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PETROCHEMICAL WINNING STRATEGY SABIC : FROM GREEN FIELD TO GLOBAL GROWTH IOC Petrochemical Conclave, India
16 March 2012 Henry Wang, SABIC
IOC Mar12 CSP EA HW 20123
No. 1
INTRODUCTION
• Good afternoon and thank you for kind invitation to speak • Henry Wang :
Executive Adviser Corporate Strategy and Planning Saudi Basic Industries Corporation (SABIC)
• India Petrochemical & Chemical Growths • SABIC set out on the journey 35 years ago • We are happy to share our experience and
learning with India Government and our valued Strategic Partners in India
No. 2
• 1976 only a vision • Today a leading Global Petrochemical Company
• Revenue >$50 Billion • Net Income $7.8 Billion • Production > 67 Million Metric Tons • Present in > 40 Countries • 87 International Subsidiaries &
Sales Offices • 16 Technology & Innovation Centers • 33,000 employees & talented individuals …………………………………….………..no longer a vision but a reality
SABIC : OUR JOURNEY …….
No. 3
SABIC : OUR BUSINESSES
6 Global Strategic Business Units (SBUs) • Chemicals • Polymers • Performance Chemicals • Innovative Plastics • Fertilizers • Metals
From 1976 onwards a growth engine meeting worldwide demand for Petrochemicals, growing from 6 to 67 million tons per year production
No. 4
SABIC : OUR GROWTH SUCCESS STORY
• From Green Field & Fishing Villages to Global Growth • Share our story and our learnings • SABIC is a case study with… • Unparalleled experience in helping our Strategic Partners succeed • Growth with Global Partners • Growth capabilities and competencies • Emerge and Succeed on the World Stage
No. 5
SABIC : THE BEGINNING
• 1970 Saudi Arabia largely un-industrialized • Saudi Government Vision & Strategy aimed at :
• Modernize the country and its infrastructure • Diversify the economy to develop a 20th century economy • Focused on
• Education • Health Services • Infrastructure development • Private business participation • GDP Added Value Contributions
• Reduce dependence on oil • Develop Refining, Gas and Petrochemicals (when Petrochemicals was a
regional business and global trading of chemicals limited)
No. 6
SABIC : EARLY IMPORTANT DECISIONS
• Simultaneously develop people , infrastructure and the economy • Open up Labour markets & created employment • Invest our oil proceeds in diversification and development • Encourage imports of leading EPC, construction Equipment and supplies • Offer competitive financing – up to 60% of capital investment • Develop State-Owned Enterprises (SOEs) for rapid development of Power
supply, Water, and Infrastructure • 2 Commercial SOEs developed SABIC and SAMAREC:
• Reduced country risk for investors • Facilitate access to Saudi Arabia • Localize expertise, know-how, and management
• Aggressively encourage Foreign Direct Investment in Refining & Petrochemicals
No. 7
SABIC : EARLY IMPORTANT DECISIONS (CONT’D)
• Build gas distribution capability for industry, desalination and power • Develop 2 industrial cities
• Al Jubail on the East Coast • Yanbu on the West Coast
• Establish the Royal Commission For Jubail and Yanbu to:
• Co-ordinate Ministries, Authorities, Utility providers • Develop Infrastructure • Manage land allocation • Provide telecommunications • Municipal and industrial services to residents and tenants
No. 8
SABIC : INDUSTRIAL DEVELOPMENT : A TALE OF TWO CITIES : JUBAIL
• Al Jubail was a quiet fishing village in the 1960’s. • Today it is a world scale chemicals and refining hub – and still growing. • It is a modern industrial city Planned with growth in mind phase 1 = 35,000
hectares • Built in 2 parts – Residential and Industrial. • With phase 2 total land area reaches 75,000 Hectares ! Development included: • Road networks • Water, power, telecoms, sewers • Connections between industrial port and industrial sites by
pipelines & iron ore conveyor
Two ports constructed: • one industrial, chemical, fertilizer, sulphur, refinery products, RORO ships,
connection to sites. • A commercial port commercial for containers and plastics products
PE,PP,PS,PVC
No. 9
SABIC : SEEING IS BELIEVING
No. 10
SABIC : Jubail : Seeing is believing
No. 11
SABIC : YANBU : SEEING IS BELIEVING
No. 12
SABIC : JUBAIL : SEEING IS BELIEVING
No. 13
• Jubail and Yanbu today producing the majority of SABIC Petrochemical & Chemicals, Fertilisers, Iron & Steel Products
• The 2 cities are perfect locations • Enabling deep integration • Reducing total capex and opex
SABIC : INDUSTRIAL DEVELOPMENT : A TALE OF TWO CITIES
No. 14
• SABIC was created by the Saudi government in 1976, with $3 Billion capital, to utilize associated gas to produce value-added chemicals, polymers, fertilizers
• In 1984, the first public offering of 25% of SABIC was made for public purchase
• SABIC was created as the government vehicle for • Development of Petrochemical & Chemical Clusters • Fertilizers • Metals
• We had many doubters and critics • This was a regional industry and KSA did not
have critical mass • Petrochemical trading was limited back then • We had many doubters who paid lip service & did
not believe we can succeed.
SABIC : ITS FORMATION AND PURPOSE
No. 15
• We were sure that we would succeed, we now know why, and we are happy to share with you….
• The primary success factor is the vision of the Saudi government • They were generous in their support • They met their commitments • SOEs were created and with Ministries delivered quality facilities,
reliable services and supply of fuel gas and feedstock
• SABIC was always managed as a commercial enterprise • Managed by SABIC • Board provided advisory and strategic direction AND KSA issue
resolution (Infrastructure/regulatory
• We embraced integrity, focusing on delivery and performance
• In the 70’s and 80’s we operated as a holding company, transforming by the 90’s to a corporate business model
SABIC : WE BELIEVED !
No. 16
• Complexes were developed on a stand-alone basis
• They were developed jointly with world leaders • To provide technology and know-how • To jointly develop projects and share EPC experience • Share management, commissioning, start-up, and
operational experience • To train Saudi engineers, operators, and technicians (up to 2+ years) • To market and sell products
• Plants were designed using “best-in-class” proven world scale technologies
• Using first class contractors and suppliers
• With total quality principles, Highest EHSS standards, Safety commitment, all from CEO level
• Investing in logistical infrastructure, and participating in a chemical shipping company
SABIC : WE BELIEVED !
No. 17
• We developed our own Marketing and sales organization ahead of start-up
• Focused early on the Customer
• Developing capabilities to adopt new technologies successfully
• Early R&D focus • 1989 begin development of SABIC R&D capability • 1992 Riyadh R&D centre – World class, analytical, unique PE Pilot plant
• A willingness to learn
• Embrace best practices
• Continually adopt new, more sophisticated processes and systems
• Constant Organizational adaptation, leveraging experience & responding to changes
• Business model developed from a holding company to a Global Corporation today
SABIC : WE BELIEVED !
No. 18
• From our outset we excelled in the pursuit of growth • We grew organically either with JV or 100% owned
structures • By 2000 we realized growth was needed at home
and abroad • For stronger presence in mature and emerging
markets • 2000 Revenue ~$7Billion, with 10% in Europe • 2002 Acquisition of DSM Petrochemicals • 2006 Acquisition of Huntsman UK Petrochemicals • 2007 Acquisition of GE Plastics, now SABIC
Innovative Plastic • 2009 Sinopec JV in China – start up 2010
• Beginning of China growth Platform • Successful JV – More JV’s to come
SABIC : GROWTH IN KSA AND THEN GLOBALLY…
No. 19
• We are now experienced in organic , JV, and M&A growth • Our KSA growth continues • We want to share our experience to grow in new areas
and markets which provide opportunities to add value • Many emerging economies will find SABIC the right
partner for growth • We are ourselves the product of an emerging economy ! • We have fresh and first hand experience
FROM GREENFIELD TO GLOBAL GROWTH…………
SABIC : TODAY A GLOBAL CORPORATION…
No. 20
• We have a sincere and genuine interest to collaborate with the India Petrochemical, Chemical & Energy industry and the Government of India to grow the Petrochemical & Chemical industry.
• Petrochemical growth is the foundation of economic growth, creating high quality employment, and enables downstream investment.
• SABIC’s experience is one of rapid, efficient and effective monetization of valuable resources
• We have played and still play a major role in the development of the KSA economy
• From Green Fields & Fishing Villages to Global Player • Sustainable Developments & Successes • We create sustainable Win-Win Partnership with all
our Strategic Partners globally
SABIC : A MAJOR GLOBAL PETROCHEMICAL CORPORATION
SABIC & INDIA
THANK YOU FOR THE KIND
INVITATION TO SPEAK
IOC Mar12 CSP EA HW 20123