Transcript Slide 1

Iraq Petrochem & Heavy
Industry 2013
London 28-29 May 2013
Part 1:- Petrochemical Industry – Gateway to Achieving “Developed Status”
Dr Husain Al-Chalabi &
Mr Hussain Aziz
“VOICE”
Content
- Introduction
- The Structure of the Petrochemical
- The complexity of planning the “ organic”
growth of the Industry .
- Integration of the overall with the socioeconomic development of a Country .
- Iraqi Industries – including Petrochemicals
- Proposed Petrochemical plan
- Iraq Realities and the way forward.
Hydrocarbon Processing Industries
Source - HPI
Production Stages
in the Petrochemical Industry
• The Integrated Petrochemical Industry has
three main Production Stages in the
“supply chain” between the Raw Material
& Consumers :– Stage 1 = Manufacturing of the “Base Raw”
material .
– Stage 2 =Chemical conversion into, main
product Groups.
– Stage 3 = Chemical process industries
supplying consumers
Integration of Production Stages
in the Petrochemical Industry
Source :Shell
Examples of products from the Production Stages
•
The Primary Petrochemicals (often called Base Chemicals) are a group of compounds produced
from the processing of the raw material and are in the form of:
Olefins
(e.g. ethylene, propylene, butadiene)
Aromatics (e.g. benzene, toluene, xylenes)
Syngas
(Hydrogen and Carbon Monoxide, with or without Nitrogen)
•
The Intermediate Petrochemicals are Main Products Groups of chemicals that are produced
from further processing of the Primary Petrochemicals; but are not in a ready form (composition
and properties stand point) for use as a finished product. Example of such category is the
Ethylene Dichloride.
•
The Finished Products from the Petrochemical Industry represent the output material from the 6
industries of the Petrochemical Sectors.
Synthetic Rubbers
:
e.g. Styrene Butadiene Rubber (SBR);
Acrylonitrile Butadiene Styrene Rubber (ABS)
Synthetic Fibres
:
e.g. Polyesters; Polyacrylonitrile
Plastics
:
e.g. Polyethylene; Polyvinylchloride (PVC)
Organic Chemicals
:
e.g. Amine Glycol (anti freeze);Trichloroethylene
Carbon Black
:
e.g. for production of printer ink
Surfactants
:
e.g. Linear Alkyl Benzene (LAB)
World chemicals sales: geographic
breakdown
Business / Market
• Business :- The Change of the chemical
structure of the raw materials to yield products of
value to other industries / users in the following
sectors :–
–
–
–
–
–
Petrochemicals
Speciality Chemicals
Fine chemicals
Agricultural chemicals
Synthetic textiles
Inorganic chemicals
Commercial Structure
• - Mega projects for the supply of Raw Material .
Implemented by Major Companies or
Governmental agencies
• - Many companies involved in the production of
Base Chemicals & Main product Groups
• - Very large number of SMEs [ Small / Medium
Enterprises] involved in the Chemical process
industries supplying consumers
Impact on Skill / Knowledge Base
and Development
• About 20 million people around the globe have a job connected to
the chemical industry (directly and indirectly).
• Investments in innovation, including research & development (R&D)
are key elements in securing the future of the chemicals industry
• They not only promote the adaptation to and the development of
new technologies and innovation, but are necessary prerequisites
for the continuous adjustment of corporate structures to the needs
of the marketplace
• In relative terms, the ratio of capital spending to sales, or capital
intensity, of the Western European chemicals industry has been
declining and reached the value of 4.5 per cent in 2011, down
from 5.6 per cent registered in 2001
Common issues in Implementing
Projects in Developing Countries
• Growth , availability of resources and finance in
Developing countries promotes the
industrialization . The uncertain markets and
lack of infrastructure hinders; but there are other
barriers. The main barrier is the shortage of
the high calibre of management , engineering
, supervision , craft skills needed to make the
technology productive in the new
environment .
Challenges for Iraq
• - Available resources in Iraq have not demonstrated the
skill level & the organisation needed to scope a project
and prepare a business plan that can generate market
interest for project finance or even to meet a vision
aimed at development & prosperity .
• - Operating expenses of the Iraqi Institutions has
increased multi-fold , while productivity remains in the
underdeveloped category.
• - Rehabilitation and / or upgrading projects relies on the
definition of the existing asset and the screening of the
alternatives that can lead to the best way to develop and
implement the project.
• - Most important Challenge is the lack of an effective
program to for “Capability Building”.
Bridge to Development :- Together
We Will
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UOP
Vision & Strategies
• The fully developed Petrochemical industry is like a “jig
saw” puzzle of integrated investments to meet the
socio-economic development plan & following a clear
Vision with well developed “Road Map”. Every
investment is based on “SMART”[ Specific, measurable,
achievable , realistic and time based ].
• The strategies and policies must consider the country’s
unique blend of resources, needs and capabilities as the
ingredients of its mission to satisfy the vision for its social
and economic development
• With a robust and well executed plan, the organic
growth of the Petrochemical industry is partially
financed from the rewards of the earlier phases.
Planning in the Petrochemical
Industry
• The Petrochemical Industry, with a well balanced growth
and integration with the Oil & Gas sectors on one hand
and the private sector on the other hand, can
potentially generate economic rewards to Iraq in a scale
of similar league to that from the oil production
revenues, as well as create opportunities for
employment , skill development and valuable “Human
Capital”.
• The “bridging effect” between the oil and gas sector and
the industries serving the needs of the consumer is
fundamental to the overall economic activities in a
developed country.
Basis for Effective Plan
• Planner should use a disciplined procedure, by
which significant Petrochemical candidates
can be evaluated and ranked in terms of their
relative attractiveness ; but must show robust
economics with sustainability throughout the
project life.
• In addition to exhibiting satisfactory relative
merit, before any decision to undertake detailed
and expensive feasibility work, a given project
should be seen to “fit” into a reasonable concept
of long-range systematic industrial growth.
The planner’s screening criteria
Within the “fence of the Industrial Complex”, covers the following
components:
•
1.
Product Marketability Rating
•
2.
Technical Feasibility Rating
•
3.
Profitability of Manufacture
•
4.
Profit Sensitivity to Changes
Outside the “Fence”, there are other considerations :–
–
–
–
–
–
Labour impact and availability/development of the skills
Infrastructure Constraints
Raw Material Availability
Downstream Industry Potential
Considerations Relative to Project Integration
Strategic requirements (security of supply)
Product Marketability Rating
The Marketability Rating Factors cover:
A.
B.
C.
D.
Market Size
Market Growth
Merchantability (including trade
barriers)
Transportation
Technical Feasibility Rating
The Technical Rating Factors cover:
I.
II.
III.
IV.
Resource Availability
Environmental Hazards
Plant Reliability
Technological Demand (including
Expatriate Technical Personnel
Demand)
PHASE 2 DEVELOPMENT
Ammonia/Urea Plant
660,000 MTA NH3 Plant
Power Generation
300 MWh Combined Cycle
Power Generation
700 MWh Combined Cycle
Lean natural gas
Rich associated gas
500 MMSCFD
Gas Processing Plant (GPP)
Double capacity of original
GPP and modify for C2
Recovery
Methanol Plant
1,000,000 MTA MeOH Plant
Polyethylene
To match ethylene capacity
Ethylene Plant
550,000 - 1,000,000 MTA
Capacity will depend on extent
of C3, C4 cracking and design
for ethane recovery
Propylene or Mixed C3's
Propane cracking for C3=
Propane for Export
720,000 MTA
Mixed C4's
Future butadiene extraction
Butane for Export
400,000 MTA
Pyrolysis Gasoline
Future benzene extraction
Condensate to Refining
360,000 MTA
Dr. Mustafa M F Al-Jarrah•
Marketing
Marketing of Petrochemical products requires supportive activities
which extend from:
- the development of infrastructure, to ensure an effective
transfer of the goods from the factory to the buyer;
to
- technical
and after sales services, particularly for the newly
established industries in the developing countries.
• It is still the preference of planners of Petrochemical Projects in
many countries to forge an alliance with an international producer,
Technology provider and/or marketer of Petrochemicals.
Ethylene Production Cost
Naphtha
Gas
List of Industries - Iraq Ministry of Industry
Source- MoI
Proposed Petrochemical industrialization Strategy for an
Oil & Gas rich Country like Iraq
•
The proposed strategy for the development of the Petrochemical Industry, based on
value added & initial focus on few products, contains the following elements:-
•
–
Natural gas available, mainly the methane rich fraction, gives the maximum
“value added” in Iraq when used in the fertilizer industry in comparison to its export.
Even though natural gas is used to produce methanol with a high value added, the
expansion of the fertilizer is viewed more suitable.
–
Ethane derived from natural gas and condensate processing is the premium
raw material for the ethylene based industry and should be the “FIRST” phase to the
development of, olefin based Iraqi Petrochemical industry.
–
Liquid based Petrochemical phase using LPG could be the “SECOND” phase
to the Iraqi Petrochemical industry. This phase has some synergy with the first phase
and avoided having numerous Primary Petrochemicals in the formative period of the
industry, that are otherwise needed to upgrade the C4 and heavier by-products,
which are derived from naphtha and heavier petrochemical feedstocks.
–
Liquid based Petrochemical phase using naphtha and residue components can
be the “THIRD” phase to the Iraqi Petrochemical industry. This phase not only
benefits from synergy with other earlier phases; but will show greater benefit of
integration with the Refinery environment.
•
•
•
Knowledge & Skill Transfer
•
Knowledge & Skill Transfer is not an event . It is a process of
achievement . For effective transfer, the process & its elements
are challenging .
•
Persistent barriers to progress :–
Shortage of skills [ e.g. management , engineering , supervisory ] for
the application to make it productive in the new environment .
Elements in the Knowledge transfer [ interdependent ]
–
•
•
•
•
•
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Good knowledge
Recognition of needs
Effective
Positive attitudes
Sense of investment
Real benefits are identifiable
Wake up call
• Iraq Leadership and the institutions need to
wake up from their illusive dream of developing
the country. To walk the talk , you need a vision
with a “road map”.
• The Rebuilding & Development of Iraq is a
mission that must be championed by
professional Iraqis and supported by the rest of
the world.
• Recent reporting suggest that having money will
not develop Iraq , without focussing on effective
measures towards “Capability building” and
more specifically “Human Resource”.
“VOICE”- Veterans Of Iraqi
Concerned Engineers
• From our background in the oil industry, for the
success of any project, the implementation
must include the knowledge of the local
capabilities and the various complementary
capabilities from the foreign partner(s) that fill
the gaps. One of the critical measures of the
foreign partner is the ability to interact
effectively [ work with the local partner as
one team ], to deliver in the time allocated
within the economic plan and without a
meaningful increase in the cost of the
implementation.
Concluding Remarks
•
Iraq is very conscious of 2 things :–
–
Want to increase oil production to reap higher economic rent [ net revenue = volume X price - costs] to
catalyse the socio- economic development plan ; with the consequence of increased gas production.
Want to minimize the economically wasteful Flaring of gas and comply with the environmental practices
•
The views of increasing oil [and hence the associated gas ] production while combating the gas
Flaring , via absorption capabilities [ that generates the maximum benefit to Iraq] , has been
endorsed by energy experts and strategic planners.
•
Petrochemical industry is like a “jig saw” puzzle of integrated investments to meet the
socio-economic development plan & following a clear Vision with well developed “Road
Map”. To succeed , the planning and implementation must be championed by professional
Iraqis and must include the knowledge of the local capabilities and the various
complementary capabilities from the foreign partner(s) that fill the gaps.
With a robust and well executed plan, the organic growth of the Petrochemical industry is
partially financed from the rewards of the earlier phases.
The “bridging effect” between the oil and gas sector and the numerous domestic “smaller
size” industries serving the needs of the consumer is fundamental to the overall
economic activities in a developed country and creates sizable private sector
participation in the socio-economic development . Private sector growth and reduced
reliance on the Government for employment is a positive step in reversing the current
symptoms of “ oil curse”.
Highly skilled Resources & capabilities are fundamental for sustainability and growth , hence
it is still the preference of planners of Petrochemical Projects in many countries to forge an
alliance with an international producer, Technology provider and/or marketer of
Petrochemicals, while transitioning to “development Status”.
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•