
Execution
▪ Singapore, 2014
▪ Jurong Island
▪ 1 mmta ethylene cracker
▪ Direct crude oil cracking
▪ Key feature: Tapis crude oil
▪ Integrated with existing refinery-
petrochemicals complex
Operating
▪ Saudi Arabia, 2025+
▪ 2 integrated projects
400kbd refinery at Yanbu
producing 9 mmta chemicals
TC2C complex employing
CB&I/ CLG/Aramco
technologies producing 70-
80 percent chemicals
Planning
Hengli Petrochemical is likely to commercialise the first world leading scale integrated complex to
achieve petrochemicals yields of over 40 percent. This is targeted to be fully operational by 2020
Aromatics Complex
Solvent Deasphalting
VGO Hydrocracking
Residue Hydrocracking
Diesel Hydrocracking
Naphtha Hydrotreating
Gasification
Crude Distillation
OlefinsComplex
Fuels
APIC 2018 17
Whilst world scale “Crude Oil to Chemicals” integrated complexes may offer strong long term benefits,
the pace of developments will likely be limited by a number of factors
APIC 2018 18
Feedstock
Secure access to abundant supplies
Markets
Adjacent – or secure long haul access – to growing
target demand centres
Cost
Access to funding and/or external financing
Location
Local cost factors critical for competitiveness
Technology
Not all leading edge technologies available readily
for license
Ethylene Propylene PX
Annual Demand Growth World Scale Capacity World Scale COTC
Annual Incremental Demand
versus world scale Capacity
Feedstocks
Integration
Technology
sourcing unconventional materials
to capture cost advantage
extracting the most value from
what we have wherever we can
using innovation to capture
a sustainable advantage
A closing thought from APIC 2012 here in KL……
19APIC 2018
We must all keep FIT to survive
….but….
Only the fittest will thrive
2020 VISION Keeping FIT for the future – staying in shape to address the key industry MEGA trends
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Energy & Chemicals Advisory
Clive Gibson
Vice President