Kuwait Petrochemicals Report Q3 2012

The Kuwait Petrochemicals Report examines the huge but as yet unrealised potential of downstream

industries in the light of Kuwait Petrochemical Corporation’s (KPC) plans to significantly boost
ethylene and polyethylene capacities by 2016.
The report examines the lack of domestic conversion industries, which absorb around 1% of total
petrochemicals output, and the failure of the country to add value and expand the product portfolio to
improve petrochemicals margins.
In 2011, Kuwait had ethylene capacity of 1.7mn tonnes per annum (tpa) feeding downstream units that
included 825,000tpa LLDPE, according to BMI estimates. It also has 370,000tpa of benzene, 822,000tpa
of xylenes, 1mn tpa of EG, 765,000tpa of EO and 160,000tpa of PP capacity. In the fertiliser sector,
Kuwait has capacities of 1.04mn tpa urea and 885,000tpa ammonia. Olefins and polyolefins capacities are unlikely to increase before 2016, with the main expansion projects completed in 2009. The Kuwaiti
petrochemicals industry lacks a sufficiently broad product portfolio – notable by its failure to diversify
into the purified terephthalic acid-polyethylene terephthalate chain despite sizeable xylenes feedstock
availability – and this will mean the country will register a lacklustre performance compared to regional
peers in 2012. By sourcing naphtha from domestic resources, the country still has an edge over most
Asian producers and Kuwait remains competitive globally, despite failing to add value to production and
move beyond its slim portfolio. On the downside, producing relatively low margin products limits the
range of markets, primarily to the packaging markets in Asia.
KPC is pressing ahead with more basic chemicals capacities and is developing the country’s third olefins
project, Olefins III. Scheduled for completion by end-2016, the unit will be based on a mixed-feed
cracker with capacities of 1.4mn tpa ethylene and around 600,000tpa propylene, using gas and liquid
feedstock. Downstream facilities will make products including PE and EG – potentially up to 800,000tpa
PE and up to 600,000tpa EG. Olefins III will boost ethylene capacity by over 80% to 2.1mn tpa while PE
will nearly double to 1.6mn tpa.

Over the last quarter BMI has revised the following forecasts/views:
1.BMI has revised Kuwait’s petrochemicals rating up by 0.2 points to 60.8 points this quarter, due
to an improvement in structural and economic risk scores. It remains in third place, 0.6 points
ahead of Qatar and 2.9 points behind the UAE.
2.With refinery capacity set to increase, the declining naphtha-ethane differential and the
improvement of long-term risks, Kuwait is ripe for investment in diversification, particularly in
the PTA-PET chain which can be served by new xylenes capacity.

Kuwait Petrochemicals Industry Q3 2012

Published : June 2012                No. of Pages : 49                        Price: US$1175

   

Table of Content

Industry View ... 4
SWOT Analysis 6
Kuwait Petrochemicals Industry SWOT . 6
Kuwait Political SWOT .. 7
Kuwait Economic SWOT 8
Kuwait Business Environment SWOT 9
Global Petrochemicals Overview . 10
Petrochemicals Market Overview 10
Table: World Ethylene Production By Country, 2011 And 2016 (‘000 tonnes capacity) . 10
Financial Results . 14
Table: Financial Results Of Major Petrochemicals Companies, 2011 . 14
Global Oil Products Price Outlook .. 15
Table: BMI''s Refined Products Forecasts, 2010-2016 . 15
Gulf Regional Overview 24
Table: Announced Ethylene Crackers In The Gulf Region ... 26
Kuwait Market Overview ... 27
Industry Trends And Developments 29
Upstream . 29
Financial Results . 30
Olefins And Polyolefins 30
Overseas Investments ... 31
Industry Forecast Scenario .. 32
Table: Kuwaiti Petrochemicals Sector, 2009-2016 (’000tpa, Unless Otherwise Stated) .. 33
Risk/Reward Ratings . 34
Table: Middle East And Africa Petrochemicals Risk/Reward Ratings . 34
Overview Of Kuwait’s Business Environment .. 36
Macroeconomic Outlook ... 38
Table: Kuwait – Economic Activity .. 40
Company Profiles .. 41
Equate Petrochemical Company .. 41
Kuwait Petroleum Company (KPC) . 42
Glossary Of Terms . 44
Table: Glossary Of Petrochemicals Terms .. 44
BMI Methodology ... 45
How We Generate Our Industry Forecasts .. 45
Chemicals And Petrochemicals Industry .. 45
Cross Checks ... 46
Business Environment Ratings . 47
Table: Petrochemicals Business Environment Indicators And Rationale . 47
Weighting . 48
Table: Weighting Of Indicators 48Table: World Ethylene Production By Country, 2011 And 2016 (‘000 tonnes capacity) . 10

Table: Financial Results Of Major Petrochemicals Companies, 2011 . 14

Table: BMI''s Refined Products Forecasts, 2010-2016 . 15

Table: Announced Ethylene Crackers In The Gulf Region . 26

Table: Kuwaiti Petrochemicals Sector, 2009-2016 (''000tpa, Unless Otherwise Stated) . 33

Table: Middle East And Africa Petrochemicals Risk/Reward Ratings . 34

Table: Kuwait – Economic Activity . 40

Table: Glossary Of Petrochemicals Terms . 44

Table: Petrochemicals Business Environment Indicators And Rationale . 47

Table: Weighting Of Indicators. 48