basf + petronas: a powerful combination in southeast asia · aroma ingredients –a quantum leap in...
TRANSCRIPT
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Stefan Beckmann, Managing Director
BASF PETRONAS Chemicals
May 12, 2015
BASF + PETRONAS: A powerful
combination in Southeast Asia
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− Unique combination focused on ASEAN Region:
15 Markets, 2 billion+ consumers
− Verbund site at Kuantan expanding to meet downstream
demand
− Continued enhancement of production and cost efficiencies
− Target growth above BASF group average
− Aim to increase EBITDA margins significantly due to more
attractive downstream portfolio
BASF + PETRONAS: building on a powerful
partnership
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1 | World-scale Verbund site in ASEAN
2 | Markets and business performance
4 | Further growth plans
3 | Success factors
Content
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Ideally located in the heart of ASEAN region
Ulsan
Bangkok
Dongguan
Sydney
Jiangyin
Mumbai
4000 miles
1500 miles
2300 miles
3100 miles
Dahej
Kuantan
Melbourne
Kaohsiung
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Verbund site Kuantan at a glance
Sales ~USD 996 million* in 2014
Site area1.35 km2 Gebeng site
1.05 km2 Port Tank Farm
Production output** 1 million metric tons p.a.
Pipelines450 km (surface)
30 km (underground)
Production facilities 13 production plants
Employees*** 702
*exchange rate 2014 US$/€1.33 (source: ZZS), **total production output of upstream and downstream plants ,
***100% BASF PETRONAS Chemicals and 100% Toray BASF PBT Resins, as of end 2014
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Waste water
treatment
plant
Oxo
complex
BDO
complex
Central
office
building
Acrylics
complex
Kuantan Verbund (135 hectare) site includes…
• Acrylics complex: production started in 2000 with a current capacity of 160kt p.a.
• Oxo/Syngas complex: production started in 2001 with a current capacity of 330kt p.a.
• Butanediol complex: production started in 2003 with a current capacity of 100ktp.a.
Total investment from 1999 till 2014: USD 1.6 billion
Verbund site with world class technology
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Propylene
Natural gas
Syngas
Acrylic acid2-Ethylhexyl acrylate
Butyl acrylate
Sales ProductsIntermediatesRaw Materials
Normal butanol
2-Ethylhexanol
Tetrahydrofuran
gamma-Butyrolactone
1,4-Butanediol
BDO
Equiv.
Normal butanol
2-Ethylhexanol
Crude acrylic acid
Glacial acrylic acid
n-Butane
Normal
butyraldehyde
Maleic anhydride
supplied by PETRONAS
IsobutanolIsobutanolIsobutyral-
dehyde Isobutyraldehyde
Operates integrated C3 and C4 value chains
Acrylics
Oxo
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1 | World-scale Verbund site in ASEAN
2 | Markets and business performance
4 | Further growth plans
3 | Success factors
Content
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South Asia and ASEAN chemicals market have the highest
growth rate after China
Greater ChinaJapan South AsiaSouth Korea ASEAN ANZ
Data source: BASF
1836 2578Asia Pacific: 5.8%
Greater China: 7.1%
Chemical production excluding pharma in Asia Pacific
(USD billion)
CAGR 2014 – 2020
ASEAN: 4.8%
South Asia: 5.7%
1257
1893
214129
171
154
92
148
205116
17
18
2014
2020
CONFIDENTIAL
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BA 2EHA BDO
Korea
(Ulsan)
Taiwan
(Kaohsiung)
Thailand
(Bangkok)
(Dongguan)
Australia
(Melbourne &
Sydney)
China
(Jiangyin)
IBOL
BASF PETRONAS is well
positioned to serve the
markets outside of China
• Access to 15 countries in
Asia Pacific through BPC
marketing and BASF sales
network
• Serving ~600+ customers
• Set up tank operations to be
closer to customers
• Logistic advantage-
Efficient supply chain
management and logistics
ensure short lead times
• Production base in Malaysia
has the benefit of ASEAN
Free Trade Agreement (FTA)
Malaysia is a strategic location to serve growth markets
Malaysia
(Kuantan)
Vietnam
(Dongnai)
BA: Butyl acrylate, 2EHA:2-Ethylhexyl acrylate, IBOL:Isobutanol, BDO: 1,4-Butanediol
CONFIDENTIAL
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Construction
CAGR 2010-2020: 5.1%
Hygiene
CAGR 2010-2020: 5.6%
Packaging
CAGR 2010-2020: 6.5%
BASF PETRONAS offers attractive portfolio to high growth
industry in Asia Pacific
Plastic
CAGR 2010-2020: 5.8%
Textile
CAGR 2010-2020: 6.3%
Pharmaceutical
CAGR 2010-2020: 8.5%
Source: BASF
CONFIDENTIAL
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Strong sales growth over a decade
BASF PETRONAS’ growth
• Net sales grew steadily
between 2002-2014
• BASF PETRONAS
recovered quickly from the
financial crisis in 2008-09
• Net sales in 2014 still on
high level but impacted by:
− downward trend in the
selling price for basic
commodities
− unplanned shutdown of
acrylics complex
• BASF PETRONAS earned
premium on cost of capital
in 2014
Net sales
(Index)
BASF PETRONAS’ sales growth 2001-2014
0
50
100
150
200
250
300
350
400
450
500
CONFIDENTIAL
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1 | World-scale Verbund site in ASEAN
2 | Markets and business performance
4 | Further growth plans
3 | Success factors
Content
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BASF
• Broad customer base
• Extensive sales
network
• Downstream
production
• Unique “Verbund”
sites
• Strong in technology
BASF and PETRONAS: a growing partnership
PETRONAS Chemicals
Group (PCG)
• Leading integrated
chemicals producer
• Part of PETRONAS
Group for Natural Gas
maximization
• Fully integrated world
class production sites
BASF PETRONAS Chemicals and PETRONAS Chemicals
Group (PCG) plants in Kuantan are considered as one
“Kuantan Verbund”
Long-term partnership through thick-and-thin, regular
strategic dialogues on all levels
Two partners ventured into new investment projects e.g. aroma
ingredients and 2-Ethylhexanoic acid
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Verbund generates >€1 bn p.a. global cost savings*
* Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included.
− A pipeline structure of 450 km between plants and from site to port tank farm results in
logistic savings
− Shared use of on-site facilities (e.g. waste water treatment, security, fire department)
− Significant reduction in energy demand and CO2 emissions
BASF PETRONAS Chemicals, Kuantan
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Competitive and secure raw material supply
Long term supply contract with
PETRONAS
• PETRONAS’ total hydrocarbon
reserves stand at
~27 billion barrels of oil
equivalent (boe) with an
average production of 1.1
million boe per day
• Long term supply contract with
market oriented pricing for
Natural Gas, Propylene,
n-Butane
• Utilities & Power - long-term
security and sustainability of the
gas supply at Gebeng industrial
area via Peninsular Gas
Utilisation (PGU) system
• Fully backward integrated into
PETRONAS off-shore gas fieldsKuantanPCMTBE
KertehGPP*
Jerneh
Resak
Angsi
Bekok
South China
Sea
DuyongMALAYSIA
Production
Gas Pipeline
* Gas processing plant
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Alliance with MNCs and local key players with high potential
Reliability and supply consistency
Long term supplier/customer relationship
Highest safety standards along the full supply chain,
including product stewardship
Sharing of knowledge and best-practices
Enhanced market access through BASF sales network
Unique value propositions to our customers
CONFIDENTIAL
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Growing local talent
BASF PETRONAS aims to attract and grow best fit
talent
• Structured program for talent management
focuses on hiring, on-boarding and retaining
• Training and development supports talent
management:
− BASF PETRONAS organized 296 learning &
development programs, 31 structured in-house
“Technician Development Program”, 40 in-
house trainers in 2014
− Total training spend in 2014 is more than
USD 300,000
• BASF PETRONAS is the Employer of Choice
− The attrition rate is significantly below the
industry average
− Won several awards such the national “Human
Resource Minister Award in 2014”
Picture
Picture
Human resource minister award 2014
Employer of choice – silver award 2012
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1 | World-scale Verbund site in ASEAN
2 | Markets and business performance
4 | Further growth plans
3 | Success factors
Content
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Operational excellence to support downstream expansion T
ech
nic
al p
rocess
op
tim
izati
on
Hibiscus
• Technical process
optimization
– Root cause analysis
– Technical improvement
– Support by technical experts
• Plant and site org.
development
– Optimize work processes
– Clear roles and
responsibilities
Plant and site org. development
total savings
* expected by end of 2016
• 99 measures to increase
the reliability of plants
• Make us fit for new projects
million
p.a.*
Operational excellence
CONFIDENTIAL
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Key Features• Premium specialty chemicals
• Cutting edge technology
• New product portfolio
based on BASF technology
End market• Flavor &
fragrances
• Plastic Additives,
Coatings, Cosmetics
Capacity • 30kt/a • 30kt/a
Plant start-up date• ~Q2 2016
• ~Q1 2017 (Menthol)• ~Q4/2016
Major investments in the next 5 years
Aroma
ingredients2-EHAcid*
* 2-EHAcid: 2-Ethylhexanoic Acid
CONFIDENTIAL
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Aroma ingredients complex of USD 500 million
This complex is BASF PETRONAS’ largest
investment in a single project
Current scope
• Current scope includes Citral, Citronellol and
Menthol
Strategic rationale
• An important second production foothold in the
rapidly growing Asian market
• Cost leadership position while accessing
competitive raw material
• Citral availability for further extension of
downstream production in Ludwigshafen and
Kuantan
Market
• Aroma ingredients are resilient to economic cycle
• Global market size is €6 billion with 3-4 percent
growth rate until 2020
• Will supply aroma ingredients to global market
Ground-breaking on April 10, 2014
Aroma complex under construction
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Aroma ingredients offers wide array of application
Citral• Lemon, citrus, fruity
and green scent
• Fragrances & flavour compositions for
imitation of lemon,
grapefruit and
orange
• Fragrances & flavor compositions for
imitation of citrus,
cherry, strawberry,
peach and tutti-
frutti flavours
Citronellol
L-Menthol
• Floral, rose, citrus
and green scent
• Essence of
freshness and
cooling effect
Application industryFragrances & flavour
• Pharmaceuticals, cosmetics, oral
products
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FormaldehydeIsobutene
Isoprenol
Prenal
Prenol
Vitamin A
Citronellol
Geraniol
Ionone
Citronellylnitrile
Citronellal
Beta-Carotene
Hydroxycitronellal
Rose Oxide
Linalool
Vitamin E
Menthol
Pyranol
Aroma ingredients – a quantum leap in product portfolio
Citral value chain will
support diversification
into specialty chemicals:
• BASF PETRONAS will
be the pioneer in
production of citral in
Asia
• Citral is the basis for
Vitamins A, E and many
other aroma chemicals
• Availability of citral will
attract downstream
investment at BASF and
at the customers
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Propylene
Natural gas
Sales ProductsIntermediatesRaw Materials
Normal butanolNormal butanol
Isobutanol
2-EthylhexanolNormal
butyraldehyde
Isobutyral-
dehyde Isobutyraldehyde
Tetrahydrofuran
gamma-Butyrolactone
1,4-Butanediol
BDO
Equiv.n-Butane Maleic anhydride
2-Ethylhexanoic acid*
IsoprenolCitral
Methyl tertiary butyl ether
iso-Butene
Formaldehyde
Citronellol
Citral
Menthol
Citral*
Isobutanol
2-Ethylhexanol
Syngas
Verbund at Kuantan tomorrow….
* startup 2016
CONFIDENTIAL
Oxo
Acrylic acid2-Ethylhexyl acrylate
Butyl acrylate
Crude acrylic acid
Glacial acrylic acid
Acrylics
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− Unique combination focused on ASEAN Region:
15 Markets, 2 billion+ consumers
− Verbund site at Kuantan expanding to meet downstream
demand
− Continued enhancement of production and cost efficiencies
− Target growth above BASF group average
− Aim to increase EBITDA margins significantly due to more
attractive downstream portfolio
BASF + PETRONAS: building on a powerful
partnership
– 27
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2-EHAcid: Product diversification
2-Ethylhexanoic acid
• Protect PVC from UV
sunlight, oxygen
and heat
• Transparent very sticky
sheet placed between
2 glass layers to improve
security, sound
attenuation and sun
protection - mainly for
automotive industry
• Synthetic lubricants
used in aviation
refrigerants
• Drying agent in paints,
enamels, varnishes &
printing inks
PVC stabilizers PVB film Lubricants Coating