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The ‘Development & Supply Partner’ to the Plastics

Industry

Distrupol NIPA

Presentation

Leading European Supply Partners

• Oil and Gas to Plastics

• Polymer Consumption Growth by Region

• Pricing Relationships and Trends

• Impact of Shale Gas Development

• The Changing World of Propylene

• Conclusions

4

Pricing and Trends in Commodity Polymers

Polymers from Oil

5

Transportation

Domestic

Power

Generation

Industry

Other

PetrochemicalsOther

Polymers - 4%

Petrochemical Feedstock Sources

6

Crude

Oil

Gasolines (C5/C6)

(70-140C)

Naphtha- Heavy (C7/C9)

(140-200C)

Atmspheric Gas Oil

Kerosene (C9/C16)

(175-275C)

Diesel Fuel (C15/C25)

(200-370)

Gases

Methane (65-90%)

Ethane, Propane, Butane

Heavy Fractions

Lubricating Oil

Heavy Fuel Oil

Asphalt

Crude Oil

Distillation<29 C

>370 C

200 C

70 C

140 C

300 C

Boiling Point

Yield from Crude Oil

Cracking Naphtha

8

Quench

Boiler

Primary

Fractionator

Compressors

Distillation

ColumnsBoiler feed

water

Furnace

Naphtha

Steam

Gasoline

Fuel Oil

Propylene

Ethylene

Hydrogen

Methane

Butadiene

Monomer Yield by Feedstock

9

0%

25%

50%

75%

100%

Ethane Propane Butane Naphtha Gasoil

Other Hydrocarbons

Butadiene

Propylene

Ethylene

Feedstock Source by Region

10

0%

20%

40%

60%

80%

100%

Western Europe Japan USA

Ethane

Propane

Butane

Naphtha

Gasoil

Ethylene (C2) to Polyethylene

11

C=C

H H

H H

C=C

H H

H H

C=C

H H

H H

Ethylene

C C

H

H

H

H

C C

H

H

H

H

Polyethylene

Polymers from Monomers

12

Petrochemical Feedstock

PropyleneBenzene ParaxyleneEthylene

Chlorine

EDC

VCM

Ethylbenzene

Styrene

GP Polystyrene

BR

HI Polystyrene

PTA

PET

MEGPVC

LDPE LLDPE HDPEPP Co PP Homo

Other Feedstock

Intermediate

Polymer

EO

Global Polymer Demand

13

Polymer Growth by Region 1983 - 2011

14

Forecast Growth by Region to 2016

15

Comments on Pricing

• Current pricing is predominantly influenced by Feedstock

prices

• Crude Oil Prices have remained high

• Supply issues with Crackers have meant high

monomer values

• Crude normally traded in $’s, so currency movements

affect feedstock values

• Overall global supply/demand balance strongly

influenced by Chinese growth rates

16

Polyolefins Historic Pricing

17

Shale Gas Development

18

US Shale Gas Drilling Projects

19

% of US Ethylene from different sources

20

Gas Vs Oil Disconnect

21

The Changing World of Propylene

• Shift to Ethane feedstock in North America – Shale Gas

• Emphasis on continued use of Ethane in Middle East

• Limited co-product supply

• Ethylene derivatives in surplus – propylene shortage

• Limited availability of propylene within refinery systems in

North America and Europe

• Forecast demand growth implies propylene must be

sourced elsewhere

• Propane Dehydrogenation in ME and US

• Refineries and Coal in Asia

• Higher investment costs imply higher propylene values

22

PDH Projects across the world

23

Conclusions

• Pricing in Commodity Polymer Markets are currently

driven by feedstock prices

• Main driver for Feedstock Prices are Oil/Gas prices and

Exchange Rates

• Shale Gas developments in North America will lead to a

significant cost advantage for C2 producers there

• North America will become a significant exporter of

Ethylene derivatives

• Move to Ethane from Shale Gas for Ethylene will lead to

shortage of Propylene, with oversupply of Ethylene

• Non-traditional routes to Propylene are more expensive,

so price differential between C2 and C3 will increase

24

A Polymer for every Application