GCC Petrochemicals & Chemicals Industry, Facts & Figures 2012 (English)

GCC PETROCHEMICALS & CHEMICALS INDUSTRY Facts & Figures 2012

1

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About The Gulf Petrochemicals and Chemicals Association (GPCA): The Gulf Petrochemicals and Chemicals Association .7*( PZ H KLKPJH[LK HUK UVU WYVÄ[ THRPUN HZZVJPH[PVU ZLY]PUN HSS P[Z TLT¨ILYZ ^P[O H ]HYPL[` VM KH[H [LJOUPJHS HZZPZ[HUJL HUK YLZV\YJLZ YLX\PYLK I` [OL WL[YVJOLTPJHSZ HUK JOLTPJHSZ PUK\Z[Y` .7*(»Z TPZZPVU PZ ZPUN\SHY HUK ZWLJPÄJ PU [OH[ P[ PU[LUKZ [V Z\WWVY[ [OL NYV^[O HUK Z\Z[HPUHISL KL]LSVWTLU[ VM the petrochemical and chemical industries in the Gulf PU WHY[ULYZOPW ^P[O P[Z TLTILYZ HUK Z[HRLOVSKLYZ HUK IL IV[O H ZV\UKPUN IVHYK HUK H TLL[PUN WVPU[ MVY KLIH[L HUK KPZJ\ZZPVU 0[ PZ [OL ÄYZ[ Z\JO HZZVJPH[PVU U [V YLWYLZLU[ [OL PU[LYLZ[Z VM [OL PUK\Z[Y` PU [OL 4PKKSL ,HZ[ HUK P[ OHZ IYV\NO[ H THQVY KPTLUZPVU [V P[Z [HZR I` JYLH[PUN IV[O H MVY\T MVY KPZJ\ZZPVU HUK H WSHJL ^OLYL SPRLTPUKLK WLVWSL JHU TLL[ HUK ZOHYL JVUJLW[Z HUK PKLHZ :PUJL P[Z PUJLW[PVU PU 4HYJO [OL .7*( OHZ LHYULK [OL LU]PHISL YLW\[H[PVU MVY Z[LLYPUN [OL YLNPVUHS PUK\Z[Y` [V^HYKZ H ^OVSL UL^ SL]LS VM JV VWLYH[PVU HUK YHPZPUN [OL Z[HUKHYK PU [LYTZ VM JVTTVU NYV\UK PU[LYLZ[Z (KKP[PVUHS PUMVYTH[PVU PZ H]HPSHISL H[ ^^^ NWJH VYN HL

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GCC PETROCHEMICALS & CHEMICALS INDUSTRY Facts & Figures 2012

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Table of Contents 1. Preface

06

2. About Chemicals Industry

07

3. GCC Chemicals Industry and Economy in 2012 3.1. Contribution of the chemicals industry to regional and national GDP 3.2. Contribution of chemicals industry to manufacturing output 3.3. Industries dependent upon chemicals industry 3.4. Share of Chemicals in non-oil exports on regional and national levels 4. GCC Production Capacity by Product (2008-2012)

11

13

52

6.3. Worldwide and GCC Capacity Utilization Comparisons

54

7. GCC Chemicals Industry Growth Pattern (2012)

55

7.1. Production, Regional Consumption and International Trade

56

20 21 22

23

7.2. Chemicals industry growth performance against total manufacturing 57 7.3. International comparison of GCC chemicals production growth by product segment

58

7.4. International comparison of GCC chemicals production growth by region 59 26

4.2. GCC Capacity: Breakdown

by Value-chain

28

4.3. Basic Petrochemicals

29

4.4. Fertilizers

30

4.5. Polymers

32

4.6. Top 10 chemical products produced in the GCC

34

4.7. Global Share of GCC top 10 Products

35

8. Global Chemicals Industry

(2012)

61

8.1. World chemicals output

62

8.2. World chemicals export by Region and Country

64

8.3. World chemicals import by Region and Country

66

8.4. World chemicals consumption

by Region and Country

68

9. International Trade (2012)

69

45

5.1. GCC Production Capacity by Country

46

5.2. Basic Petrochemicals: Breakdown

by Country

47

5.3. Fertilizers: Breakdown by Country

48

5.4. Polymers: Breakdown by Country

49

5.5. Fine Chemicals: Breakdown by Country 50

4

6.1. Capacity Utilization by Country

51

6.2. Capacity Utilization by product segment 53

4.1. GCC Capacity: Breakdown

by Product Segment

5. GCC Production Capacity by Country (2008-2012)

6. GCC Capacity Utilization (2011-2012)

9.1. GCC Export by product segment

71

9.2. GCC Import by product segment

73

9.3. GCC Export by country

75

9.4. GCC Import by country

76

9.5. GCC Export by destination

77

9.6. GCC Import by origin

79

9.7. GCC international trade balance: breakdown by product segment

80

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9.8. GCC international trade balance: breakdown by country 9.9. Detailed analysis of GCC exports by destination *&& &KHPLFDOV WUDGH ÁRZV E\ major regions 10. GCC Intra-Regional Trade (2012)

13. Research and Development (2011)

109

81 82 85

13.1. Number of chemicals patents issued worldwide and in the GCC

110

1HZ SDWHQW DSSOLFDWLRQV LQ WKH ÀHOG of chemistry worldwide and GCC

112

13.3. R&D spending

114

87

10.1. Intra GCC export by product segment 88 10.2. Intra GCC export in total chemicals export

90

10.3. Intra GCC export in value terms

91

10.4. Intra GCC import in total chemicals import

92

11. Employment (2012)

93

11.1. Employment in GCC chemicals industry

94

11.2. International comparisons of GCC chemicals employment

96

11.3. Employment in GCC chemicals industry by occupation

98

11.4. Employment in GCC manufacturing and chemicals industry

100

11.5. Workforce nationalization in GCC chemicals industry

101

11.6. GCC employee productivity: chemicals sector and manufacturing

102

12. Sales Revenue (2012)

103

12.1. GCC Petrochemicals Industry Sales Revenue by Country

104

12.2. Share of GCC in Worldwide Chemicals Sales Revenues

106

Gulf Petrochemicals & Chemicals Association

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A message from the Secretary General 0 HT KLSPNO[LK [V PU[YVK\JL V\Y ÅHNZOPW Z[H[PZ[PJHS W\ISPJH[PVU [OL ¸.** 7L[YVJOLTPJHSZ *OLTPJHSZ 0UK\Z[Y` -HJ[Z HUK -PN\YLZ¹ MVY [OL `LHY ^OPJO OPNOSPNO[ RL` WLYMVYTHUJL PUKPJH[VYZ MVY [OL .** WL[YVJOLTPJHSZ HUK JOLTPJHSZ PUK\Z[Y` K\YPUN [OL JHSLUKHY `LHY VM *VUZPZ[LU[ ^P[O VUL VM [OL [OYLL WPSSHYZ PU .7*(»Z Z[YH[LN` UHTLS` [OL ¸[OV\NO[ SLHKLYZOPW¹ ^L THKL KLKPJH[LK LMMVY[Z [V LUOHUJL [OL JVU[LU[ VM [OL LKP[PVU 0U HKKP[PVU [V [OL ZLJ[PVUZ PU [OL WYL]PV\Z LKP[PVU [OPZ `LHY ^L OH]L WYV]PKLK PUMVYTH[PVU HIV\[ .** PU[YH YLNPVUHS [YHKL HU V]LY]PL^ VM [OL NSVIHS JOLTPJHSZ PUK\Z[Y` HUK HU HUHS`ZPZ VM [OL PUK\Z[Y`»Z ZVJPV LJVUVTPJ JVU[YPI\[PVU ;OPZ YLWVY[ PZ WYVK\JLK PU OV\ZL ZV\YJPUN [OL KH[H HUK PUMVYTH[PVU MYVT V\Y TLTILY JVTWHUPLZ HZ ^LSS HZ V\Y YLNPVUHS HUK PU[LYUH[PVUHS WHY[ULYZ 0[ PZ MHPY [V Z[H[L [OH[ .7*( OHK ILLU HISL [V YLHSPaL [OPZ TPSLZ[VUL PU V\Y QV\YUL` [V^HYKZ WYV]PKPUN JYLKPISL KH[H HUK I\ZPULZZ PU[LSSPNLUJL [V V\Y TLTILYZ HUK Z[HRLOVSKLYZ VUS` [OYV\NO [OL JVU[PU\LK Z\WWVY[ MYVT V\Y TLTILY JVTWHUPLZ HUK Z[HRLOVSKLYZ ;O\Z 0 ^V\SK SPRL [V [OHUR [OLT HSS MVY THRPUN RL` KH[H HUK PUMVYTH[PVU H]HPSHISL [V .7*( ^P[OV\[ ^OPJO [OPZ YLWVY[ ^V\SK OH]L UV[ ILLU WVZZPISL .7*( PZ JVTTP[[LK [V JVU[PU\PUN ^VYRPUN ^P[O V\Y TLTILYZ HUK WHY[ULYZ [V WYV]PKL \ZLM\S YLMLYLUJL W\ISPJH[PVUZ 3VVRPUN MVY^HYK .7*( WSHUZ [V JVU[PU\L PU]LZ[PUN PU KL]LSVWPUN YLSL]HU[ PUK\Z[Y` JVU[LU[ PU SPUL ^P[O V\Y VIQLJ[P]L [V IL [OL WYLTPLY WYV]PKLY VM PUK\Z[Y` RUV^SLKNL HUK ZLY]PJLZ [V V\Y TLTILYZ HUK Z[HRLOVSKLYZ Dr. Abdulwahab Al-Sadoun :LJYL[HY` .LULYHS

6

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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2.

A bout C hem ical s Industry

Gulf Petrochemicals & Chemicals Association

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9. International Trade (2012)

Chemicals industry takes natural raw materials such as oil and natural gas, as well inorganic minerals such as limestone and salt and converts them into thousands of chemical products. Based on the United Nations Environmental Program, there are about 248,000 chemical products known to date. Chemicals industry serves nearly every sector of economy by providing essential inputs in the form of chemical productions or solutions. As GHĂ€QHG E\ 81 ,QGXVWULDO &ODVVLĂ€FDWLRQ 6\VWHP ,6,& 5HY FKHPLFDOV LQGXVWU\ LQFOXGHV

ISIC Rev.3 Reference

Description •

2401

Manufacture of basic Chemicals

• • • •

2402

2403

Manufacture of other chemical products

Manufacture of manPDGH ÀEHUV

Manufacture of basic chemicals, except fertilizers and nitrogen compounds Manufacture of fertilizers and nitrogen compounds Manufacture of plastics in primary forms and of synthetic rubber

•

Manufacture of pesticides and other agro-chemical products Manufacture of paints, varnishes and similar coatings, printing ink and mastics Manufacture of pharmaceuticals, medicinal chemicals and botanical products Manufacture of soap and detergents, cleaning and polishing preparations, perfumes and toilet preparations Manufacture of other chemical products

•

0DQXIDFWXUH RI PDQ PDGH ÀEHUV

• •

As described above, output of the chemicals industry includes base products, intermediate products, specialties DQG UHÀQHG FKHPLFDOV DV ZHOO DV ÀQLVKHG SURGXFWV DQG SKDUPDFHXWLFDOV

Chemicals Life Cycle Chemicals life cycle starts with extraction of raw materials (mining, extraction of oil and gas and others) which DUH XVHG LQ FKHPLFDOV PDQXIDFWXULQJ SURFHVVLQJ DQG UHĂ€QLQJ 0DQXIDFWXUHG EXON FKHPLFDOV DUH XVHG WR SURGXFH a wide variety of downstream chemical products. These chemical products can, in turn, be used as feedstock for chemicals production further downstream, industrial activities and services, or production of consumer products.

At any stage of life cycle, chemicals are being shipped to various locations within the country of its production or internationally.

8

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2. About the Chemicals Industry

Raw materials (oil, coal, gas, air, water, minerals)

&KHPLFDOV SURFHVVLQJ UHĂ€QLQJ

Basic inorganic and organics i.e. ammonia, gases, acids, salts Petrochemicals: Benzene, Ethylene, Propylene, Xylene, Toluene, Butadiene, Methane, Butylene

Chemicals processing

Fertilizers, industrial chemicals, plastics, propylene R[LGH UHVLQV HODVWRPHUV ÀEHUV

SPECIALTY CHEMICALS

CONSUMER CARE PRODUCTS

LIFE SCIENCE Pharmaceuticals, Agrochemicals, Biotechnology

OTHER INDUSTRIES Metals, Gas, Automobiles, Textiles etc.

CONSUMERS Source: OECD, 2001

Gulf Petrochemicals & Chemicals Association

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9. About 2.

International the Chemicals Trade (2012) Industry

2nd largest

manufacturing sector Every job in the industry

2.9%

Represents of GCC GDP in 2012

creates

3 additional jobs elsewhere Directly employs more than people

138,700

people

34%

of all employees in the chemicals industry are national citizens

$US 97.3 billion

worth of chemicals output in 2012

Chemicals products are

47%

Chemicals comprise of GCC non-oil export in 2012

integral part

of various industries in GCC economy

Production capacity of

129.2 million tons

in 2012

12.2% per annum

Growth of

between 2008 and 2012

10

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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3.

Gulf Petrochemicals & Chemicals Association

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3.

Chemical Industry and Economy in 2012 9. GCC International Trade (2012)

The GCC chemicals industry: an enabler of economic development The chemicals and petrochemicals industry in the GCC plays pivotal role in the development of the regional and national economies. The industry has changed drastically in the last decades with GCC emerging as a major hub for the global chemical industry. Thirty years ago, GCC was a net importer of chemicals, whereas currently the vast majority of chemicals production exported to global markets. The chemicals industry has a large impact on the economy, particularly in terms of value addition and job creation.

It is believed that the chemicals industry will play a pivotal role in enabling development as the GCC economies go through structural challenges related WR LQGXVWULDOL]DWLRQ HFRQRPLF GLYHUVLĂ€FDWLRQ DQG WKH creation of new employment opportunities.

At the heart of the chemicals industry’s continued growth is the availability of, and access to, natural gas IHHGVWRFN DQG UHÀQHU\ SHWURFKHPLFDO LQWHJUDWLRQ 7KH *&& HQMR\V VLJQLÀFDQW HQHUJ\ DGYDQWDJHV QHDUO\ one-third of the world’s oil and quarter of world’s natural gas reserves are found in the region, however, competition for the natural gas from other industries such as power generation and water desalination had led to constraint in supply of the gas to the chemical industry in the GCC region.

The chemicals industry plays a key role in enabling improved standards of living and quality of life. It provides the basis for a variety of economic activities within downstream industries including: textiles, plastics, agriculture, construction, oil and gas extraction, healthcare and electronics.

12

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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3. GCC Chemical Industry and Economy in 2012

Chemicals industry contribution to GDP of GCC GCC: GPD (current prices) by main economic activities, 2012 Transport, Storage & Communication

5.5%

11.1%

Finance Insurance, Real Estate & Business Services

11.2% Others Wholesale & Retail Trade, Restaurants and Hotels

Construction

8.5%

5.3%

9.3%

Manufacturing

2.3% 2.9% 4.1%

Refining Sector

1.1% Crude Petroleum & Natural Gas

Petrochemicals & Chemicals Other Manufacturing

Agriculture, Forestry & Fishing

48.0%

Source: National Statistical Authorities, GPCA Analysis, 2013

GCC: Manufacturing GDP (current prices) by Sub-Sectors, 2008-2012 100% Contribution to Manufactuiring (%)

90% 80%

48.6%

70%

53.5%

48.6%

46.0%

44.5%

GCC (Gulf Cooperation Council) comprised of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates continues to play a vital role in the global and regional economy. GCC economies are the largest in the MENA region.

Growth in the GCC remains robust supported by the combination of historically high oil prices, expanded oil production and low interest rates. Fiscal and external VXUSOXVHV DUH ODUJH LQĂ DWLRQ LV moderate and prospects for growth remain positive.

However, GCC economies are heavily dependent on hydrocarbon extraction which accounts for 48.1% of the GDP. For example, Saudi Arabia is the largest oil exporter in the world and is at present the only producer with VLJQLÀFDQW VSDUH FDSDFLW\ WKDW FDQ be used to stabilize global energy markets. GCC region accounted for 2.1% of world’s GDP at current prices.

60% 50% 40%

26.4%

23.8%

25.5%

30.2%

31.3%

25.9%

23.8%

24.2%

30% 20% 10% 0%

24.9%

22.7%

2008

2009 Other manufacturing

2010

2011

Petrochemicals and chemicals

Source: National Statistical Authorities, GPCA Analysis, 2013

2012 Refining Sector

The manufacturing sector which includes the petrochemicals and chemicals sector represented 9.3% of region’s GDP in 2012.

The value added contribution of the manufacturing sector in 2012 is estimated at $US143.6 billion.

Out of this petrochemicals and chemicals represented 31% or $US45.2 billion in value addition to the economy.

Gulf Petrochemicals & Chemicals Association

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3.

Chemical Industry and Economy in 2012 9. GCC International Trade (2012)

Chemicals industry contribution to GDP of Saudi Arabia Saudi Arabia: GPD (current prices) by main economic activities, 2012

Transport, Storage & Communication

8.0%

4.7%

Finance Insurance, Real Estate & Business Services

15.8% Others Wholesale & Retail Trade, Restaurants and Hotels

Construction

8.2%

10.1% 2.6% 3.8% 3.7%

4.4%

1.9% Crude Petroleum & Natural Gas

Manufacturing Refining Sector Petrochemicals & Chemicals Other Manufacturing

Agriculture, Forestry & Fishing

46.9%

Source: National Statistical Authorities, GPCA Analysis, 2013

Saudi Arabia: Manufacturing GDP (current prices) by Sub-Sectors, 2008 - 2012 100%

Saudi Arabia has been one of the best performing economies in the recent years, with the average rate of real GDP growth during 20082012 third highest behind China and India. In 2012 Saudi Arabia’s economy continued to perform well with real GDP growth of 5.1%, down from 8.6% in 2011. In 2012, Saudi Arabia’s GDP is estimated at $US 711 billion. The World Bank ranks Saudi Arabia as the 19th largest economy in the world, representing 1% of world’s GDP. The manufacturing sector which includes the petrochemicals and chemicals sector accounted for 10.1% of Saudi Arabia’s real GDP in 2012. The value added of the manufacturing sector in 2012 is estimated at $US71.6 billion. Out of this the petrochemicals and chemicals sector represents 37.6% in 2012 or $US26.9 billion in value addition to the economy.

Contribution to Manufactuiring (%)

90% 80%

34.8%

40.9%

39.1%

39.8%

36.3%

39.0%

32.3%

31.7%

34.7%

37.6%

26.3%

26.8%

29.2%

25.5%

26.1%

2008

2009

2010

2011

2012

70% 60% 50% 40% 30% 20% 10% 0%

Other manufacturing

Petrochemicals and chemicals

2012 value add of Saudi Arabia’s chemicals sector to economy is estimated at $US26.9 billion.

Refining Sector

Source: National Statistical Authorities, GPCA Analysis, 2013

14

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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3. GCC Chemical Industry and Economy in 2012

Chemicals industry contribution to GDP of the UAE United Arab Emirates: GPD (current prices) by main economic activities, 2012 Transport, Storage & Communication

8.0%

17.4%

Finance Insurance, Real Estate & Business Services

3.2% Wholesale & Retail Trade, Restaurants and Hotels

Construction

12.6%

8.9%

Others

9.0%

Manufacturing

0.9% 1.8% 6.3%

Refining Sector

0.7%

Crude Petroleum & Natural Gas

Petrochemicals & Chemicals Other Manufacturing

Agriculture, Forestry & Fishing

40.2%

In 2012 the manufacturing sector of the UAE grew by 11.7% in comparison with the previous year and contributed 9% to GDP at current prices. Value addition of the manufacturing sector in 2012 is estimated at $US34.4 billion. The contribution of the petrochemicals and chemicals sector is 19.7% or $US6.7 billion in value addition to the economy.

Source: National Statistical Authorities, GPCA Analysis, 2013

United Arab Emirates: Manufacturing GDP (current prices) by Sub-Sectors, 2008 - 2012 100% 90% Contribution to Manufactuiring (%)

In 2012, the economic recovery in the UAE continued to strengthen the country’s economy. Economic growth based on real GDP has reached 4.4% year-on-year in 2012, an increase from 3.9% in 2011. In 2012 the GDP of the UAE (at current prices) was $US 384 billion. The World Bank ranks the UAE as the 32nd largest economy in the world accounting for 0.5% of global GDP at current prices.

Within the GCC region, UAE’s GDP per capita is third highest after Qatar and Kuwait.

80% 70%

74.4%

79.1%

74.6%

69.7%

70.2%

60% 50% 40% 30% 20%

15.8%

12.0%

16.2%

20.2%

19.7%

10% 0%

9.8%

8.9%

9.2%

10.1%

10.1%

2008

2009

2010

2011

2012

Other manufacturing

Petrochemicals and chemicals

2012 value add of UAE’s chemicals sector to economy is estimated at $US6.7 billion

Refining Sector

Source: National Statistical Authorities, GPCA Analysis, 2013

Gulf Petrochemicals & Chemicals Association

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3.

Chemical Industry and Economy in 2012 9. GCC International Trade (2012)

Chemicals industry contribution to GDP of Qatar Qatar: GPD (current prices) by main economic activities, 2012

Transport, Storage & Communication Wholesale & Retail Trade, Restaurants and Hotels Construction

3.3% Finance Insurance, Real Estate & Business Services

10.2%

5.6%

8.7% Others

4.4%

9.9%

Manufacturing

2.6% 3.5% 3.8%

Refining Sector

0.1% Crude Petroleum & Natural Gas

Petrochemicals & Chemicals Other Manufacturing

Agriculture, Forestry & Fishing

57.8%

Source: National Statistical Authorities, GPCA Analysis, 2013

Qatar: Manufacturing GDP (current prices) by Sub-Sectors, 2008 - 2012 100% Contribution to Manufactuiring (%)

90% 80% 70%

37.8%

37.0%

35.5%

26.7%

26.7%

2011

2012

68.7%

60% 50% 40%

36.4% 48.1%

52.2%

19.8%

19.6%

30%

17.7%

20% 10% 0%

32.2%

28.2%

The manufacturing sector, including WKH UHÀQLQJ DQG FKHPLFDOV VHFWRU represented 9.9% of Qatar’s nominal GDP in 2012. The value added contribution of the manufacturing sector to economy in 2012 is estimated at $US18.2 billion, out of which the chemicals sector represented 35.5% or $US6.7 billion

13.6% 2008

2009 Other manufacturing

2010

Petrochemicals and chemicals

Source: National Statistical Authorities, GPCA Analysis, 2013

16

Qatar is world’s fastest growing economy with real GDP growth of 12% between 2008 and 2012.

2012 was a year of stabilization with real GDP growing by 6.2%.

Non-hydrocarbon sector was a key contributor to this growth which grew by 10% in 2012. This is in line with the National Development Strategy which revolves around HFRQRPLF GLYHUVLÀFDWLRQ DQG JURZWK in the non-hydrocarbon sectors: manufacturing, construction, transport and communications, trade and hotels, and services sectors. The GDP of Qatar at current prices was $US 192 billion.

As per the World Bank ranking, Qatar is the 53rd largest economy in the world and accounted for 0.2% of global GDP at current prices. Qatar has the highest GDP per capita among other GCC states and the 4th highest globally.

Refining Sector

Qatar is world’s fastest growing economy with real GDP growth of 12% between 2008 and 2012.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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3. GCC Chemical Industry and Economy in 2012

Chemicals industry contribution to GDP of Kuwait Kuwait: GPD (current prices) by main economic activities, 2012

Transport, Storage & Communication

5.7% 10.0%

Wholesale & Retail Trade, Restaurants and Hotels Construction

1.7%

Finance Insurance, Real Estate & Business Services

12.0% Others

3.7% 4.6%

Manufacturing

2.5% 0.5% 1.6%

Refining Sector

0.2% Crude Petroleum & Natural Gas

Petrochemicals & Chemicals Other Manufacturing

Agriculture, Forestry & Fishing

62.1%

Source: National Statistical Authorities, GPCA Analysis, 2013

Kuwait: Manufacturing GDP (current prices) by Sub-Sectors, 2008 - 2012 100% Contribution to Manufactuiring (%)

90%

33.8%

36.1%

18.4%

12.0%

32.9%

32.2%

10.4%

10.6%

In 2012 economic growth in Kuwait was maintained at 6.2% largely due to the oil sector where production and prices remained high. In 2012 Kuwait’s oil sector grew by 10%, while non-oil sector growth was 4%. Kuwait’s GDP at current prices in 2012 reached $US166.7 billion and the GDP per capita is second highest in the GCC region after Qatar and top 15th on a global level.

Constituting approximately 4.6% of GDP at current prices, the manufacturing sector in Kuwait is H[SHFWHG WR EH D NH\ EHQHÀFLDU\ of the Kuwait Development Plan.

Kuwait’s economic growth is expected to increase the demand for manufactured products.

The total size of value added of manufacturing sector in 2012 is estimated at $US7.7 billion. The chemicals sector represented 10% of manufacturing value add in 2012 or $US0.77 billion.

35.5%

80% 70% 60%

10.1%

50% 40% 30%

47.8%

51.9%

2008

2009

56.6%

57.2%

54.4%

2010

2011

2012

20% 10% 0%

Other manufacturing

Petrochemicals and chemicals

2012 value added of Kuwait’s chemicals sector represented 10% of manufacturing total.

Refining Sector

Source: National Statistical Authorities, GPCA Analysis, 2013

Gulf Petrochemicals & Chemicals Association

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3.

Chemical Industry and Economy in 2012 9. GCC International Trade (2012)

Chemicals industry contribution to GDP of Oman Oman: GPD (current prices) by main economic activities, 2012

Transport, Storage & Communication

5.0% 7.6%

Wholesale & Retail Trade, Restaurants and Hotels

Finance Insurance, Real Estate & Business Services

8.1% 11.1% Others

Construction

10.1%

4.8%

3.2% 4.6% 2.3%

1.1% Crude Petroleum & Natural Gas

Manufacturing Refining Sector Petrochemicals & Chemicals Other Manufacturing

Agriculture, Forestry & Fishing

52.2%

Source: National Statistical Authorities, GPCA Analysis, 2013

Oman: Manufacturing GDP (current prices) by Sub-Sectors, 2008 - 2012 100% Contribution to Manufactuiring (%)

90% 80%

33.2% 45.8%

26.2%

Oman’s economy continued to grow in 2012 supported by increased oil production and high oil prices. Overall, the IMF projected real GDP growth to have reached 5% in 2012, up from 4.5% in 2011. The non-oil sector grew by 5.8% in 2012, supported by public investment, and increased activity in services sector.

The manufacturing sector in Oman has demonstrated promising growth over the past decades. It is the second largest sector after oil & gas and accounts for 10.1% of GDP at current prices. Heavy LQGXVWULHV VXFK DV UHÀQLQJ DQG chemicals represent the majority of the manufacturing value addition.

In 2012, total value added of the manufacturing sector is estimated at $US7.7 billion out of which the petrochemicals and chemicals sector’s contribution was $US3.5 billion.

22.7%

45.0%

70% 60% 50%

45.3%

34.9%

44.6%

31.5%

31.8%

29.2%

32.0%

2009

2010

2011

2012

8.6% 23.5%

40% 30% 20%

45.6%

10% 0%

2008

Other manufacturing

Petrochemicals and chemicals

The manufacturing sector in Oman has demonstrated promising growth over the past decades.

Refining Sector

Source: National Statistical Authorities, GPCA Analysis, 2013

18

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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3. GCC Chemical Industry and Economy in 2012

Chemicals industry contribution to GDP of Bahrain Bahrain: GPD (current prices) by main economic activities, 2012

Finance Insurance, Real Estate & Business Services

26.0%

14.1% Others 15.0%

Transport, Storage & Communication

3.5% 1.7% 9.9%

6.4%

Wholesale & Retail Trade, Restaurants and Hotels

6.3%

0.3%

6.1%

Construction

Manufacturing Refining Sector Petrochemicals & Chemicals Other Manufacturing

Agriculture, Forestry & Fishing

Petroleum 25.2% Crude & Natural Gas

Source: National Statistical Authorities, GPCA Analysis, 2013

Bahrain: Manufacturing GDP (current prices) by Sub-Sectors, 2008 - 2012

In 2012, real GDP growth in Bahrain was 4.8%. This is more than twice the 2011 level of 2.1%. The hydrocarbon sector suffered a contraction in 2012 which was offset by the growth in manufacturing and government services. Growth in the hospitality sector was the fastest in 2012 as a rebound from 2011.

The manufacturing sector is dominated by energy-intensive industries such as aluminum, UHÀQLQJ FKHPLFDOV DQG VWHHO DQG in 2012 contributed 15% of GDP at current prices. At current prices, the chemicals industry accounted for 11.1% of the manufacturing sector’s GDP in 2012. Value added of the manufacturing sector in 2012 is estimated at $US4 billion, out of which the contribution of the chemicals sector is estimated at $US0.4 billion.

100% Contribution to Manufactuiring (%)

90% 80% 70%

54.1%

62.5%

63.8%

63.7%

65.6%

14.7%

13.4%

13.0%

11.1%

22.9%

22.8%

23.3%

23.3%

2009

2010

60% 50% 40%

17.0%

30% 20% 10% 0%

28.9% 2008

Other manufacturing

2011

Petrochemicals and chemicals

Manufacturing sector’s contribution to the GDP of 15% in Bahrain is highest among other GCC countries.

2012 Refining Sector

Source: National Statistical Authorities, GPCA Analysis, 2013

Gulf Petrochemicals & Chemicals Association

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3.

Chemical Industry and Economy in 2012 9. GCC International Trade (2012)

Contribution of chemicals industry to manufacturing output GCC Manufacturing Output by Industry, $US billion

CAGR (2008-2012) 450

9.4%

368.5

Value of output ($US Billion)

400

109.5

350 300

282.6 249.2

250

77.6

200

17.7 20.6 27.5

67.0

150 100 50

404.1

52.1

304.5

96.0

81.5

18.3 25.8 26.5

18.4 23.8 27.2

15.7 22.0 24.6

22.0 27.8 33.4

93.9

97.4

64.1

48.1

87.0

89.5

108.0

114.0

71.6

2008

2009

2010

2011

2012

0

Refining

Chemicals

Food products & beverages

Non-metallic mineral products Basic Metals

Others

Note: 2011 and 2012 are preliminary Source: UNIDO, Statistical Authorities, GPCA Estimates, 2013

Traditionally, the manufacturing sector in the GCC has been viewed as integral part of economic GLYHUVLÀFDWLRQ ,QH[SHQVLYH HQHUJ\ DQG DYDLODELOLW\ RI infrastructure and resources were the factors driving industrial growth in the region. Regional oil & gas UHVRXUFHV HQDEOHG GHYHORSPHQW RI WKH UHÀQLQJ DQG chemicals industry. These two sectors represent more than half of the total manufacturing output which was estimated at $US404.1 billion in 2012. Due to production capacity expansions and surging prices, the RXWSXW RI WKH UHÀQLQJ DQG FKHPLFDOV VHFWRU KDV JURZQ UDSLGO\ RYHU WKH SDVW ÀYH \HDUV 7KH FKHPLFDOV VHFWRU is the second largest manufacturing sector in the region and in 2012 represented approximately 24% of

20

the region’s manufacturing output. Between 2008 and 2012 chemicals output grew at an average of 16.9% per annum, higher than in any other sector. As a result, the share of chemicals industry in total manufacturing output has increased from 18% in 2008 to 24% in 2012.

Chemicals sector is the second largest manufacturing sector in the GCC.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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3. GCC Chemical Industry and Economy in 2012

Industries dependent upon chemicals industry Value of chemical inputs supplied to GCC industries 2012, $US million 22'529

Crude Petroleum, Natural Gas, Mining 9'229

Wholesale & Retail Trade, Restaurants and Hotels 4'305

Real Estate & Business Services

3'886

Agriculture, Forestry & Fishing

3'707

Basic metals Manufacturing

3'304

Electricity and Water

3'232

Rubber & Plastic Products Manufacturing

2'051

Construction Coke & ReďŹ ned Petroleum

1'362

Non-metallic mineral products

1'216

Wearing Apparel Manufacturing

781

Electrical Machinery Manufacturing

741

Machinery & Equipment Manufacturing

691

Food products & beverages Manufacturing

502

Paper & paper products Manufacturing

479

Wood Products Manufacturing

303

Textiles

301

Publishing & printing

199

Furniture Manufacturing

87

Motor Vehicles

76

Other transport equipment

75

Medical, Precision & optical instruments

18

Note: Includes chemicals inputs of imported and locally produced chemicals. GCC chemicals sales by industry are estimated based on the chemicals consumption by industries and their relative value added for economies with available data.

Source: GPCA Estimates, 2013

Chemicals products are an integral part of various industries. Looking downstream, the economy depends upon chemicals industry at four levels: 1. Actual production of chemicals; 2. Industries manufacturing industrial products that purchase chemicals and use them to make these products that are the raw materials or intermediate inputs for other industries; 3. Industries manufacturing consumer products and RWKHU ÀQDO JRRGV ZKLFK SXUFKDVH FKHPLFDOV GLUHFWO\ or buy industrial parts and components based on chemistry; 4. Wholesale, retail and service industries based on chemistry-derived products Source: American Chemistry Council

Almost every industry procure products or services that originate from the chemicals industry. An example is the GCC oil & gas production sector accounts for 48% of the regional GDP and uses a variety of chemicals in the oil production process. The main chemicals used in the oil & gas sector are drilling and well chemicals, production chemicals, injection chemicals, pipeline chemicals, gas treatment chemicals and utility chemicals. Chemicals consumption by GCC oil & gas production and mining is estimated at $US22.5 bn.

Most manufactured goods are directly touched by chemistry. Within GCC manufacturing, the largest users of chemicals are rubber & plastic products PDQXIDFWXULQJ SHWUROHXP UHĂ€QLQJ EDVLF PHWDOV manufacturing, non-metallic mineral products. In addition to the chemicals sales to be used as raw materials in rubber and plastics production such as synthetic rubber and of basic chemicals such as chlorine, caustic soda, and titanium dioxide, there are number of specialty chemicals used in the production.

Rubber processing chemicals are functional chemicals are used to facilitate processing or to improve the SURSHUWLHV RI WKH ÀQDO UXEEHU SURGXFW 7KH\ LQFOXGH accelerators, activators, anti-ozonants, antioxidants, stabilizers, and vulcanizing agents, among others.

Plastic additives include chemicals that are added to plastic resin to facilitate processing of plastic resin WR HQKDQFH RU PRGLI\ WKH ÀQDO SURSHUWLHV RI SODVWLF products. Some of them are antioxidants, antistatic DJHQWV EORZLQJ DJHQWV FRORUDQWV à DPH UHWDUGDQWV heat and other stabilizers, lubricants, plasticizers, reinforcing agents and UV absorbers.

With no natural drinking water sources, water treatment is an important area for the region. Water management chemicals used include biocides, FRDJXODQWV GHIRDPHUV Ă RFFXODQWV VFDOH LQKLELWRUV and corrosion inhibitors.

Gulf Petrochemicals & Chemicals Association

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3.

Chemical Industry and Economy in 2012 9. GCC International Trade (2012)

Share of Chemicals in non-oil exports on regional and national levels GCC Non-Oil Export in 2012

Qatar

Saudi Arabia

53%

$US 112.6 billion

32%

68%

37%

63%

Kuwait

44%

56%

47% Oman

Bahrain

UAE

Petrochemicals & Chemicals

59%

41%

22%

78%

88%

12%

Other non-oil exports

Source: National Statistical Authorities, GPCA Analysis, 2013

GCC exports is still highly dependent on the hydrocarbon sector which accounts for more than 80% of export value. Globally the hydrocarbon sector accounts for approximately 68% of export value.

GCC non-oil export grew by an average 20% per annum between 2001 and 2012. Qatar registered the highest growth of 24% per annum during the same period, followed by the UAE and Saudi Arabia where non-oil export grew by 21.4% and 20.6% per annum respectively. As a result the share of non-oil export in the total export of goods has increased from 15% in 2001 to 18% in 2012.

22

Examination of GCC non-oil export in 2012 shows almost half or 47% of total non-oil export value was generated from chemicals sector. Dependency of non-oil exports on energy intensive industries such as chemicals is different among GCC states. The highest dependency has been observed in Qatar where chemicals accounted for 68% of non-oil export in 2012.

In Saudi Arabia, the largest chemicals production country within the GCC, chemicals accounted for 63% of total non-oil export in 2012. Similarly, the share of chemicals in non-oil export of Kuwait remains high at 56%. In the rest of the GCC countries, chemicals account for less than a half of non-oil export. Non-oil H[SRUW LQ WKH 8$( LV PRVW GLYHUVLĂ€HG DQG FKHPLFDOV accounted for only 12% of the non-oil export.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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3. GCC Chemical Industry and Economy in 2012

4.

GC C P r oduction C apacity by P r oduct (2008-2 0 1 2 )

Gulf Petrochemicals & Chemicals Association

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4.

Production Capacity 9. GCC International Trade (2012) by Product (2008-2012)

Introduction The chemical industry is divided into a number of broad segments. GCC chemicals production can be described by the following table:

Chemicals (excluding Pharmaceuticals) Product Segments

Consumer Chemicals

Basic Chemicals

Specialty Chemicals

Intermediates Petrochemicals

Inorganic Chemicals

Fine Chemicals

Basic Inorganics

Polymers

Industrial Gases

Fertilizers

Source: &HĂ€F $PHULFDQ &KHPLVWU\ &RXQFLO

24

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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4. GCC Production Capacity by Product (2008-2012)

Petrochemicals Basic Chemicals

Includes 7 major bulk (commodity) building blocks: Ethylene, Propylene, Methanol, Aromatics (benzene, toluene and xylenes)

Intermediate Chemicals

Represent next step of chemical conversion of basic petrochemicals and are used in GRZQVWUHDP GHULYDWHV VXFK DV SODVWLF UHVLQV V\QWKHWLF UXEEHU PDQ PDGH ÀEHUV DQG RWKHUV

Fine Chemicals

&KHPLFDOV SURGXFHG LQ VPDOOHU VFDOH DQG DUH XVHG LQ SURGXFWLRQ RI ÀQDO SURGXFWV

Polymers

&RPPRGLW\ WKHUPRSODVWLFV HQJLQHHULQJ SODVWLFV 0DQ PDGH ÀEHUV 0DQ PDGH UXEEHU ZLWK KLJK GHJUHH RI à H[LELOLW\ Basic Inorganics

Fertilizers

Various combinations of nitrogen, phosphorous, potassium

Industrial Gases

Includes oxygen, nitrogen, argon, carbon dioxide and hydrogen. Industrial gases are widely used in the manufacturing processes with major industries including steel, chemicals production, electronics and health care

Inorganic chemicals

Chemicals derived from metal and non-metallic minerals and don’t contain carbon as principle element Specialty Chemicals

Adhesives

Chemicals used to bond two surfaces together and are mostly supplied to automotive, construction, packaging sectors

Catalysts

Specialty chemicals that affect the speed of chemical reaction. They are mostly supplied to RLO UHĂ€QLQJ FKHPLFDO SURFHVVLQJ LQGXVWULHV

Coatings

Materials applied to protect or decorate surfaces and are mostly supplied to automotive, transportation, construction, packaging and other industrial sectors

Cosmetic Additives

Functional chemicals and are used to improve performance of cosmetic and personal care products

Crop Protection

Products that help control plants from harmful insects, diseases and other related products

Dyes and Pigments

Organic and inorganic chemicals used to impart color into other materials

Industrial Additives

Functional chemicals added to aid or facilitate industrial processes and enhance properties RI WKH ÀQDO SURGXFW

Lubricant Additives

Functional chemicals added to lubricating oils to impart special properties

Paints and Inks

Colored, liquid dispersions of dyes or pigments used to impart text and design

Other Specialties

A number of other specialty chemicals exist Consumer Chemicals

Consumer Chemicals

Chemicals sold directly to consumers and include chemicals products such as soaps and detergents, cosmetics

GCC chemicals industry has been mostly concentrated around production of Petrochemicals, Polymers and Basic Inorganics (Fertilizers and Inorganic Chemicals). They account for about 90% of the total chemicals production in the region.

Gulf Petrochemicals & Chemicals Association

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4.

Production Capacity 9. GCC International Trade (2012) by Product (2008-2012)

GCC Capacity breakdown by product segment Current production of GPCA member companies can be grouped into the following product segments and sub-segments: •

•

•

Petrochemicals including: • basic petrochemicals • intermediates • ÀQH FKHPLFDOV • polymers Basic Inorganics including: • fertilizers • inorganic chemicals Specialty Chemicals

I Petrochemicals Segment: Basic petrochemicals or commodity chemicals are produced in large quantities. They are the basic building blocks derived from hydrocarbon feedstock and are used to produce other chemical products. In 2012, GCC basic petrochemicals capacity reached 44.1 million tons per annum which accounts for 34.1% of the regional chemicals capacity. Between 2008 and 2012, regional producers have expanded their basic petrochemical production capacities by an average rate of 13.2% per annum. This is higher than the overall chemicals capacity growth of 12.2% per annum.

Petrochemical intermediates represent the next step in the chemical conversion of bulk petrochemicals and are used in downstream derivatives such as plastic UHVLQV V\QWKHWLF UXEEHU PDQ PDGH ÀEHUV DQG RWKHUV GCC capacity of intermediates has reached 12.6 million tons in 2012, representing 9.8% of the total capacity in the region.

GCC polymers production is concentrated around commodity thermoplastics. Over the past 5 years polymers industry in the GCC has seen a remarkable growth of CAGR 17% reaching 23.8 million tons in 2012. After basic petrochemicals and fertilizers, the polymers segment is the third largest in the GCC chemicals industry representing 18.4% of region’s total production capacity.

I Basic Inorganics Segment: Fertilizers are various combinations of nitrogen, phosphorous and potassium. The major end-users of fertilizers are in the agriculture sector. Fertilizer production in the GCC is the second largest product sub-segment representing 23.3% of the total regional capacity or 30.1 million tons per annum. Over the past 5 years GCC fertilizers production capacity grew by an average 13.7% per annum.

Inorganic chemicals are derived from metal and non-metal minerals and do not contain carbon as a principle element. In 2012 the GCC production capacity of inorganic chemicals reached 3.5 million tons per annum which represents 2.7% of the total capacity.

I Specialty Chemicals Segment: GCC production capacity for specialty chemicals is still in the early stages of development. Specialty chemicals are produced in relatively small quantities and have specialist end-use applications. They are derived from petrochemical intermediates and other industrial chemicals. As of 2012, the GCC capacity of GPCA members was estimated at 0.24 million tons which is 0.2% of the regional chemicals capacity.

7KH ÀQH FKHPLFDOV JURXS LV FRPSULVHG RI RUJDQLF chemicals which are derived from bulk petrochemicals, intermediates and other carbon sources. The SURGXFWLRQ FDSDFLW\ RI ÀQH FKHPLFDOV LQ WKH *&& is 14.8 million tons which represents 11.4% of the regional chemicals capacity.

26

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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4. GCC Production Capacity by Product (2008-2012)

GCC Chemicals Production Capacity by Product Segment CAGR (2008-2012)

12.2% 140

96.7

100

2.9 19.4

Million Tons

81.6 80

2.8 18.0

60

0.2

17.6

12.7

40

0.2

13.0

11.5 9.5

11.0

26.9

32.6

2008

2009

20

3.0 20.0

0.2

3.5

3.5

0.3

0.3

30.1

27.3

20.6

21.3

23.8

14.4

14.8

14.8

11.4

12.5

12.6

41.1

42.2

44.1

2010

2011

2012

Petrochemicals

110.7

120

Basic Inorganics

129.2

121.8

0

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

GCC Chemicals Capacity by Product Segment 2012 Total: 129.2 million tons

Petrochemicals

Intermediates

11.4%

23.3%

Fertilizers

9.8% 2.7% 0.2%

Basics

Inorganic chemicals

26.0%

73.7%

Fine Chemicals

18.4%

Basic Inorganics

Polymers

Specialty Chemicals

34.1%

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Gulf Petrochemicals & Chemicals Association

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27

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4.

Production Capacity 9. GCC International Trade (2012) by Product (2008-2012)

GCC Capacity breakdown by value chain GCC Chemicals Capacity by Value Chain CAGR (2008-2012)

12.2% 0.7 7.0

110.7 Million Tons

120 100 80 60 40 20

129.2

121.8

140 0.7 3.6

96.7 81.6 8.4 7.1 32.2

0.5 3.4

9.8 11.8

0.6 3.5

13.3

12.0 14.4

45.8

39.0

14.7

47.3

0.7 7.0 14.5 15.5

49.9

30.0

32.0

34.2

38.8

41.6

2008

2009

2010

2011

2012

0

C1 Methane Aromatics

C2 Ethylene Inorganics

C3 Propylene C4 Butadiene

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

A wide range of chemicals products are the result of the processing of organic and inorganic raw materials.

The majority of chemicals products in the GCC use organic inputs such as oil and natural gas, which contain hydrocarbons. Organic chemicals in the GCC are represented by Methane (C1), Ethylene (C2), Propylene (C3), Butadiene (C4) and Aromatics value chains.

Chemical products based on the ethylene (C2) value chain represent the majority of the regional output and accounted for 38.6% of the total GCC Capacity in 2012. This is equivalent to 49.9 million tons of production capacity as of end of 2012. Currently the ethylene value chain in the GCC is represented by more than 60 different chemicals which aid various industries which include food packaging, housewares, automotive, insulations and other.

7KH VHFRQG VLJQLÀFDQW SURGXFW JURXS LQ WKH *&& LV comprised of methane (C1) based chemicals which accounted for 32.2% of the total GCC capacity in 2012 or 41.6 million tons per annum. There are approximately 50 different chemicals within the methane value chain produced in the GCC. This product group supplies products to the building materials, plastics and agriculture industries.

28

GCC capacity to produce propylene (C3) based products reached 15.5 million tons in 2012 which accounted for 12% of region’s total. With a low capacity base in the region, there are approximately 45 propylene based products currently produced in the GCC. Propylene based products serve as a basis for products used in many downstream industries including automotive, telecommunications, printing and coatings. Over the past 5 years the production of propylene (C3) based chemicals has seen an expansion of CAGR 21.7% which the highest when compared to other product groups.

Similarly to propylene (C3) based chemicals, the aromatics value chain represented a minor share of the total regional capacity in 2012, accounting for 11.2%. With approximately 55 different chemicals produced from benzene, mixed xylenes and toluene, this group supplies a variety of industries from packaging to apparel, pharmaceuticals and spare parts. Similarly to the propylene (C3) value chain, the DURPDWLFV JURXS LV KLJKO\ GLYHUVLÀHG LQ WKH UDQJH RI chemicals currently produced when compared to the ethylene (C1) and methane (C2) groups.

Inorganic chemicals accounted for 5.5% of the total capacity in the region in 2012. There are more than 30 inorganic chemicals currently produced in the GCC. The inorganic products segment has been expanding at an average 20.3% per annum over the past 5 years.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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4. GCC Production Capacity by Product (2008-2012)

Basic Petrochemicals capacity breakdown by product GCC Basic Petrochemicals Capacity by Product CAGR (2008-2012)

13.2% 45

41.1

40

32.6

Million Tons

35 30

26.9

25

2.2 3.5

20 15

0.1 0.4

2.3

0.1 1.2

5.7

44.1 0.3 2.2

0.3 2.5

3.1

3.1

3.1

6.4

6.7

9.3

9.4

19.8

20.5

21.7

2010

2011

2012

7.2

9.3

8.2 8.0

10 5

42.2 0.3 2.2

12.7

15.0

0 2008

2009

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Basic petrochemicals are comprised of bulk (commodity) chemicals produced in large quantities and are used to produce other chemicals and specialties. Due to petrochemicals capacity expansions in the region and availability of natural gas feedstock, GCC capacity of basic petrochemicals has been expanding at the compound annual growth rate of 13.2% between 2008 and 2012. In 2012 total capacity has reached 44.1 million tons per annum.

More than 90% of all organic downstream chemicals are derived from 7 major bulk (commodity) chemicals.

methanol capacity expansion of 3.9% per annum was the lowest among other commodity chemicals in the GCC. This is due to the fact that the majority of GCC methanol is being exported.

Ethylene traditionally has been the main basic petrochemical produced in the GCC. In 2012, ethylene represented the majority or 49.2% of the region’s total basic petrochemicals capacity. In the GCC, ethylene is mainly used to produce polyethylene (PE) with other major users being ethylene oxide (EO), ethylene glycol (EG) and polyvinyl chloride (PVC).

The Aromatics (benzene, toluene and xylenes) accounted for 13.1% of region’s capacity to produce commodity chemicals in 2012. Benzene is the largest aromatics produced in the GCC with production capacity reaching 3 million tons in 2012. In the GCC, benzene is used mainly to produce styrene monomer.

6LQFH *&& SURGXFHUV KDYH DGGHG VLJQLĂ€FDQW production capacity of xylenes and by 2012 regional xylenes capacity has reached 2.5 million tons.

Methanol is the second largest commodity petrochemical produced in the region which accounted for 21.2% of the total basic petrochemicals capacity in 2012 or 9.3 million tons. Between 2008 and 2012

Production capacity of propylene reached 7.2 million tons in 2012 which represents 16.2% commodity chemical’s total. Propylene is mainly used to produce polypropylene (PP), while other users include producers of acrylonitrile (ACN), propylene oxide (PO) and cumene and acrylic acid.

Gulf Petrochemicals & Chemicals Association

GCPA_2012_Facts_Figures_1111.indd 29

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4.

Production Capacity 9. GCC International Trade (2012) by Product (2008-2012)

Fertilizers capacity breakdown by product GCC Fertilizers Production Capacity by Product CAGR (2008-2012)

35

13.7%

30.1

30

27.3

25

3.4

20

19.4

20.0

0.5

0.5

8.3

8.3

9.9

10.5

11.1

12.5

2008

2009

2010

2011

18.0 0.5

15

7.6

3.4

11.3 11.4

10 5 0

Urea

Ammonia

15.3

2012

Diammonium phosphate (DAP)

Note: Based on nameplate capacity Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Fertilizers represent various combinations of three basic elements (nitrogen, phosphorous and potassium). Fertilizer industry insures that agricultural business have nutrients they need to grow crops to meet world’s requirements for food and energy. GCC fertilizers production is mostly represented by nitrogen production with ammonia and urea accounting for 88% of the total GCC fertilizers capacity in 2012 or 26.6 million tons. Most of the ammonia is utilized to manufacture urea and which is the most important nitrogen-based fertilizer. In 2012 GCC ammonia production capacity was 11.3 million tons, growing by an average 10.6% between 2008 and 2012. GCC urea capacity in 2012 has crossed 15 million tons per annum and accounts for 50.7% of the total fertilizer production capacity in the region.

6LJQLÀFDQW TXDQWLWLHV RI 'LDPPRQLXP SKRVSKDWH (DAP) production commenced from 2011 and represents 10.8% of the regional capacity. As a Phosphorus fertilizer DAP is manufactured from mineral deposits occurring in the nature.

30

Fertilizer’s main purpose is to provide essential nutrients needed by the crops to the soil. As the majority of GCC fertilizers production is concentrated around production of single nutrient fertilizers such as ammonia and urea, nitrogen is the main nutrient provided by the GCC. As of 2012, nutrient provided by the fertilizers produced in the GCC was equal to 8.4 million tons of nitrogen nutrients. This is about 8% of the world’s total nitrogen consumption which is estimated at 104-105 million tons per annum (source: IFA).

GCC fertilizers production is mostly represented by nitrogen production with ammonia and urea accounting for 88%.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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4. GCC Production Capacity by Product (2008-2012)

Fertilizers Nutrients Production GCC Fertilizers Nutrients Production CAGR (2008-2012)

11.8%

10

9.2

Nutrients Million Tons

9

7.6

8 7 6

5.9

5.9

0.1

0.1

6.3

0.8

0.2

0.1

5 8.4 4 3

7.3 5.8

5.8

6.2

2008

2009

2010

2 1 0

Nitrogen

2011

2012

Phosphorus pentoxide (P2O5)

Note: Nutrients productions is calculated based on production excluding captive consumption Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Fertilizer industry insures that agricultural business have nutrients they need to grow crops to meet world’s requirements for food and energy.

Gulf Petrochemicals & Chemicals Association

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4.

Production Capacity 9. GCC International Trade (2012) by Product (2008-2012)

Polymers capacity breakdown by product GCC Polymers Capacity by Product, Million Tons CAGR (2008-2012)

17%

23.8

25 0.7 0.9

1.0 0.9

7.6

7.6

1.4

1.4

4.3

4.3

17.6 0.7 0.9

15

10

5

8.0

12.7 0.7 0.9

5.7

3.4

1.4

1.0

4.2

1.3 1.4

1.7 4.3

3.2 5.7

7.1

4.7

6.0

3.6 2008

2009

2010

2011

2012

Petrochemicals

Million Tons

20

20.6

21.3

0

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Polymers are compounds derived from one or more petrochemical monomers like ethylene, styrene, propylene and include commodity thermoplastics, engineering resins and thermoplastic elastomers.

Between 2008 and 2012, GCC polymers production capacity expanded by an average 17% per annum, which is highest among other chemical product segments. Among the numerous numbers of plastics ZLWK YDULHW\ RI JUDGHV IRU HDFK VSHFLĂ€F DSSOLFDWLRQ the 5 largest volume commodity thermoplastics are: Polyethylene (LDPE, LLDPE, HDPE), Polypropylene (PP), Polyvinylchloride (PVS), Polystyrene (PS and EPS) and Terephthalate (PET). These products dominate GCC polymers production.

Polyethylene (LDPE/ LLDPE / HDPE) accounted for 55.3% of GCC polymers production capacity in 2012 or 13.2 million tons per annum. High density polyethylene (HDPE) is a major polyethylene produced in the GCC and accounted for 30% of 2012 polymers production capacity. In volume terms, regional capacity

32

of HDPE in 2012 reached 7.1 million tons. In 2012 alone GCC producers have added around 1 million tons of HDPE capacity which represents 18.8% yearon-year growth. Major users of HDPE are producers of blow-moulded products such as bottles, packaging containers, drums, car fuel tanks, toys and household goods; producers of injection-moulded products such as crates, pallets, packaging containers, house wares and toys.

With production capacity of 4.3 million tons at the end of 2012, linear low density polyethylene (LLDPE) is the second largest polyethylene resin produced in the GCC. LLDPE accounted for 18.1% of GCC polymers production capacity in 2012. Over the past few years WKHUH KDYHQҋW EHHQ VLJQLÀFDQW FDSDFLW\ DGGLWLRQV RI LLDPE in the GCC, hence, its production capacity between 2008 and 2012 was 8.1% per annum, the lowest among other polymers. LLDPE is mostly used DV ÀOP IRU IRRG DQG QRQ IRRG SDFNDJLQJ VKULQN DQG VWUHWFK ÀOP DQG QRQ SDFNDJLQJ XVHV 2WKHU XVHV IRU LLDPE include injection-moulding products and wire and cable applications.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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4. GCC Production Capacity by Product (2008-2012)

GCC Polymers Capacity 2012 Total 23.8 million tons

1.1% PC PS 1.1% 0.6% Polyester Fiber PVC 1.7% 0.1% EPS PET 5.7%

33.7%

Polythelene

PP

HDPE

55.3%

30.0%

18.1% LLDPE 7.2% LDPE

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

GCC production of low density polyethylene (LDPE) has been lower than production other polyethylene grades. In 2012, LDPE production capacity reached 1.7 million tons growing by an average 14% per annum between 2008 and 2012. LDPE Capacity expansions continues at a higher rate and in 2012 alone the capacity growth rate was 21% year-on-year growth. Packing industry is the mail user of low density polyethylene (LDPE).

With production capacity of 8 million tons per annum, polypropylene (PP) is the second largest polymer in the GCC and accounts for 34% of the total. PP capacity expansion over the past 5 years is one of the highest among other polymers in the region.

With average annual growth rate of CAGR 23.6% between 2008 and 2012, polypropylene production has expanded from 3.4 million tons per annum in 2008 to 8 million tons per annum in 2012.

GCC polymers production capacity expanded by an average 17% per annum between 2008 and 2012, highest among other chemical product segments.

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4.

Production Capacity 9. GCC International Trade (2012) by Product (2008-2012)

Top 10 major products produced by the GCC chemicals industry Share of Top 10 chemical products in total capacity 2012

17% Ethylene Others

27% 129.2 million tons

3% LLDPE 3% MEG 4% HDPE 6%

12% Urea

MTBE

9% Ammonia 7% Methanol 6%

Propylene

6% PP

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

GCC chemicals and petrochemicals production is represented by 78 different chemicals (not including various product grades). Among them 10 products represent the majority of the production capacity. In 2012 they accounted for 73% of region’s total.

Notably, three basic petrochemicals, namely ethylene, methanol and propylene accounted for 30% of the regional chemicals capacity in 2012. Ethylene production capacity in the GCC is the largest among other product and accounted for 17% of region’s total.

The majority of ethylene is utilized captively to produce other value-add chemicals. Methanol and propylene accounted for 7% and 6% respectively. Most of the propylene production is consumed regionally to produce polypropylene.

Polymer products, polyethylene (HDPE and LLDPE) and polypropylene are also among top 10 products. HDPE and polypropylene each accounted for 6% of GCC’s chemicals capacity in 2012 and LDPE accounted for 3%. While there is a regional consumption of polymers in the region, the GCC polymer industry is by in large export oriented. $PRQJ ÀQH FKHPLFDOV 07%( DQG 0(*ҋV VKDUH LQ 2012 was 3% and 4% in the region’s total chemicals capacity.

73% of region’s chemicals capacity is represented by 10 products.

Fertilizer product urea is the second largest product in the GCC accounting for 12% of the region’s total chemicals capacity in 2012 followed closely by ammonia which account for 9%. While ammonia production is one of the largest in the region, the majority of ammonia is consumed captively to produce urea.

34

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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4. GCC Production Capacity by Product (2008-2012)

Overview of gl obal ethylene production Global Ethylene Production Capacity by Region (2008-2012)

1.4% Latin America 5.3% 0.4% Others

1.2% Latin America 4.7% 0.3% Others

Africa

GCC

11.6%

22.1% Asia (Excl China)

2008 129.0 million tons Europe

Africa

GCC

14.4%

2012 150.9 million tons

8.1% China

24.6%

22.9% Asia (Excl China)

Europe

13.1% China

21.3%

26.5% North America

22.0% North America

Source: Mitsubishi Chemical Techo-Research Corporation (MCTR), ICIS, GPCA

Ethylene is one of the main basic petrochemicals and is used to produce polyethylene (PE), ethylene oxide (EO), ethylene glycol (EG), polyvinyl chloride (PVC) and polystyrene (PS) and various intermediates such as ethyl acetate.. In 2012 world ethylene capacity reached 150.9 million tons per annum representing a growth of 4% per annum since 2008. Asia is the largest ethylene producer in the world accounting for 36% of world’s total. Ethylene capacity growth in Asia between 2008 and 2012 was 8.7% per annum and is one of the highest in the world and higher than the world’s total growth of 4%.

In 2012, GCC ethylene capacity was 21.7 million tons per annum which accounts for 14.4% of world’s total.

It grew by an average 9.7% per annum in comparison with worldwide growth of 4%. As a result, GCC share in the world’s ethylene capacity has increased from 11.6% in 2008 to 14.4% in 2012.

GCC Ethylene production capacity accounts for 14.4% of world’s total

Gulf Petrochemicals & Chemicals Association

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4.

Production Capacity 9. GCC International Trade (2012) by Product (2008-2012)

Overview of gl obal urea production Global Urea Production Capacity by Region (2009-2012)

3.4% 3.7% 0.3% Others North America 6.2% GCC 6.0%

3.4% 3.5% 0.2% Others North America 5.8% GCC 7.9%

Latin America

Latin America

Africa

Europe

13.7%

Africa

2009 175 million tons

Europe

14.3%

66.7% Asia

2012 193.7 million tons

64.9% Asia

Source: International Fertilizer Association (IFA) Production and International Trade, September 2013

Urea is the most widely used solid nitrogen fertilizer in the world. The agricultural sector is the main user of urea and accounts for more than 80% of total urea demand. World urea production capacity in 2012 was estimated to be 193.7 million tons, up from 175 million tons in 2009. The majority of these capacity additions took place in Asia and the GCC. Between 2009 and 2012, Asian countries added 9 million tons of urea capacity while GCC added 4.8 million tons.

Asia is the largest urea producer in the world. Its production capacity in 2012 is estimated to be 125.7 million tons which represented 64.9% of world’s total.

Due to urea capacity expansion in other regions, share of Asia worldwide in urea production market has declined from 66.7% in 2009.

Producers in Europe (comprised of Western, Central and Eastern Europe) produced 27.7 million tons of urea in 2012. This is 14.3% of world’s total urea capacity. Between 2009 and 2012, Europe’s producers added 3.6 million tons of urea capacity which resulted in compounded annual growth of 4.8% for that period.

36

In 2012 GCC producers manufactured 15.3 million tons of urea which accounted for 7.9% of world’s total. Thus making the GCC the third highest regional producer of urea. GCC’s urea expansion growth rate of 13.3% per annum between 2009 and 2012 is the highest in the world.

North American urea producers did not have any VLJQLÀFDQW FDSDFLW\ DGGLWLRQV RYHU WKH SDVW \HDUV ,Q 2012 North American urea production capacity was estimated at 11.2 million tons, slightly higher than 10.9 million tons in 2009.

Urea production capacity in Africa and Latin America are similar ( 6.7 million tons and 6.6 million tons in 2012 respectively) . There was a notable expansion of urea capacity in Latin America between 2009 and 2012. Its growth of 3.7% between 2009 and 2012 was one of the highest among other regions.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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4. GCC Production Capacity by Product (2008-2012)

Overview of gl obal ammonia production Global Ammonia Production Capacity by Region (2009-2012)

4.0% Africa GCC 4.0% 1.0% Others Latin America

North America

3.0% Africa 1.0% Others GCC 5.0%

6.0%

Latin America

9.0%

North America

2009 189.5 million tons

Europe

6.0%

8.0% 2012 204 million tons

52.0% Asia

24.0%

Europe

54.0% Asia

23.0%

Source: International Fertilizer Association (IFA) Production and International Trade, September 2013

Today, virtually all nitrogenous fertilizers are derived from ammonia. Ammonia is produced from hydrocarbon feedstock and is a key intermediate for fertilizer production such as urea, ammonium nitrates, ammonium phosphates and compounds. Ammonia is the only viable source of nitrogen for producing large amounts of protein. The nitrogen content of fertilizers improves both the quantity and quality of proteincontaining crops.

The North American capacity for ammonia production reached 16.2 million tons in 2012, which accounted for 5% of world’s total. Similarly to Europe, over the past \HDUV WKHUH KDYH EHHQ QR VLJQLÀFDQW FDSDFLW\ DGGLWLRQV in North America. In 2009, North American ammonia capacity was only slightly lower than 16.2 million tons which resulted in an average growth of 0.2%. This is lowest growth among other regions.

World ammonia production capacity reached 204 million tons in 2012, representing an average growth of 2.5% per annum since 2009. Asia traditionally has been the largest ammonia producer in the world accounting for more than half of world’s ammonia production capacity. In 2012, Asia’s capacity to produce ammonia reached 109.3 million tons per annum which accounts for 54% of world’s total.

Production capacity in Latin America in 2012 was 11.5 million tons, an increase from 11 million tons in 2009. While demand in Latin America has been rapidly increasing due to the strong development of the agricultural sector, ammonia capacity expansion in this region continues at slower pace of than in other regions. Between 2009 and 2012 it has registered a growth of 1.5% per annum which is lower than world’s average growth of 2.5% p.a.

Europe (comprised of Western, Central and Eastern Europe) is the second largest producer of ammonia representing 23% of world’s total ammonia production capacity or 46.1 million tons. Over the past years there have been no major ammonia capacity additions in Europe and therefore capacity growth between 2009 and 2012 is modest at 0.6%.

Slightly behind Latin America, GCC ammonia capacity in 2012 was 11.3 million tons which makes GCC 5th largest among other regions. Rapid capacity expansion in the GCC from 8.3 million tons in 2009 to 11.3 million tons in 2012 has made ammonia production in the region the fastest growing among other parts of the world.

Gulf Petrochemicals & Chemicals Association

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4.

Production Capacity 9. GCC International Trade (2012) by Product (2008-2012)

Overview of gl obal methanol production Global Methanol Production Capacity by Region (2008-2012)

Rest of the World

15.0%

GCC

7.0%

14.0%

North America

32.0% China

2.0% Africa 3.0%

North America

Europe

12.0% 2.0% Africa 4.0% Europe 4.0% Rest of the World

2008 59 million tons

GCC

10.0%

2012 95.5 million tons

48.0% China

5.0% Asia (Excl China) 14.0% Central & Latin America

22.0% Central & Latin America

6.0% Asia (Excl China)

Source: Methanol Market Services Asia (MMSA), GPCA, 2013

Methanol is mainly used to make three derivatives: formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid. Other derivatives are dimethyl terephthalate (DMT), methyl methacrylate (MMA), methylamines, chloromethanes and glycol ethers.

Worldwide, there are around 90 methanol plants with combined production capacity of 95.5 million tons, producing methanol from various feedstock – natural gas, coal, biomass and waste.. Asian producers account for more than a half of the worldwide methanol production capacity. In 2012 they accounted for 55% of 52 million tons per annum. China is the largest methanol producer in Asia with more than 46 million tons per annum.

38

GPCA estimates that GCC methanol capacity of 9.3 million tons represented 10% of worldwide methanol capacity in 2012, down from 14% in 2008.

While production capacity of methanol in the GCC continued to expand between 2008 and 2012 by an average 3.9% per annum, worldwide growth was 12.8% per annum during the same period. This resulted in a reduced share of the GCC in worldwide PHWKDQRO FDSDFLW\ RYHU WKH SDVW ÀYH \HDUV

While GCC methanol production capacity continued to expand between 2008 and 2012 by an average 3.9% p.a, worldwide growth was 12.8% p.a.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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4. GCC Production Capacity by Product (2008-2012)

Overview of gl obal polypropylene production Global Polypropylene Production Capacity by Region (2008-2012)

1.9% 1.4% Others Latin America 7.1% GCC 6.6%

1.8% 1.2% Others Latin America 5.0% GCC 12.9%

Africa

Africa

27.1% Asia (Excl China)

North America

2008 51.6 million tons

16.0%

North America

26.6% Asia (Excl China) 2012 61.9 million tons

14.1%

17.2% China Europe

20.6% China

22.7%

Europe

17.8%

Source: Mitsubishi Chemical Techo-Research Corporation (MCTR), ICIS, GPCA

Polypropylene (PP) is the second widely used polymer after polypropylene (PE) with application industries including packaging, domestic appliances, automotive, housewares, furniture, medical and industrial.

which represents 17.8% of the world total. There were QR VLJQLÀFDQW FKDQJHV LQ SURS\OHQH FDSDFLW\ LQ (XURSH and therefore its share has declined from 22.7% in 2008 to 17.8% in 2012.

World production capacity of polypropylene in 2012 is estimated to be 61.9 million tons with almost half (47%) of the capacity located in Asia. China is the single largest polypropylene producing country in Asia.

China’s 2012 PP capacity is estimated at 12.7 million tons which represents 20.6% of the world total. .

North America’s polypropylene capacity in 2012 is estimated to be 8.7 million tons which accounts for 14.1% of world’s total. Polypropylene capacity additions in North America over the past years have been minimal. As a result the 2008-2012 annual compounded growth was 1.5% per annum.

Combined capacity of producers in the rest of Asian countries (excluding China) reached 16.5 million tons in 2012 which accounts for 26.6% of the world total.

Strong polypropylene demand in China encouraged producers to increase manufacturing capacity. As a result PP capacity in China grew by an average 9.5% per annum between 2008 and 2012. A similar trend was observed in other Asian countries, where PP production capacity has increased from 13.9 million tons in 2008 to 16.5 million tons in 2012.

GCC region is slightly behind North America. In 2012 GCC polypropylene capacity was 8 million tons which accounted for 12.9% of the world total. The share of GCC polypropylene sector has doubled since 2008 when the region accounted for 6.6% of world’s total PP production capacity. This was a result of extensive capacity additions by GCC producers which have added more than 4.5 million tons of PP capacity since 2008.

Polypropylene production in Europe has been traditionally high. In 2012, PP production capacity in this region was estimated at 11 million tons per annum

Latin America and Africa remain the minor producers with 3 million tons and 1.1 million tons per annum of PP production capacity respectively.

Gulf Petrochemicals & Chemicals Association

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4.

Production Capacity 9. GCC International Trade (2012) by Product (2008-2012)

Overview of gl obal propylene production Global Propylene Production Capacity by Region (2008-2012)

GCC

3.9%

5.1% Latin America 1.5% Africa 0.4% Others

Latin America GCC

24.3% Asia (Excl China)

Europe

23.5%

2008 90.1 million tons

Europe

1.6% Africa 3.5% 4.0% Others

7.0%

19.1%

26.8% Asia (Excl China)

2012 101.6 million tons

13.9% China

North America

17.3% China

27.4%

North America

20.7%

Source: Mitsubishi Chemical Techo-Research Corporation (MCTR), ICIS, GPCA

Propylene is one of the basic petrochemicals and serves as a building block for a number of chemical products. The majority of world’s propylene is used to produce polypropylene (PP). Other consumers of propylene include producers of acrylonitrile, propylene oxide, oxo alcohols and cumene. In 2012 worldwide propylene capacity reached 101.6 million tons, up from 90.1 million tons in 2008. This represents a 6.8% annual compounded growth rate and is mostly driven by capacity additions in Asia and the GCC.

Asia is the largest propylene producer with 44.7 million ton per annum of installed capacity in 2012.

This accounts for 44% of the worldwide capacity for propylene. Driven by polypropylene capacity expansion in Asia, propylene capacity has increased from 34.4 million tons in 2008 to 44.7 million tons in 2012.

GCC propylene production reached 7 million tons per annum in 2012 which accounts for 7% of world’s total.

Production capacity growth in the GCC between 2008 and 2012 was 19.7% per annum which is highest among other regions.

GCC propylene production reached 7 MTPA in 2012 which accounts for 7% of world’s total.

40

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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4. GCC Production Capacity by Product (2008-2012)

Overview of gl obal HDPE production Global HDPE Production Capacity by Region (2008-2012)

12.0% Asia (Excl China) Rest of the World

21.0%

4.0% China

Rest of the World

18.0%

1.0% 3.0%

22.0% Asia (Excl China)

Africa

2.0% 4.0%

Latin America

Africa Latin America

GCC

2008 34.4 million tons

26.0% North America

10.0%

GCC

Europe

2012 41.7 million tons

21.0%

12.0% China

17.0% Europe

12.0%

15.0% North America

Source: ICIS, GPCA, 2013

High density polyethylene (HDPE) is the largest of the three polyethylenes (PE) by volume of consumption.

HDPE’s properties give it higher strength compared with other polyethylene allowing a wide range of uses. Major application of HDPE is blow-moulding for products such as bottles for milk and other noncarbonated drinks, drums, fuel tanks for automobiles, toys and household goods. Because HDPE has good chemical resistance, it is used for packaging many household and industrial chemicals such as detergents, bleach and acids.

In 2012, worldwide HDPE production capacity reached 41.7 million tons, up from 34.4 million tons in 2008.

This capacity increment has been largely driven by Asian producers The HDPE production capacity in Asia reached 14.5 million tons in 2012 which accounts for 34% of the total globally. Over the past few years, HDPE capacity in Asia has been growing by an average 40.1% per annum – the highest among all other regions. China is the largest HDPE producer among Asian countries and accounted for 12% of world’s total or 5.2 million tons.

North America is the second largest producer of HDPE globally. With production capacity of around 6.2 million tons, North American producers account for 15% of world’s total, down from 26% in 2008. Similarly, the share of European producers has declined from 21% in 2008 to 12% in 2012.

The combined capacity of HDPE producers in the GCC in 2012 is about 7.1 million tons. This accounts for 17% of world’s total. Since 2008, GCC HDPE production capacity has grown by an average 26% per annum which is second highest growth rate after Asia.

Since 2008, GCC HDPE production capacity grew by an average 26% p.a which is second highest after Asia.

Source: ICIS, GPCA, 2013 Gulf Petrochemicals & Chemicals Association

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9. GCC International Trade (2012) by Product (2008-2012) 4.

Production Capacity

Overview of gl obal Monoethylene Glycol (MEG) production Global MEG Production Capacity by Region (2008-2012)

4.0% Latin America Europe

Rest of the World

12.0%

17.0%

30.0% Asia (Excl China)

27.0% Asia (Excl China) 2.0% Europe 5.0%

Latin America

North America

2008 21.1 million tons

21.0%

North America

2012 27.2 million tons

17.0%

11.0% China GCC

13.0% China

22.0%

GCC

19.0%

Source: Mitsubishi Chemical Techo-Research Corporation (MCTR), ICIS, GPCA

Monoethylene glycol (MEG) is an important raw material for industrial applications. A primary use of MEG is in the manufacture of polyester (PET) resins, ÀOPV DQG ÀEHUV (QG XVHV IRU 0(* UDQJH IURP WH[WLOHV packaging, and kitchenware to engine coolants.

Supported by the demand from polyester (PET) resins producers, global MEG production capacity has been growing by an average 6.5% per annum between 2008 and 2012. This expansion of MEG has been driven by the additions in Asia and GCC. Asia continues to be

the largest producer of MEG accounting for 40% of the product’s global capacity. Since 2008, there has been a 5.4% per annum growth of MEG production capacity in Asia. This is the highest among other regions.. GCC is the second largest MEG producing region globally and in 2012 represented 19% of the global production capacity for MEG. This is a decrease from the 2008 level of 22%.

GCC is the second largest MEG producing region and represented 19% of world’s production capacity.

42

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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4. GCC Production Capacity by Product (2008-2012)

Overview of gl obal LLDPE production Global LLDPE Production Capacity by Region (2008-2012)

10.0% Asia (Excl China)

13.0% Africa 2.0% Latin America 6.0% Rest of World

1.0% Latin America 5.0% Africa

2012 30.4 million tons

30.0% North America GCC

GCC

12.0%

2008 22.8 million tons

16.0%

24.0% Asia (Excl China)

9.0% China Europe

Europe

7.0% Rest of World

14.0%

14.0%

15.0% China

22.0% North America

Source: ICIS, GPCA, 2013

Linear Low-Density Polyethylene (LLDPE) is part of WKH SRO\ROHÀQV IDPLO\ DQG ZLGHO\ XVHG SRO\HWK\OHQH along LDPE and HDPE. Globally, the majority of //'3( UHVLQV LV XWLOL]HG E\ ÀOP DSSOLFDWLRQV VXFK DV food and non-food packaging to produce heavy duty LQGXVWULDO EDJV ÀOP DSSOLFDWLRQV FDUULHU EDJV 2WKHU applications include liquid paper board coatings, wire and cable, injection moulding parts, pipes etc.

Global production capacity of LLDPE reached 30.4 million tons, up from 22.8 million tons in 2008.

World consumption of packaging materials created opportunities for LLDPE producers worldwide. Almost all LLDPE capacity expansion since 2008 has taken place in Asia. This has resulted in Asia having the highest capacity growth among other regions: 38.1% per annum between 2008 and 2012. This capacity expansion has increased Asia’s share of global capacity from 19% of world’s total in 2008 to 38% in 2012 making Asia the leading LLDPE producing region in the world.

world’s total production capacity, down from 30% in 2008. Similarly, the global share of European LLDPE producers has decreased from 16% in 2008 to 12% in 2012.

GCC LLDPE producers continue to be the third region worldwide after Asia and North America. In 2012, LLDPE production capacity in the GCC has reached 4.3 million tons which accounts for 14% of world total.

GCC LLDPE capacity growth between 2008 and 2012 of 10.9% per annum was one of the highest after Asia.

LLDPE production capacity in the GCC has reached 4.3 million tons which accounts for 14% of world’s total.

In mature markets such as Europe and North America there have been limited capacity additions and closures of less competitive units. As a result, North American LLDPE producers accounted for 22% of

Gulf Petrochemicals & Chemicals Association

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9. GCC International Trade (2012) by Product (2008-2012) 4.

Production Capacity

Overview of gl obal MTBE production Global MTBE Production Capacity by Region (2008-2012)

Latin America

7.0%

2.0% Rest of the World 18.0% China

Latin America

North America

North America

5.0%

2.0% Rest of the World

13.0%

28.0% China

21.0% 2008 18.6 million tons

11.0% Asia (Excl China) Europe

17.0%

2012 18.9 million tons

12.0% Asia (Excl China) Europe

19.0%

22.0% GCC 23.0% GCC

Source: Mitsubishi Chemical Techo-Research Corporation (MCTR), GPCA

MTBE (methyl tertiary-butyl ether) is a chemical compound produced in very large quantities and is used as a fuel additive in motor gasoline. It is one of a group of chemicals commonly known as “oxygenates” because they raise the oxygen content of gasoline.

Global production capacity of MTBE in 2012 is estimated to be 18.9 million tons, slightly up from 18.6 million tons in 2008. Asia is the largest producer of MTBE in the world accounting for 40% of global production capacity. Asia’s production capacity growth of 8.9% per annum between 2008 and 2012 was the highest among other regions.

44

GCC is the second MTBE producing region in the world. In 2012 its production capacity accounted for 23% of the world total. Combined capacity of GCC MTBE producers in 2012 reached 4.2 million tons which is similar to 2008 level.

Global production capacity of MTBE in 2012 is estimated to be 18.9 MTPA.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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5.

GC C P r oduction C apacity by C ountr y (2008-2 0 1 2 )

Gulf Petrochemicals & Chemicals Association

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5.

Production Capacity 9. GCC International Trade (2012) by Country (2008-2012)

GCC Production Capacity by Country GCC Chemicals Production Capacity by Country

CAGR (2008-2012)

12.2% 140

110.7

120

96.7 Million Tons

100

81.6

80 60

129.2

121.8

4.9 10.1

0.7 3.4 4.2

40 57.7

7.3 10.1

7.1 7.6 9.0 11.4

1.3 3.4 5.2

7.1 7.6 9.0

1.4

6.9 7.7 9.2

1.4

1.4

19.8

16.6

74.3

80.1

84.2

69.4

2009

2010

2011

2012

20 0 2008

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

CAGR of GCC Production Capacities (2008-2012)

19.6 18.4 16.9

15.9

CAGR (2008-2012)

12.2%

12.2 9.9

1.6

UAE

Qatar

Oman

Kuwait

GCC

Saudi Arabia

Bahrain

The GCC chemicals industry is one of the largest manufacturing industries in the GCC and it continues to expand and diversify.

In 2012, GCC chemicals capacity increased by 6.1% driven mostly by capacity additions in Saudi Arabia and Qatar. GCC capacity expansion in 2012 is slightly lower than in 2011 when region registered 10% year-on-year growth. Between 2008 and 2012 GCC chemicals capacity grew by an average 12.2% per annum.

During the same period, UAE and Qatar were expanding their chemicals capacity faster than other GCC states by 19.6% and 18.4% per annum respectively.

Saudi Arabia is the largest producer in the region and represented 65.2% of the GCC chemicals capacity in 2012. From 2008-2012, there has been many capacity additions in other GCC countries.

Qatar continues to be the second largest chemicals producer in the region accounting for 15.3% of the total GCC capacity in 2012.

Over the past 5 years capacity expansion in Qatar has increased its share in the region from 12.3% in 2008 to 15.3% in 2012. While Oman, a relatively small player in the region accounting for 7.1%, almost doubled its production capacity from 4.9 million tons per annum in 2008 to 9.3 million tons in 2012.

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

46

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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5. GCC Production Capacity by Country (2008-2012)

Basic Petrochemicals capacity breakdown by country GCC Basic Petrochemicals Capacity by Country CAGR (2008-2012)

13.2%

50 45

0.4

40

2.9

32.6

Million Tons

35 30

26.9

25

1.4 2.2

0.4 0.6 1.3

1.4 2.4 2.2

3.4 0.4 0.6

3.5

44.1

42.2

41.1

0.4

2.9

2.9

0.4

3.4

3.4

3.5

3.5 4.2

3.5

4.3

27.5

27.8

29.8

25.6

2009

2010

2011

2012

20 15 10

21.0

5 0 2008

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Basic petrochemicals represent the largest share of the GCC petrochemicals industry. With industry expansion, regional capacity to produce basic petrochemicals has been expanding and the annual compounded growth rate between 2008 and 2012 is 13.2%.

chemicals produced in Oman and have been key drivers behind capacity expansion in the country over the past years. Between 2008 and 2012, Oman’s petrochemicals capacity grew from 1.4 million tons per annum to 3.5 million tons at present, a growth of 25.6% per annum.

Saudi Arabia is the largest regional producer of basic petrochemicals. In 2012 its production capacity reached 29.8 million tons which represents 68% of the region’s total. This is driven by the availability of primary feedstock such as natural gas and crude oil.

Despite the Saudi dominance on a regional level, other countries of GCC have been expanding their capabilities which, from 2008-2012 has resulted in Qatar, Oman and Kuwait almost doubling their production capacity. Qatar is presently the second largest producer in the region with 42.2 million tons.

The establishment of new producers in Qatar and capacity expansions by the existing producers has led to an average increase in capacity growth of 17.5% per annum from 2008-2012.

Likewise, Kuwait’s basic chemicals production capacity remained unchanged between 2010 and 2012 and is currently close to 3.4 million tons per annum. Capacity expansion in Kuwait between 2008 and 2010 were driven mostly by ethylene and aromatics (benzene and xylenes).

Commodity petrochemicals capacity in Oman has been 3.5 million tons per annum for several years.

Methanol and aromatics are the main commodity

The UAE follows the same trend as in Oman and Kuwait. There have not been any capacity additions between 2010 and 2012, and so UAE chemicals production capacity remains at 2.9 million tons per annum.

Basic petrochemicals capacity in Bahrain is 0.4 million tons per annum and is largely related to the production of Methanol. Over the past years there have not been any capacity additions in Bahrain and therefore it remains the marginal producer in the region.

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5.

Production Capacity 9. GCC International Trade (2012) by Country (2008-2012)

Fertilizers capacity breakdown by country GCC Fertilizers Production Capacity by Country

CAGR (2008-2012)

Million Tons

35

13.7%

30.2

30

27.3

25

1.0 1.3 1.7

19.4

20.0

1.0 1.3 1.7

1.0 1.3 1.7

2.8

4.2

4.8

4.4

4.4

4.4

6.8

6.8

6.8

2008

2009

2010

20

18.0

15

1.0 1.3 1.7

10

5

1.0 1.1 1.7 4.8

4.8 10.7 7.7

10.8

10.8

2011

2012

0

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Fertilizers and crop protection chemicals together form agricultural chemicals group. Fertilizer production in the GCC is the second largest product group expanding by an average 13.7% per annum between 2008 and 2012. In 2012 alone, GCC fertilizer industry’s year-on-year growth was 10.5% driven by the capacity additions in Qatar.

Saudi Arabia is the largest producer of fertilizers in the GCC. In 2012, the fertilizer production capacity of Saudi producers reached 10.9 million tons which accounts for 36% of region’s total fertilizer industry.

With the capacity expansions taking place between 2008 and 2012, Saudi Arabia’s share in region’s total remained at the similar level of 36-38%. Major fertilizer projects which have come on stream in Saudi Arabia in the past few years include Ma’aden Phosphate &RPSDQ\ҋV )HUWLOL]HU &RPSOH[ ZKLFK DGGHG VLJQLÀFDQW production capacity of diammonium phosphate (DAP) and ammonia.

Qatar is the second largest fertilizer producer in the region. With annual production capacity of 10.7 million tons in 2012, Qatar accounted for 35% of GCC capacity. Qatar fertilizer production is concentrated around nitrogen fertilizers. Qatar is the largest urea,

48

and second largest ammonia producer in the region.

With two major expansions commencing production in Qatar over the past years, Qatar’s current fertilizer plant in the largest single urea and ammonia facility in the world.

Similarly, Oman’s fertilizer industry focuses on the production of nitrogen fertilizers: ammonia and urea.

In 2012, Oman’s fertilizer production capacity reached 4.8 million tons which represents 16% of the region’s total. Between 2008 and 2012, Oman’s fertilizer industry grew by an average 14% per annum, which is in line with the growth of GCC fertilizer industry.

Fertilizer production capacity in Kuwait, UAE and Bahrain remained unchanged over the past years: 1.7 million tons per annum in Kuwait, 1.14 million tons per annum in the UAE and 1 million tons per annum in Bahrain. As a result the share of these countries in the region’s fertilizer industry over the past years has declined. Kuwait fertilizer industry’s share in the regional total declined from 9% in 2008 to 6% in 2012. Similarly share of the UAE fertilizer industry has declined from 7% to 4%, and the share of the Bahrain fertilizer industry in the regional total has declined from 5% to 3%.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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5. GCC Production Capacity by Country (2008-2012)

Polymers capacity breakdown by country GCC Polymers Production Capacity by Country

CAGR (2008-2012)

17%

23.8

25

21.3

20.6

Million Tons

20

15

10

0.7 1.0

17.6 12.7 1.3 1.0

0.7 0.7

1.3 1.0

13.9 5

1.0 1.7

1.3 2.4

0.7 0.8

0.7

1.0 2.0

1.0

2.4

2.4

15.2

15.5

2010

2011

17.4

9.0

0 2008

2009 Saudi Arabia

UAE

Kuwait

2012

Qatar Oman

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Polymers are compounds derived from one or more petrochemical monomers such as ethylene, styrene and propylene. Polymers include commodity thermoplastics, engineering resins and thermoplastic elastomers. Between 2008 and 2012, the GCC polymers industry has achieved a remarkable capacity growth averaging 17% per annum, the highest among other chemical product segments.

Saudi Arabia is the largest regional polymers producer accounting for 73% of the GCC production capacity in 2012. Last year alone, polymers capacity addition in the country was 1.9 million tons representing a 12.5% year-on-year growth. Polymers production in Saudi $UDELD LV WKH PRVW GLYHUVLÀHG LQ WKH UHJLRQ ZLWK ODUJHVW portfolio of polymers types and grades produced in the region.

While UAE’s overall petrochemicals capacity is one of the smallest in the region, within the polymers production UAE is the second largest regional producer. In 2012, the UAE represented 10% of the total polymers production capacity in the region.

Over the past 5 years, polymers production growth in the UAE has registered 25.6%, the highest average annual growth rate in the region..

Qatar’s polymer production is focused on polyethylene production and accounted for 8% of region’s total polymers capacity in 2012. While capacity expansion in Qatar has continued over the past 5 years at an average rate of 10.6%, it was slower than in other GCC countries.

Kuwait and Oman each represented 4% of the regional polymer production in 2012. Likewise Qatar, polymers capacity expansion in Kuwait and Oman was lower than the region’s overall growth.

Saudi Arabia is the largest regional polymers producer accounting for 73% of the GCC production capacity in 2012.

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5.

Production Capacity 9. GCC International Trade (2012) by Country (2008-2012)

Fine chemicals capacity breakdown by country GCC FIne Chemicals Production Capacity by Country

CAGR (2008-2012)

6.5% 16 14 Million Tons

12 10

11.5 0.7 0.6

0.5

0.7 1.0

0.7 1.2

0.5

14.8

14.8

14.4 13.0

0.6

0.6

1.1 1.2

1.1 1.2

0.6

8 6 4

9.7

10.8

12.0

12.0

12.0

2010

2011

2012

2 0 2008

2009 Saudi Arabia

Kuwait

Qatar

UAE

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Fine chemicals are positioned between commodity chemicals and specialties, they are high value-added products. Fine chemicals play much more important role than bulk chemicals production and serve the pharmaceuticals, agrochemicals, plastics and other LQGXVWULHV )URP FRPPRGLW\ SHWURFKHPLFDOV WR ÀQH chemicals; the average value per ton is increasing.

7KHUH LV D KXJH YDULHW\ RI ÀQH FKHPLFDOV DQG HDFK individual chemicals company tends to produce only a small quantity.

*&& SURGXFWLRQ FDSDFLW\ RI ÀQH FKHPLFDOV ZDV estimated at 14.8 million tons per annum in 2012.

6DXGL $UDELD LV WKH ODUJHVW SURGXFHU RI ÀQH FKHPLFDOV in the region and accounted for 81.4% of the GCC SURGXFWLRQ FDSDFLW\ LQ 3URGXFWLRQ RI ÀQH chemicals in the rest of the GCC is still comparably small with Kuwait accounting for 7.8%, Qatar for 7.4% and the UAE for 3.8% of the region’s total in 2012.

Fine chemicals play an important role and serve the pharmaceuticals, agrochemicals, plastics and other industries. GCC production capacity of mne chemicals was estimated at 14.8 mtpa in 2012.

50

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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5. GCC Production Capacity by Country (2008-2012)

6.

GC C C apacity Utilization (2011-2012)

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6.

Capacity Utilization 9. GCC International Trade (2012)(2011-2012)

Capacity utilization by country GCC Chemicals Industry Capacity Utilization by Country, %

2011 Bahrain Kuwait Oman Saudi Arabia

Average capacity utilization 2008-2012

2012 113% 93% 94% 92%

Bahrain

100%

Kuwait

97%

Oman

94%

Saudi Arabia

92%

Bahrain Kuwait Oman

94%

Saudi Arabia

93%

UAE

91%

UAE

GCC

92%

GCC

91%

GCC

Qatar

93%

Qatar

UAE

85%

83%

111% 96%

Qatar

89% 94% 99%

Note: Due to data revisions, 2011 capacity utilization has been revised from 91% to 92%.

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Capacity utilization measures the extent to which the capital stock of an industry is being employed in the production of goods. It rises and falls with the business F\FOH 2YHU WKH SDVW ÀYH \HDUV *&& FKHPLFDOV industry’s capacity utilization averaged 94%. This is higher than global average capacity utilization for the same period, which was 86%.

In 2012 GCC chemicals industry has operated at 91% of its capacity which is a marginal drop from 92% in the previous year. At a country level, chemicals plants operating rates remained unchanged only in Saudi Arabia and Oman. Depending on individual characteristics, operating rates in other GCC states have either improved or declined.

A decline in operating rates has been recorded in Qatar which is the second largest producer in the GCC. In 2012 its capacity utilization declined by 10 percent points on year-on-year basis. This was due to the start-up of new facilities and time required to achieve target production. The temporary nature of the low capacity utilization in Qatar is supported by WKH FRXQWU\ҋV ÀYH \HDU DYHUDJH RSHUDWLQJ UDWH ZKLFK LV 99%.

production capacity, it has been utilizing a number of measures to improve its operating rates and achieve greater output. Therefore its operating performance in the recent years is highest when compared to other GCC states.

Conversely, the UAE industry’s capacity utilization rate has increased to 91%, an increase of 6% from 2011 and follows years of steady improvement since major capacity additions brought forward in 2010.

Likewise, capacity utilization in Kuwait saw an improvement of 4 percentage points in 2012 in comparison with the previous year. With operating rates of 97%, producers in Kuwait have utilized nearly all their nameplate capacities demonstrating one of the best operating performances in the region.

The largest chemicals producers in the region – Saudi Arabia did not record any changes in capacity utilization in 2012 and remained at 92%. Lower fertilizer and polymer plants operating rates have been affecting the country’s overall performance in recent years. However, the operating rates in Saudi Arabia in 2011 and 2012 are consistent with the historic average of 93%.

Similarly, capacity utilization in Bahrain has declined from 113% in 2011 to 100% in 2012. While Bahrain accounts for the minor share of region’s total

52

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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6. GCC Capacity Utilization (2011-2012)

Capacity utilization by product segment GCC Chemicals Industry Capacity Utilization by Product Segment, %

2011

99% Downstream Chemicals

98% Downstream Chemicals

Downstream Chemicals Intermediates

97%

Basic

96%

All Products

92%

Inorganic chemicals

90%

Polymers Fertilizers

2008-2012 Average capacity utilization

2012

89% 84%

Intermediates

97%

Basic

94%

All Products

91%

Inorganic chemicals

90%

Polymers Fertilizers

88% 84%

97%

Intermediates

94%

Basic

94%

All Products

94%

Inorganic chemicals Polymers

91% 89%

Fertilizers

97%

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Capacity utilization of individual product segments is affected by the business cycles and supply / demand changes. The GCC chemicals industry has been export oriented and therefore it is exposed to a number of external factors which affect operating rates.

The production of basic chemicals and intermediates is least exposed to external factors because the majority of production is consumed captivity within the region.

Basic chemicals and intermediates are also one of the largest product segments in the region representing almost half of the GCC chemicals production capacity.

Producers of basic chemicals in the GCC utilized 94% of nameplate capacity in 2012. While this is a slight decline from 96% in 2011, it is similar to the 5 years average operating rate. Capacity utilization within the intermediate products segment is one of the highest.

In 2011 and 2012 it remained at 97% and is mostly GULYHQ E\ LQFUHDVHG SURGXFWLRQ RI ÀQH FKHPLFDOV

The polymers segment is another export oriented segment in the GCC chemicals industry. In 2012, when compared to 2011, polymers operating rates have slightly declined to 88% from 89%.

Over the past mve years, GCC chemicals industry’s capacity utilization averaged 94%.

7KH PDMRULW\ RI ÀQH FKHPLFDOV SURGXFHG LQ WKH UHJLRQ are exported overseas. Operating rates of plants SURGXFLQJ ÀQH GRZQVWUHDP FKHPLFDOV UHPDLQ KLJK at 98-99% for the second year. This suggests that the overseas demand for these products remains stable and GCC producers are able to capitalize on high value-added products.

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6.

Capacity Utilization 9. GCC International Trade (2012)(2011-2012)

Global comparison of the GCC capacity utilization GCC and Worldwide Petrochemicals Capacity Utilization, %

2012

91% 87% 92%

2011

2010

87% 92% 87% GCC Capacity Utilization

Worlwide Capacity Utilization

Source: American Chemistry Council, Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Capacity utilization measures the extent to which the capital stock of an industry (or nation) is being employed in the production of goods. It rises and falls ZLWK WKH EXVLQHVV F\FOH 2YHU WKH SDVW ÀYH \HDUV WKH overall GCC chemicals industry’s capacity utilization averaged 94%. This is higher than the global average capacity utilization of 86% during the same period.

54

Capacity utilization in chemicals industry globally remained 87% in 2012, while in the GCC it was 91%.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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6. GCC Capacity Utilization (2011-2012)

7.

GC C C hem icals Industry Growth P atter n (2012)

Gulf Petrochemicals & Chemicals Association

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7.

Chemicals Industry 9. GCC International Trade (2012)Growth Pattern (2012)

Trends in GCC chemicals production, trade and consumption growth GCC Production, Trade and Consumption Growth 11.4 10.4 9.2 8.3

8.2 5.8

Production

Consumption

Growth (2005-2008)

International Trade

Growth (2009-2012)

Note: Export excludes intra-regional trade; Consumption includes captive consumption and intra-regional trade Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

During the period from 2009 and 2012, GCC chemicals production and consumption registered higher growth rates when compared to the period from 2005 to 2008. In the production side, an increase in the growth rate from 8.2% in the time span 20052008 to 9.2% in the timeframe 2009-2012. Likewise, GCC chemicals consumption growth rate between

56

2009 and 2012 is 2.5% higher than the chemicals consumption growth rate between 2005 and 2008. In contrast GCC chemicals exports growth rate during the period of 2009 and 2012 has declined by 1% from 11.4% to 10.4%, indicating an increase in the regional consumption by the downstream industries.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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7. GCC Chemicals Industry Growth Pattern (2012)

GCC Chemicals growth performance against total manufacturing Chemicals growth performance against total manufacturing (2008-2012) 47%

33% 22% 19%

21%

19%

10% 4% 2009 2008

2010

2011

2012

-8% -12% Chemicals

Manufacturing

Note: Growth performance is calculated based on the value of output, Manufacturing data for 2011 and 2012 is preliminary Source: UNIDO and GPCA Estimations, 2013

Following the decline in production output during 2009 economic downturn, both GCC chemicals and manufacturing sectors are on recovery trend since 2010. During 2010 and 2011, chemicals sector’s output measured in value terms outperformed that of the manufacturing sector as a whole. In 2010, output of GCC chemicals industry grew by 33% while the total output of GCC manufacturing sector grew by 22%. Likewise, the chemicals sector’s output was more than double that of the manufacturing sector in 2011 growing by 47% in comparison to 21% growth

rate achieved by the manufacturing sector. In 2012, however, the growth trend of the chemicals sectors in the region was lower than the growth trend for the total manufacturing sector: chemicals sector grew by 4% and manufacturing total by 10%. Lower growth rate of chemicals sector in 2012 is a result of lower year-onyear rate of chemicals production expansion in 2012.

During 2010 and 2011, GCC chemicals industry’s production capacity has expanded by 14.5% and 10% year-on-year respectively, higher than 6.1% growth in 2012.

Gulf Petrochemicals & Chemicals Association

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7.

Chemicals Industry 9. GCC International Trade (2012)Growth Pattern (2012)

GCC chemicals production growth by product segment in global perspectives World and GCC Production Growth by Product Segment, CAGR (2008-2012) 14.3 11.1

10.4 6.6 5.4

4.9 3.0

Chemicals Agricultural Chemicals (Excl Pharmaceuticals)

2.3

2.2

Inorganic Chemicals

World

Organic Chemicals

3.1

Plastic Resins

GCC

Source: Gulf Petrochemicals and Chemicals Association (GPCA) and American Chemistry Council, 2013

The worldwide average growth rate for chemicals production (excluding pharmaceuticals) between 2008 and 2012 stood at 3%. GCC production growth in the same period is 10.4% which is just over triple the ÀJXUH IRU ZRUOGZLGH JURZWK DQG LV GULYHQ E\ WKH QHZ capacity additions in the region.

Looking at individual business segments, GCC production growth has outpaced the global growth within the same time span. In the plastic resins segment, GCC production grew at CAGR of 14.3% while its global counterpart grew by 3.1%. Similarly the GCC petrochemicals segment’s production grew by 11.1% in comparison to 2.2% for the global

petrochemical industry segment. Likewise, inorganic chemicals production growth in the GCC between 2008 and 2012 was higher than of that worldwide.

During this period, this product segment grew by an average 5.4% in the GCC while globally it grew by an average 2.3%. Agro chemicals production in the GCC is mostly concentrated around fertilizers production.

Between 2008 and 2012, fertilizers production in the GCC grew slightly higher than worldwide production of agricultural chemicals: GCC grew at CAGR of 6.6% and worldwide production at CAGR of 4.9%.

GCC chemicals production growth between 2008 and 2012 was 10.4% p.a, while globally 3%.

58

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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7. GCC Chemicals Industry Growth Pattern (2012)

Global and GCC production index

Global Production Index by Product Segment (Index 2007=100) 2007

2008

2009

2010

2011

2012

Chemicals (excluding Pharmaceuticals)

100.0

100.5

93.6

105.2

109.6

112.9

Agricultural Chemicals

100.0

101.8

101

111.1

115.7

123.5

Consumer Chemicals

100.0

99.5

95.2

100.5

106.3

109.8

Inorganic Chemicals

100.0

100.8

90.9

102.2

107

110.3

Organic Chemicals

100.0

100.7

91.3

105.2

109.2

109.9

Plastic Resins

100.0

99.6

92.6

106.6

109.3

112.6

Synthetic Rubber

100.0

100.9

90.1

108

119.4

127.1

Man-Made Fibers

100.0

102.8

101.8

115.7

125

134.4

Specialty Chemicals

100.0

100.5

94.8

103.9

107.9

111.8

Source: American Chemistry Council, 2013

GCC Production Index by Product Segment (Index 2007=100) 2007

2008

2009

2010

2011

2012

Chemicals (excluding Pharmaceuticals)

100.0

107.6

122.5

143.0

152.6

159.7

Inorganic chemicals

100.0

102.5

106.2

109.6

126.1

126.6

Plastic Resins

100.0

105.2

129.6

154.5

163.1

179.5

Fertilizers

100.0

100.2

103.1

107.3

117.0

129.2

Organic Chemicals

100.0

112.3

131.1

159.5

168.7

171.1

Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2013

Gulf Petrochemicals & Chemicals Association

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7.

Chemicals Industry 9. GCC International Trade (2012)Growth Pattern (2012)

GCC chemicals production growth in a global perspective Global Chemicals Production Growth by Region CAGR (2008-2012)

10.4% 8.6%

3.7%

3.0%

3.0% 0.9% 0.0%

GCC

Asia

Africa and Middle East

Global Output of Chemicals

Latin America Global Output of Chemicals (exl Pharma)

Western Europe

-1.1%

-1.9%

Central and Eastern Europe

North America

Source: Gulf Petrochemicals and Chemicals Association (GPCA) and American Chemistry Council, 2013

Total global output of chemicals includes production growth of inorganic and organic chemicals, plastic UHVLQV V\QWKHWLF UXEEHU DQG ÀEHUV VSHFLDOW\ FKHPLFDOV and consumer chemicals as well as pharmaceuticals.

Current GCC chemicals production data does not include pharmaceuticals and therefore is comparable with global output excluding pharmaceuticals. Current global data includes data from 65 nations which account for 97% of the global business of chemistry.

The average growth rate of global chemicals output between 2008 and 2012 is estimated at 3%. From 2008 to 2012 chemicals production growth in the GCC grew at an average rate of 10.4% which is highest among other regions. Asia follows the GCC closely with an average production growth of 8.6%.

Global Chemicals Production Index by region (2007=100) 2007

2008

2009

2010

2011

2012

Global Output Chemicals (Excluding Pharmaceuticals)

100

100.5

93.6

105.2

109.6

112.9

North America

100

94.5

84.5

87.3

87.4

87.4

Latin America

100

102.5

97.1

103.9

104.7

106.3

Western Europe

100

99.8

92.5

99.4

101.1

99.9

Central and Eastern Europe

100

100.1

83.8

95.2

99.3

95.9

Asia

100

106.3

108.6

125.4

137.3

147.7

GCC

100

107.6

122.5

143

152.6

159.7

Source: Gulf Petrochemicals and Chemicals Association (GPCA) and American Chemistry Council, 2013

60

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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6. GCC Capacity Utilization (2011-2012)

8.

Gulf Petrochemicals & Chemicals Association

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*OREDO &KHPLFDO ,QGXVWU\ 3URĂ€OH

9. International Trade (2012)

Overview of gl obal chemicals output Global Chemicals (Excluding Pharmaceutical) Shipments ($USbillion)

CAGR (2005-2012)

9.7%

3'902.5

2'252.4

2006

Other regions

2'634.3

2'623.3

2005

97.5%

3'196.7

3'003.1 2'033.7

3'881.9

2.5%

2007

2008

2009

2010

2011

GCC

2012

Note: Shipments is equivalent to value of output Source: American Chemistry Council and GPCA, 2013

Currently almost every nation is engaged in either in production, trade or consumption of chemicals.

The term “shipments� is equivalent to the term “value of output�. As reported by American Chemistry Council, global shipments of chemicals excluding pharmaceuticals reached $US 3,881.9 billion growing by an average 9.7% since 2005. The value of chemicals output in the GCC is estimated at $US97.3 billion which represents 2.5% of the world’s total.

Between 2005 and 2012, chemicals industry output in the GCC grew at an average 19% per annum which is higher than global growth.

Value of chemicals output in the GCC in 2012 is estimated at $US97.3 billion which represents 2.5% of the total global.

62

The following table presents global chemicals shipments (including pharmaceuticals) or value of output by region. In 2012, global output of chemicals (including pharmaceuticals) reached $US 4,973.2 billion. Asian countries produced about half or 49.2% of all the chemicals in 2012. Among Asian countries, China is the largest producer representing 28.8% of global chemicals output. Other regions with VLJQLĂ€FDQW VKDUH LQ WKH YDOXH RI FKHPLFDOV RXWSXW DUH Western Europe and North America which account for 20.5% and 17.6% respectively. In 2012, GCC represented 2 % of global chemicals output (including pharmaceuticals). Looking at the pace of growth of the chemicals output between 2005 and 2012, GCC regions saw the highest average growth rate of 19% per annum. Asia is the second fastest growing region with CAGR (2005-2012) of 16.5%. GCC and Asia were the only regions which saw a double digit growth over the past years. Other regions with noticeable growth of chemicals output including pharmaceuticals are Latin America and Eastern & Central Europe which grew by an average 9% per annum during the same period.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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*OREDO &KHPLFDO ,QGXVWU\ 3URĂ€OH

Overview of gl obal chemicals output Global Chemical Shipments by Country/Region ($US billion) 2005

2006

2007

2008

2009

2010

China

289.4

364.1

494.2

667

746.5

978.7

$VLD 3DFLĂ€F H[FO &KLQD

553.4

599.4

671.6

755.80

691.3

854.3

1,009.9 1,015.8

Western Europe

767.1

829.4

954.3

1,045.5

874.6

947.5

1,081.5 1,017.9

North America

699.3

753.2

815.8

846.20

707.2

792.5

891.70

876.20

Latin America

160.8

178.3

207.3

229.00

214.4

248.5

295.30

293.90

Central & Eastern Europe

83.6

97.3

115.1

143.0

102.0

130.4

155.3

153.7

GCC

28.9

33.4

43.4

52.2

48.2

64.4

94.1

97.3

Africa and Middle East (Excl GCC)

66.5

67.5

71.8

90.4

78.4

91.1

89.8

86.5

Total Global Shipments

2011

2012

1,303.3 1,431.9

2,648.9 2,922.6 3,373.5 3,829.1 3,462.6 4,107.5 4,920.9 4,973.2

Note: Shipments is equivalent to value of output Source: American Chemistry Council and GPCA, 2013

Global chemicals output (including pharmaceuticals) reached $US 4.9 trillion in 2012.

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9. International Trade (2012)

Global chemicals export by region and country Global Chemicals (Excluding Pharmaceutical) Exports by Region

2.9% Latin America 0.8% Middle East (Excl GCC) GCC 1.5% 1.1% Africa Central & Eastern Europe 3.5% North America

15.6%

53.8% Western Europe 2002 $US 505 billion

Asia

3.6% 5.8%

GCC Central & Eastern Europe

3.4% Latin America 1.5% Middle East (Excl GCC) 1.4% Africa

North America

20.8%

42.1% Western Europe 13.3%

Asia

2012 $US 1,458 billion

28.9%

Source: World Trade Organization, 2013, Note: Includes intra-regional trade

World Top 10 Exporters of Chemicals (Excluding Pharmaceuticals) in 2012, US$ billion Export value in 2012, US$ billion

2012 Share

USA

162.4

11%

Germany

147.3

10%

China

119.5

8%

Belgium

84.4

6%

Netherlands

78.8

5%

Japan

74.9

5%

France

70.9

5%

South Korea

59.8

4%

United Kingdom

46.6

3%

Singapore

44.9

3%

Top 10

889.4

61%

World

1,458.3

Source: World Trade Organization, 2013

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World Chemicals (Excluding Pharmaceuticals) Exports by Region, US$ billion 2002

2003

2006

2007

2008

2009

2010

2011

2012

North America

78.9

87.2 104.7 116.6 131.1

149.4

172.5

136.8

171.8

198.0

194.0

Latin America

14.5

16.0

29.5

33.8

41.2

31.7

39.0

47.8

49.6

271.8 325.8 389.4 426.3 473.9

560.6

607.3

497.9

555.9

647.2

614.3

Western Europe Central and Eastern Europe

2004

20.3

2005

24.8

17.8

22.7

29.9

36.8

44.1

56.2

76.6

51.9

64.0

80.8

84.4

GCC

7.5

8.0

12.0

15.0

17.7

22.5

25.3

22.3

33.3

47.2

52.7

Middle East (Excl GCC)

4.2

4.9

6.8

8.2

9.4

12.3

19.0

14.4

19.1

23.4

22.1

Africa

5.4

6.4

7.9

9.4

10.1

11.5

21.2

13.9

17.9

21.0

20.4

Asia

105.4 131.2 169.1 200.1 228.9

272.3

307.4

257.2

346.6

427.2

420.7

World Total

505.5 602.3 740.3 837.2 944.7 1,118.5 1,270.6 1,026.1 1,247.5 1,492.6 1,458.3

Source: World Trade Organization, 2013

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9. International Trade (2012)

Global chemicals import by region and country World Chemicals (Excl Pharmaceuticals) Imports by Region

1.1% GCC Africa 2.2% 1.2% Middle East (Excl GCC) Central & Eastern Europe 4.7% Latin America 7.5%

1.4% GCC Africa 3.0% 1.0% Middle East (Excl GCC) Central & Eastern Europe

Latin America

North America

2002 $US 529.7 billion

16.1%

Asia

7.0%

9.0%

42.4% Western Europe North America

24.7%

2012 $US 1,508 billion

11.0%

Asia

36.0% Western Europe

32.0%

Source: World Trade Organization, 2013, Note: Includes intra-regional trade

World Top 10 Importers of Chemicals (Excluding Pharmaceuticals) in 2012, US$ billion 2012 Import Value, US$ billion

2012 Share

China

186.1

12.3%

USA

131.0

8.7%

Germany

105.8

7.0%

France

65.2

4.3%

Belgium

63.9

4.2%

United Kingdom

51.2

3.4%

Netherlands

50.5

3.4%

Japan

49.2

3.3%

Italy

48.0

3.2%

South Korea

42.4

2.8%

Top 10

793.5

52.6%

World

1,508.3

Source: World Trade Organization, 2013

66

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World Chemicals (Excluding Pharmaceuticals) Imports by Region, US$ billion 2002

2003

2006

2007

2008

2009

2010

2011

2012

North America

80.7

90.6 102.1 116.7 126.9

133.9

151.3

118.3

140.7

164.9

165.0

Central & Latin America

37.9

41.8

67.1

80.5

104.2

78.2

97.2

122.3

125.8

226.7 275.3 330.9 372.1 415.5

499.3

541.7

424.5

486.7

577.1

543.7

Western Europe Central and Eastern Europe

2004

51.6

2005

58.9

23.8

30.4

38.6

46.2

57.1

74.6

91.7

67.4

83.9

104.1

105.3

GCC

5.7

6.4

7.6

9.4

11.2

14.0

14.7

14.3

22.2

23.9

20.1

Middle East (Excl GCC)

5.9

7.0

8.9

9.8

11.2

13.7

16.2

14.1

16.6

18.8

17.9

11.3

12.8

15.9

17.8

20.6

26.2

32.5

29.3

33.9

42.7

43.8

Asia

137.8 163.5 209.6 242.3 269.4

316.1

373.0

311.7

414.6

498.6

486.6

World Total

529.7 627.9 765.1 873.2 979.1 1,158.2 1,325.2 1,057.7 1,295.9 1,552.3 1,508.3

Africa

Source: World Trade Organization, 2013, Note: Includes intra-regional trade

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9. International Trade (2012)

Global chemicals consumption by region and country Global Domestic Chemicals Sales (2005-2012) $US Billion

CAGR (2005-2012) Central & Western Europe

9.4% 4'973.2

4'920.9 3'829.1 3'373.5 2'648.9

2.7%

2.2% Africa % Middle East (Excl GCC) 1.3% GCC

Latin America 4.8%

28.2% China

4'107.5 North America 16.8%

3'462.6

2'922.6

2012 $US 4,973.2 billion Western Europe 22.9%

2005

2006

2007

2008

2009

2010

2011

21.1% Asia Pacific (Excl China)

2012

Note: *&& ÀJXUHV GR QRW LQFOXGH 3KDUPDFHXWLFDOV 'RPHVWLF VDOHV LV HTXLYDOHQW WR GRPHVWLF FRQVXPSWLRQ Source: American Chemistry Council and GPCA, 2013

The worldwide chemicals consumption (or domestic sales) in 2012 is estimated at $US4.9 trillion. This is DOPRVW GRXEOH WKH ÀJXUH ZKLFK ZDV HVWLPDWHG DW $US2.6 trillion. Asian countries account for the majority of the world’s chemicals consumption accounting in 2012 for 49.3% of world’s total. Among all Asian countries, consumption in China was the highest.

With $US1.4 trillion worth of chemicals consumption

in 2012, China accounted for 28.2% of worlds total consumption in the same year. The consumption of chemicals in GCC countries in 2012 is estimated at $US64.7 billion which accounts for 1.3% of world’s total consumption. This is lower than the GCC’s 2.5% share of the world’s total chemicals industry’s output in the same year and is due to the region’s export orientation.

Domestic Sales of Chemicals (2005-2012), $US billion Region

2005

2006

2007

2008

2009

2010

2011

2012

China

325.3

328.3

460.8

646.8

722.6

943.0

1,272.8

1,403.5

$VLD 3DFLĂ€F H[FO &KLQD

487.7

610.8

686.7

750.8

703.0

885.6

1,044.6

1,050.3

Western Europe

865.1

933.3

1,077.6

1,191.6

973.1

1,047.4

1,196.0

1,137.9

North America

669.5

722.4

791.8

815.5

680.3

764.5

851.8

836.9

Latin America

142.8

156.8

173.4

182.4

182.9

210.7

247.5

238.8

Central & Western Europe

70.0

77.3

84.7

109.5

82.8

110.0

134.6

133.2

Africa & Middle East (exlc GCC)

66.2

66.8

63.7

90.9

76.7

92.6

101.8

107.7

GCC Total Domestic Sales

22.3

26.9

34.8

41.6

41.1

53.3

71.9

64.7

2,648.9

2,922.6

3,373.5

3,829.1

3,462.6

4,107.5

4,920.9

4,973.2

Source: American Chemistry Council and GPCA, 2013 Note: *&& ÀJXUHV GR QRW LQFOXGH 3KDUPDFHXWLFDOV 'RPHVWLF VDOHV LV HTXLYDOHQW WR GRPHVWLF FRQVXPSWLRQ

68

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9.

I n t e r n a t i o n a l Tr a d e (2012)

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9. International Trade (2012)

Introduction Globalization of the chemicals industry date back to the 1960s. Now almost every nation is involved in the foreign trade of chemical products either as supplier or consumer. Advancements in infrastructure such as transport and telecommunications as well as the elimination of trade barriers such as tariffs and duties, promote and support trade between nations.

Competition between companies is extended beyond the national borders resulting in several companies from different nations competing for the same customers. Commodity chemicals can be produced in one location and downstream products manufactured in several other locations. These products are then shipped to many other locations to be processed IXUWKHU EHIRUH WKH\ XOWLPDWHO\ EHFRPH ÀQDO SURGXFWV including plastic goods, automobile parts, paints and textiles.

Typically, industrialized nations produce wide range of chemical products: from commodity chemicals to specialty chemicals. Developing nations generally produce basic chemical products.

GCC countries participate in international trade in all segments of the chemicals industry. GPCA members represent approximately 97% of all the chemicals exports from the region.

70

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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9. International Trade (2012)

GCC chemicals export by product segment GCC Chemicals Export (2008-2012)

CAGR (2008-2012)

11.9%

60.7

51.6

55.1

43.6 38.7

2008

2009

2010

2011

2012

Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, United Nations, 2013

GCC chemicals exports have grown rapidly over the past decade driven primarily by capacity expansions.

The volume of chemicals exports in 2012 reached 60.7 million tons which is double its level a decade ago.

Over the 2008-2012 period, GCC chemicals export grew by an average 11.9% per annum. The majority of chemicals exported by the GCC are petrochemicals (comprised of basic petrochemicals, intermediates, ÀQH FKHPLFDOV DQG SRO\PHUV ZKLFK DFFRXQWHG IRU 66.7% of the total chemicals export in 2012. Since 2008 volume of petrochemicals exports grew at a CAGR of 13.4% reaching 40.5 million tons in 2012.

Polymers are the largest petrochemical product group exported from the GCC and accounted for 27.9% of the GCC export volume in 2012. The majority of polymers exported by the GCC producers are commodity thermoplastics. GCC polymers export grew by an average 16.9% between 2008 and 2012 which is higher than the overall export growth recorded by the GCC chemicals industry. Part of the chemicals industry GLYHUVLÀFDWLRQ LQ WKH UHJLRQ LV WKH SRO\PHUV FDSDFLW\ expansion and the consequent export of the products.

GCC Fertilizers export represented 24.1% of the total chemicals exports in 2012. Over the past decade GCC fertilizers exports have almost tripled in terms of volume, reaching 14.6 million tons in 2012. Along fertilizers, GCC exports inorganic chemicals which reached 3.8 million tons in 2012 accounting for 6.2% of the total GCC chemicals export.

Specialty chemicals and consumer chemicals, although high value products, represent a minor share in GCC chemicals exports accounting for 1.6% and 1.3% accordingly.

GCC chemicals export grew by 11.9% p.a between 2008 and 2012.

7KH ÀQH FKHPLFDOV JURXS LV WKH VHFRQG ODUJHVW petrochemical group exported from the GCC. In 2012 WKHUH ZHUH PLOOLRQ WRQV RI ÀQH FKHPLFDOV H[SRUWV which accounted for 17.4% of the total chemicals export. Exports of basic petrochemicals in 2012 reached 9.9 million tons which represents 16.4% of total export.

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9. International Trade (2012)

GCC chemicals export by product segment GCC Chemicals Export by Product Segment, 2012 Total: US$ 52.7 bn

0.2% Other petrochemicals

35.2%

Fertilizers Industrial Gases

3.5% Inorganic chemicals 6.7% Specialty chemicals 1.8% Consumer chemicals

Basic Inorganics

Petrochemicals

9.5%

13.2%

43.1%

78.3%

Polymers

Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, United Nations, 2013

The value of GCC chemicals exports in 2012 reached $US52.7 billion. The majority of exports are SHWURFKHPLFDOV LQFOXGLQJ EDVLF LQWHUPHGLDWHV ÀQH chemicals and polymers). GCC polymers exports in 2012 are valued $US22.7 billion which accounts for 43.1% of the total exports by value. As highlighted previously, the majority of GCC polymers exports are commodity thermoplastics. Following rapid polymers capacity expansion in the GCC, polymers exports saw the highest growth rate among other product segments. Exports of plastics in primary forms grew at an average rate of 25% between 2002 and 2012.

With $US18.5bn worth of exports in 2012, other SHWURFKHPLFDOV EDVLF LQWHUPHGLDWHV ÀQH FKHPLFDOV

represented 35.2% of total chemicals export. Since 2002, GCC export of petrochemicals measured in value terms grew at an average rate of 20.3%.

Within the basic inorganics segment, the majority of GCC export is comprised of fertilizers. Due to commodity nature of fertilizers, their share in exports PHDVXUHG LQ YDOXH LV VLJQLĂ€FDQWO\ ORZHU WKDQ RI WKDW

72

measured in volume. In 2012, fertilizers accounted for 9.5% share of the total value of GCC chemicals exports. Historical growth of fertilizers exports of CAGR (2002-2012) 23% is one of the highest among other products.

Specialty chemicals and consumer chemicals are high value-added products. GCC countries has exported $US 3.5 billion worth of specialty chemicals in 2012 which accounts for 6.7% of total exports. While they presently represent only a small share, export growth of CAGR 26.4% per annum between 2002 and 2012 demonstrates the increasing focus of the GCC countries on production and export of specialty chemicals. Export of consumer chemicals represent 1.8% share in the GCC chemicals export in terms of value.

The value of GCC chemicals exports in 2012 reached $US52.7 billion.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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9. International Trade (2012)

GCC chemicals import by product segment

Other petrochemicals

17.3%

2.2% Fertilizers 1.7% Industrial Gases

36.1%

22.8%

Consumer chemicals

40.0%

Polymers

Inorganic chemicals

Basic Inorganics

Petrochemicals

40.1%

GCC Chemicals Import by Product Segment, 2012 Total: 13.6 millions tons

4.4% 15.5%

Specialty chemicals

Note: 2012 data for some countries is preliminary Source: United Nations, 2013

Chemicals producing countries are both exporters and importers of chemicals. In 2012 GCC countries imported 13.6 million tons of chemicals. This import number has grown at an average of 9.6% per annum over the past decade. GCC countries import chemicals from both neighboring countries (Intra-GCC Import) and overseas (Extra-GCC Import). In 2012, the majority of chemicals import was comprised of basic inorganics which accounted for 40% of the total import volume. Notably, GCC imported 4.9 million tons of inorganic chemicals which are derivatives of various minerals and generally do not contain carbon as principle element. This volume accounted for 36.1% of 2012 chemicals import to the GCC. Historically, inorganic chemicals import to the GCC has been high accounting for up to one third of the overall import volume. Another segment of basic inorganics – fertilizers represented only a small share of 2.2%.

GCC polymers import reached 2.3 million tons in 2012.

Most of this volume is represented by commodity thermoplastics. In 2012, import of polymer products accounted for 17.3% share in total chemicals import volume. Commodity thermoplastics are primarily used

in packaging, building and construction and they are imported mostly from other GCC countries, Asia and Europe.

GCC specialty chemicals import in 2012 was approximately 2 million tons which represented 15.5% of the total chemicals import. The majority imported is industrial additives and paints & inks which account for 24% and 21% of specialty chemicals import volume respectively. Others imports include lubricant additives, paint additives, dyes and pigments, adhesives, catalysts, crop protection chemicals and coatings.

Import of consumer chemicals reached 0.6 million tons in 2012 which represents 4.4% of total volume of chemicals import. Historically, consumer chemicals imports have represented a minor share in the total import numbers.

GCC countries imported 13.6 MT of chemicals in 2012.

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9. International Trade (2012)

Polymers

23.0%

0.9% Fertilizers 1.5% Industrial Gases 11.9%

Other petrochemicals

Inorganic chemicals

Basic Inorganics

Petrochemicals

46.1%

GCC Chemicals Import by Product Segment, 2012 Total: $US 20.1bn

14.3%

GCC chemicals import by product segment

23.1%

32.1% Consumer chemicals

Specialty chemicals

7.5%

Note: 2012 data for some countries is preliminary Source: United Nations, 2013

The value of GCC chemicals import in 2012 is estimated at $US20.1 billion, the majority of which is specialty chemicals. In 2012 GCC countries have imported $US6.5 billion worth of specialty chemicals which represents 32.1% of the total chemicals import. The majority of specialty chemicals imported include: paints and inks, industrial additives, catalysts, lubricant additives, dyes and pigments, crop protection chemicals, adhesives, rubber processing chemicals, paint additives, contraction chemicals, coatings and other miscellaneous chemicals. Between 2008 and 2012, import of specialty chemicals to the GCC measured in value grew at an average rate of 17.7% per annum.

Value of imported petrochemicals (basic, intermediate RI ÀQH FKHPLFDOV UHSUHVHQWV RU 86 ELOOLRQ in 2012. Historic increase of volume of petrochemicals import has resulted in the high growth of import measured in value terms which grew by 23.2% per annum over the 2008-2012 period.

GCC import of inorganic chemicals has reached $US2.4 billion in 2012. This is the largest product segment within basic inorganics and has not changed VLJQLĂ€FDQWO\ FKDQJHG RYHU WKH SDVW GHFDGH The import of consumer chemicals in 2012 in value terms is $US1.5 billion which accounts for 7.5% of chemicals import to the GCC.

Polymer imports to the GCC stood at US$4.6 billion in 2012 which accounts for 23% of the GCC chemicals import. The majority of polymers imported are plastic resins import of which grew at an average rate of 10.2% between 2008 and 2012.

74

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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9. International Trade (2012)

GCC chemicals export by country GCC Chemicals Export by Origin CAGR (2002-2012)

70

9.6%

60.7

60

51.6 Million Tons

50

38.7

40

29.8 30 20 10

2.0 3.5 5.7

24.4 2.3 2.8

1.2 0.9 0.1

2.6 5.6

31.5 1.1 1.1 0.1

2.7 2.0 7.0

1.2 1.7

2.3 3.5

1.3 1.8

19.3

16.8

2002

2004

2006

1.2

6.9 10.0

7.4

7.2 31.7

17.0

1.2

3.2 3.6

35.8

22.6

0 2008

2010

2012

Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, United Nations, 2013

In 2012, Saudi Arabia was the largest chemicals exporter in the region, accounting for 59% of the total regional export volume. While Saudi Arabia continues to be the leading regional exporter of chemicals, its VKDUH KDV VLJQLÀFDQWO\ GURSSHG RYHU WKH SDVW GHFDGH from 70% in 2002 to 58% in 2012. This decline has been mostly attributed to the export growth from other GCC countries. Saudi Arabia’s chemicals exports over the past decade were largely polymers exports, particularly plastics in primary forms, as well as fertilizers and petrochemicals.

Qatar is the second largest exporter of chemicals in the GCC representing 17% of the region’s chemicals exports. With capacity expansions taking place over the past decade, Qatar’s chemicals exports have grown at an average rate of 13.7% per annum since 2002. As a result, Qatar’s share in the chemicals export volume has increased from 12% in 2002 to 17% in 2012. Fertilizers and petrochemicals account for the majority of Qatar’s chemicals exports.

With 6.8 million tons of exports, Oman is the third largest exporter in the GCC. Over the past decade chemicals exports from Oman have experienced tremendous growth: from one of the minor exporters to one of the top three GCC exporters representing 11% of GCC chemicals exports in terms of volume. Similar to Qatar, fertilizers are Oman’s major chemical export.

Kuwait’s share in the GCC chemicals export has been

around 6% over the past years. The majority of Kuwait’s exports are fertilizers and polymers. Kuwait’s export growth has been modest in comparison with other GCC countries – between 2002 and 2012 chemicals exports grew at CAGR 4.5%.

The United Arab Emirates exported about 3 million tons of chemicals in 2012 which represents 5% of the GCC overall exports. UAE exports have registered a steady growth over the past decade of CAGR 13% and this increase is driven by the growth of its polymers and fertilizers segments. Currently these products account for the majority of UAE’s chemical exports.

Bahrain is a minor GCC exporter representing 2% in the GCC chemicals exports. Exports from Bahrain are almost unchanged over the past decade and therefore its share has shrunk from 5% a decade ago to current 2%. Exports from Bahrain are concentrated around fertilizers exports which represent the majority of their international trade of chemicals.

Saudi Arabia is the largest chemicals exporter in the GCC.

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9. International Trade (2012)

GCC chemicals import by country GCC Chemicals Import by Country, 2002-2012

16

CAGR (2002-2012)

9.6%

14

12.8

Million Tons

12

9.6

10 8 6 4 2

6.3

5.4 1.1 0.3 1.8

1.0 0.4

0.2 0.3

0.8 0.4

0.3 0.2

9.5 0.5 0.6

0.7 1.7 0.7 0.6

0.8 1.3 1.1 0.5

13.6 1.0

0.5

1.8 2.0

4.9

3.9

2010

2012

4.3 4.3

2.4

0 2002

2004

2006

2008

Note: 2012 data for some countries is preliminary Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, United Nations, 2013

Over the past decade, GCC chemicals imports have grown at an average rate of 9.6% per annum reaching 13.6 million tons in 2012. Saudi Arabia is the largest chemicals importer in the GCC representing approximately 33% of the total volume of chemicals imports. The majority of chemicals imports to Saudi Arabia are inorganic chemicals which represent about one third of the chemicals import volume.

Petrochemicals also represent a considerable share in Saudi Arabia’s chemicals import. In 2012, about 1.2 million tons of petrochemicals were imported by the country which accounts for 26% of its total chemicals import. While Saudi Arabia is the largest polymers producer in the region, there were approximately 0.7 million tons of commodity thermoplastics imported in 2012. Import of specialty chemicals reached 0.8 million tons in 2012 which represents about 18% of the country’s import volume.

United Arab Emirates is the second largest chemicals importer in the region with 29% of the region’s import volume. The majority of chemicals imported to UAE are plastic resins. In 2012 the country imported approximately 1 million tons of commodity thermoplastics. Petrochemicals is the second largest segment in the UAE’s chemicals import with 0.8 million tons imported in 2012, followed by specialty chemicals.

76

Oman imported 1.9 million tons of chemicals in 2012, almost half of which are petrochemical products.

Inorganic chemicals accounted for 28% of the country’s chemicals imports, followed by plastic resins which accounted for 11%. Oman’s chemical imports has grown by an average 20% per annum over the past 10 years is highest among other GCC states.

Qatar imported 1.8 million tons of chemicals in 2012, the majority of which are inorganic chemicals and specialties, particularly industrial additives and paints & inks. The chemicals import growth rate in Qatar is one of the highest in the region – over the past decade it has grown at an average 19.8% per annum.

Rest of the GCC countries: Bahrain and Kuwait imported less than 1 million tons of chemical products in 2012. The majority of chemicals imported by Bahrain are inorganic chemicals which account for about 75% of chemicals import volume. Kuwait imports mostly inorganic chemicals (32%), plastic resins (30%) and specialty chemicals (22%).

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9. International Trade (2012)

GCC chemicals export by destination GCC Chemicals Export by Destination (2002-2012)

Rest of the World

South America

North America

14.5% 47.1%

0.3%

11.2%

GCC

Rest of the World

2002 24.4 million tons

4.4%

34.2% Asia (Excl China)

11.3%

6.2% Europe

China

11.1%

2012 60.7 million tons

1.6% North America 5.6%

South America

GCC Europe

24.2%

Asia (Excl China)

12.9%

15.3% China

Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, United Nations, 2013

Traditionally, Asia has been the largest export market for GCC chemicals producers accounting for half of the GCC exports by volume. In 2012, GCC countries exported 30 million tons of chemicals to Asia with China being the main destination. Development of the manufacturing sector in China has boosted its demand for raw materials including chemicals, as a result GCC chemicals exports to China grew at an average rate of 13% over the past 10 years. Exports to other Asian countries grew as well but at slower pace of CAGR 6% between 2002 and 2012.

Europe (comprised of Western, Central and Eastern Europe) is the second largest export destination for the GCC chemicals industry. Europe accounted for 12.9% of GCC total exports in 2012 or 7.8 million tons.

North and South America account for 7.2% of the GCC exports. Although, North America continues to be the largest trading partner, exports to South and Central America have been steadily increasing reaching 1.6% share in the GCC chemicals exports in 2012.

Africa has not been included as a separate area of destination; however it represents about 75% of the exports currently accounted for under “Rest of the world�.

Asia is the largest export market for the GCC chemicals producers.

Regionalization of chemicals trade in the GCC is on the rise. Over the past decade exports within GCC region grew at an average rate of 13% per annum. The share of GCC intra-regional trade of chemical products (by volume) increased from 4.2% in 2002 to 6.2% in 2012.

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9. International Trade (2012)

GCC chemicals export by destination GCC Chemicals Export by Destination (2002-2012)

Rest of the Word South America North America

GCC

38.3% Other Asia (Excl China)

15.2%

0.1%

1.9% 3.8%

2002 $US 7 billion

GCC

9.1%

Europe Europe

14.7%

38.3% Other Asia (Excl China)

14.7%

South America North America

7.9%

10.0%

Rest of the Word

2012 $US 52.7 billion

15.9%

13.8% China

16.3% China

Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, United Nations, 2013

The value of GCC chemicals exports in 2012 reached $US52.7 billion, the majority of which is exported to Asia. Between 2002 and 2012 GCC chemicals exports in value terms grew at average rate of 22% per annum. Asia traditionally has been the largest export market for GCC chemicals producers accounting for half of the GCC export. In 2012, value of GCC chemicals export to Asia is estimated at $US 28.8 billion which accounts for 54.6% of GCC chemicals export. As Asia continues to build its infrastructure and increase production this trend is likely to continue.

China is the major Asian destination for GCC chemicals export. In 2012 GCC exported $US20.2 billion worth of chemical products to China which is 70% of all exports to Asia. Over the past decade, GCC chemicals export to China has grown at CAGR of 22.3%. As a result of this growth, the total GCC chemicals export to China, measured in value terms, increased from 13.8% in 2002 to 16.3% in 2012.

Europe (comprised of Western, Central and Eastern Europe) is the second largest export destination for GCC chemicals industry. GCC chemicals export to Europe is estimated at $US8.4 billion which accounts for 15.9% of the total value of GCC exports in 2012.

With average growth of 23.2% per annum over the past decade, GCC export growth to Europe measured in terms of value is double that measured in terms of volume.

a double-digit growth of 21.2% per annum, similar to the overall export growth rate. As a result the share of intra-GCC export measured in value terms averaged 9%-10% over the past decade.

The value of chemicals exported to North and Latin America reached $US3 billion in 2012. This represents a 5.7% share in the total export value of GCC chemicals in the same year. While North America continues to be the largest trading partner in the Americas, export to South America grew at a higher pace. As a result, the share of Latin America has increased from 0.1% in 2002 to 1.9% in 2012.

Africa hasn’t been included as a separate area of destination; however it represents approximately 60% of the export value currently accounted for under “Rest of the world”. Export to African countries grew at an average rate of 20.3% per annum and reached $US4.3 billion in 2012. This represents 8.2% of the total GCC chemicals export measured in value terms.

Value of GCC chemicals exports grew by 22% p.a over the past decade.

Intra-GCC chemicals export accounted for 9.1% of the total value of regional export or $US4.8 billion.

Intra-GCC export over the past decade has grown by

78

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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9. International Trade (2012)

GCC chemicals import by origin GCC Chemicals Import, Million tons Africa 5.0% 3.0% North America 6.0%

Middle East (Excl GCC)

CAGR (2002-2012)

9.6%

12.8 9.6 5.4

13.6

Europe

18.0%

9.5

30.0% Other Asia (Excl China)

2012 13.6 million tons

6.3

China 9%

9.0% China 2002

2004

2006

2008

2010

2012 GCC

29.0%

Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013

GCC chemicals imports have grown at an average rate of 9.6% over the past decade reaching 13.6 million tons in 2012. The majority of chemicals imported by the GCC states originate from Asian countries which account for 38% of import volume or 5 million tons.

China and Australia are the biggest Asian partners of GCC in chemicals import. The majority of Australian import is comprised of inorganic chemicals, while import from China is represented by the mix of inorganic chemicals, petrochemicals and plastic resins.

Intra-GCC import accounts for 28% of total chemicals imported in 2012. Petrochemicals and polymers represent the majority of intra-GCC trade. Europe is the third largest trading partner for GCC in terms of chemicals import. In 2012, GCC imported 2.4 million tons from Europe (comprised of Western, Central and Eastern Europe). Majority of chemicals imported from Europe are inorganic chemicals, petrochemicals and plastic resins. They represent 59% of chemicals import volume from Europe.

Import from the Middle East (Excluding GCC) is estimated at 0.65 million tons which accounts for 5% of all GCC imports. GCC import from the Middle East is mostly comprised of inorganic chemicals which represent close to 80% of total volume of chemicals imported from this region. The main trading partner of the GCC in the Middle East is Jordan; about 70% of chemicals imported from Middle Eastern countries is from Jordan.

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9. International Trade (2012)

GCC chemicals trade balance by product segment GCC Chemicals Trade Balance by Product Segment 60

Trade Balance (Million Tons)

48.6 50

38.8

14.6

40 9.8

29.2 30

23.5 18.9

21.9

9.4

9.0

7.3

14.5

11.6

6.9

20 5.4

4.6

3.7

4.2

10 10.3

13.0

2002

2004

19.4

20.4

2010

2012

13.8

9.5

0 2006

2008

Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013

GCC Chemicals Trade Balance by Product Segment (millions tons)

GCC is an important player in the global chemicals market. GCC chemicals industry registered a growth of 13.5% per annum between 2008 and 2012. Trade balance growth over this period is mostly driven by surplus in export volume of basic inorganics (which includes fertilizers) and polymers. In 2012, highest trade balance was registered among petrochemicals. Polymers trade balance reached 14.5 million tons in 2012, almost double of that in 2008. Petrochemicals (excluding polymers) registered trade balance of 20.4 million tons, up from 13.8 million tons in 2008. This is a growth of 10.3% per annum. Within basic inorganics segment, trade balance growth between 2008 and 2012 reached 11.5% per annum. In 2012, there was 14.6 million tons trade balance of basic inorganics in the GCC.

20.4

14.6

14.5

13.8

9.4 7.3

-0.8 Petrochemicals (Excl polymers)

Polymers

Basic Inorganics 2008

-1.0

-0.4

0.0

Specialty Chemicals Consumer Chemicals

2012

Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013

80

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9. International Trade (2012)

GCC chemicals trade balance by country

GCC Chemicals Trade Balance by country

Trade Balance (Million Tons)

60

48.6

50 40

29.2 30

21.9

23.5 2.4 5.4

18.9

20

2.1 2.5

1.6 3.0 6.5

1.6 6.5

2.3

38.8

3.1 4.9

2.7 5.2

9.4

6.3

27.3

10 0

15.2

16.9

-0.2

-0.2

2002

2004

31.3

20.9 13.7

2006

2008

2010

2012

Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013

GCC Chemicals Trade Balance by Country (millions tons)

GCC trade balance growth over the period between 2002 and 2012 is mostly driven by surplus in export volume from Saudi Arabia. In 2012, Saudi Arabia’s trade balance reached 31.3 million tons, up from 20.9 million tons in 2008. This is the growth of 10.3% per annum.

Second largest producer in the region – Qatar registered a trade balance of 9.4 million tons. Since 2008 chemicals trade balance in Qatar grew by an average 9.8% per annum.

Growth of chemicals trade balance between 2008 and 2012 in Oman and Kuwait are highest in the GCC. In Kuwait trade balance grew by 18.4% per annum, followed by Oman with growth of 13.3% per annum. In 2012, chemicals trade balance in Oman reached 4.9 million tons, while in Kuwait it was slightly lower 3.1 million tons.

31.3

20.9

9.4 6.5 3.0

Saudi Arabia

Qatar

4.9 1.6

Oman

3.1

Kuwait 2008

-0.4

0.2

Bahrain

-2.2 -0.4 UAE

2012

Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013

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9. International Trade (2012)

Detailed analysis of GCC chemicals export to Asia GCC Chemicals Export to Asia by Country (2002-2012)

2% Japan 3% 5% Others Indonesia 3% Malaysia 3% Australia 4% South Korea 4% 2012 $US 28.8 Thailand 5% Bangladesh

Others

21% 27% China

Japan

2002 $US 3.7 billion

6%

Indonesia

6%

2% Australia 6%

billion

11% India

Malaysia

2% Thailand 5%

South Korea

27% China

Pakistan

5%

Taiwan

8% Singapore 6% Pakistan

5%

Singapore

11% India 13%

Source: GCC Customs Authorities, United Nations, 2013

Asia has traditionally been the largest export market for GCC chemicals producers accounting for half of the GCC exports in terms of volume or $US28.8 billion.

In 2012, GCC recorded export of chemicals to about 30 Asian countries. Out of them, 12 countries account for 95% of all export to this region: China, India, Singapore, Taiwan, Pakistan, Thailand, South Korea, Australia, Malaysia, Indonesia, Japan and Bangladesh.

China is the largest Asian export market for GCC chemical registering $US8.7 billion worth of chemicals import from the GCC. The majority of the chemicals that China imports from the GCC are petrochemicals and polymers. India is the second largest market for GCC export to Asia. $US5 billion worth of chemicals were exported to India in 2012. Half of the export is comprised of petrochemicals, polymers and fertilizers which accounted for 27% and 13% accordingly. GCC chemicals export to Singapore in 2012 is valued at $US3.8 billion out of which polymers represent the majority share of 70%.

82

Petrochemicals export in 2012 is valued at $US24.2 billion which accounted for 84% of total chemicals export to Asia. About 40% of commodity petrochemicals export to Asia is bound for China, followed by India which accounts for 17%. GCC polymers export to Asia in 2012 is valued at $US10.6 billion which is 36.7% of GCC chemicals export to Asian countries. Major Asian destinations for GCC polymers export are China, Singapore and India.

Another notable product segment of GCC chemicals export to Asia is fertilizer, export of which reached $US2.9 billion. The major markets for GCC fertilizers industry in Asia are Thailand, India and Australia.

Thailand accounted for 26% of fertilizers export to Asia, followed by India and Australia which accounted for 22% and 16% respectively.

GCC exports to about 30 countries in Asia.

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9. International Trade (2012)

GCC chemicals export to Asia by product segment

36.7%

10.0% Fertilizers Other petrochemicals

47.3% 0.1% 4.2% 1.5%

Industrial Gases

Inorganic chemicals

14.3%

Polymers

Basic Inorganics

Petrochemicals

84.0%

GCC Chemicals Export to Asia by Product Segment, 2012 Total:$US 28.8 bn

Specialty chemicals

0.2% Consumer chemicals

Source: GCC Customs Authorities, United Nations, 2013

Petrochemicals export to Asia accounts for 84% of total export.

Export of fertilizers represent 10% of the total export to Asia.

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9. International Trade (2012)

Detailed analysis of GCC chemicals export to Europe GCC Chemicals Export to Europe by Country (2002-2012)

Others

2% 3% Others UK 3% Malta 4% Poland 4% France

5% 8% Turkey France 3% UK 5% 10% Belgium Malta 4%

Spain

Spain

2002 2.8 million tons

18%

Italy

8%

26% Turkey

2012 7.8 million tons

12%

32% Netherlands Italy

15%

Netherlands

14%

24% Belgium

Source: GCC Customs Authorities, United Nations, 2013

Europe (comprised of Western, Central and Eastern Europe) is the second largest export destination for GCC chemicals industry. Europe accounted for 12.9% of GCC total chemicals exports in 2012 or 7.8 million tons. Based on the export volume, European Union member states import about 70% of GCC chemicals export bound to Western, Central and Eastern Europe.

GCC chemicals reach about 50 countries located in Western, Central and Eastern Europe. Out of them, nine countries account for 97% of total volume of chemicals exported to this region: Turkey, Belgium, Netherlands, Italy, Spain, Poland, Malta, UK and France.

Turkey is the largest European market for the GCC when members of European States are counted separately. In 2012, chemicals export to Turkey reached 2 million tons which accounts for 26% of total H[SRUW WR (XURSH 7KLV LV D VLJQLÀFDQW LQFUHDVH IURP 8% share a decade ago. Volume of GCC export to Turkey grew by CAGR 25% between 2002 and 2012 with polymers representing the majority followed by petrochemicals. Belgium is the second main European destination. In 2012, GCC exported 1.9 million tons to this country out of which polymers and petrochemicals represent the majority. With the increasing volume

84

of export, Belgium’s receipt of total GCC export to Europe has more than doubled – from 10% in 2002 to 24% in 2012. While The Netherlands continue to be one of the main European destinations, its share has dropped from 32% in 2002 to 14% in 2012. Of the 1 million tons of chemicals shipment bound for The Netherlands, 90% are petrochemicals.

Europe is the second largest export destination for GCC chemicals industry. GCC chemicals export to Europe is valued at $US8.4 billion, out of which polymers account for 65.7% or $US5.5 billion.

Petrochemicals export to Europe reached $US2.6 billion in 2012 and is the second major product group exported to this region. The Netherlands, Turkey and Belgium import the majority of GCC petrochemicals shipped to Europe.

Europe is the second largest export destination for GCC chemicals industry.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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9. International Trade (2012)

GCC Chemicals Trade Flows with Major Geographic Blocks, 2012

China Export: 9.3 million tons Import: 1.2 million tons

Europe Export: 7.8 million tons Import: 2.4 million tons

Asia (excl China) Export: 20.8 million tons Import: 4 million tons Africa Export: 4.9 million tons Import: 0.4 million tons

GCC Chemicals trade Balance of $US 32.6 bn North America Export: 3.4 million tons Import: 0.8 million tons

Middle East (Excl GCC) Export: 1.6 million tons Import: 0.7 million tons

Latin America Export: 0.9 million tons Import: 0.5 million tons

World Export: 60.7 million tons Import: 13.6 million tons

Source: Gulf Petrochemicals & Chemicals Association, GCC Customs Authorities, United Nations, 2013

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9. International Trade (2012)

GCC Chemicals Trade Flows with Major Geographic Blocks, 2012

China Export: $US 8.6 bn Import: $US 1.7 bn

Europe Export: $US 8.4 bn Import: $US 5.7 bn

Asia (excl China) Export: $US 20.2 bn Import: $US 4.9 bn Africa Export: $US 4.3 bn Import: $US 0.4 bn

GCC Chemicals trade Balance of $US 32.6 bn North America Export: $US 1.9 bn Import: $US 2.3 bn

Middle East (Excl GCC) Export: $US 2.6 bn Import: $US 0.3 bn

Latin America Export: $US 1 bn Import: $US 0.2 bn World Export: $US 52.7 bn Import: $US 20.1 bn

Source: Gulf Petrochemicals & Chemicals Association, GCC Customs Authorities, United Nations, 2013

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GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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9. International Trade (2012)

10. GC C Intr a-R egio n a l Trade (2012)

Gulf Petrochemicals & Chemicals Association

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10.

GCC Intra-Regional Trade (2012) 9. International Trade (2012)

GCC intra-regional chemicals trade GCC Intra-Regional Chemicals Export, Million Tons

CAGR (2002-2012)

13% 3.5 3.0

3.7

2.8

2.1

1.1

2002

2004

2006

2008

2010

2012

Source: Gulf Petrochemicals & Chemicals Association (GPCA), United Nations, 2013

Over the past decade intra-GCC chemicals trade has grown at an average rate of 13% per annum. While regional chemicals trade is increasing, it remains small when compared to other export destinations: in 2012 it accounted for 6% of the total export volume. Transport infrastructure, which is one of the enablers that affects the scale of regional trade, has become increasingly important for the GCC countries. As described in previous chapters GCC regional trade of chemicals represents only a third of total chemicals imports.

Although the extra-GCC chemicals import requires understanding on the product level, regional trade can be promoted through investments in strategic areas such as transport infrastructure which improves linkages between countries and therefore facilitates trade.

The majority of chemicals delivered within the region are polymers and other petrochemicals which account for 30.1% and 38.1% respectively. In 2012, GCC countries have exported 1.4 million tons of petrochemicals to the neighboring states growing at an average 31% per annum between 2002 and 2012.

As for the polymers, there were around 1 million tons of intra-GCC exports in 2012. Polymers exports within the region grew at an average rate of 12% per annum between 2002 and 2012.

88

Due to market proximity, regional trade of consumer chemicals and specialties has been on the rise over the past decade. Intra-GCC export of consumer chemicals grew by CAGR (2002-2012) of 12% and specialties by 11% per annum. In 2012, intra-GCC export of consumer chemicals reached 0.45 million tons which accounts 12% of total chemicals exports within the region. Similarly, regional export of specialty chemicals reached 0.3 million tons in 2012 growing by an average 11% per annum between 2002 and 2012.

The majority of specialty chemicals exported within the region are paints & inks, industrial additives and paint additives.

Within the basic inorganics segment, the majority of intra-GCC exports are attributed to inorganic chemicals, exports of which reached 0.3 million tons in 2012.

Over the past decade intra-GCC chemicals trade grew by 13% p.a.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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10. GCC Intra-Regional Trade (2012)

GCC intra-regional chemicals trade

30.1% 1.8%

Fertilizers

1.1% Industrial Gases 8.1% Inorganic chemicals Other petrochemicals

38.1% 8.8%

11.0%

Polymers

Basic Inorganics

Petrochemicals

68.2%

GCC Intra Regional Chemicals Export by Segment, 2012 Total: 3.7 million tons

Specialty chemicals

12.0% Consumer chemicals

Source: Gulf Petrochemicals & Chemicals Association (GPCA), United Nations, 2013

Polymers account for 30.1% of GCC intra-regional trade.

Basic, intermediate and mne chemicals account for 38.1% of GCC intra-regional trade.

Gulf Petrochemicals & Chemicals Association

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10.

GCC Intra-Regional Trade (2012) 9. International Trade (2012)

GCC intra-regional trade in chemicals export Share of Intra-GCC Exports in GCC Chemicals Export Volume, 2012

28% 44% 65% 91.9%

93%

94%

99.5%

94%

72% 56% 35% 8.1% Industrial Gases

Consumer Chemicals

Specialty Chemicals

Inorganic Chemicals

Intra-GCC Export

7% Polymers

6%

0.5%

6%

Petrochemicals (Excl Polymers)

Fertilizers

Chemicals Total

Extra-GCC Export

Note: Based on volume of export Source: Gulf Petrochemicals & Chemicals Association, United Nations, 2013

Intra-GCC trade accounts for 6% of the total GCC chemicals export measured in volume terms. While the ORZ VKDUH RI UHJLRQDO H[SRUWV UHﾃ？FWV WKH LPSRUWDQFH of other regions of the world for the regional chemicals industry, when looking at the individual product segments, there are products which are mostly exported within the GCC region.

Industrial gases and most of the consumer products are usually shipped within shorter distances.

Therefore, Intra-GCC trade represents a large share in total GCC exports of these products: 72% of industrial gases and 56% of consumer chemicals are shipped regionally. Leading intra-GCC exporters within these segments are Qatar and Saudi Arabia: Qatar is the largest regional exporter of industrial gases and Saudi Arabia the largest regional exporter of consumer chemicals.

Another notable segment is specialty chemicals: 35% of total export by volume took place within the GCC region. Looking at various specialty chemicals, GCC producers of dyes and pigments ship 73% of their total export volume to GCC countries. Intra-GCC trade

90

within this segment is dominated by Saudi Arabia.

This segment usually serves the paper, textile and plastic production industries. Intra-GCC exports of crop protection chemicals which include products that help control harmful insects and products control germs and pests, represents 48% of the total export volume. This segment primarily serves the farm sector, although other sectors such as household, public sector and utilities are important as well. Intra-GCC trade within this segment is lead by the UAE which accounts for 80% of total shipments within the region.

Regional export of cosmetic additives accounts for 41% of total export within this product segment. These are functional chemicals which are used to improve performance and provide special properties to various consumer products. Saudi Arabia is the largest exporter of cosmetic additives in the region. Within the paints and inks and paint additives segment, intraGCC trade represents 25% of the total export. This segment serves packaging, newspaper and publishing/ printing industries. Intra-GCC trade of these products is lead by Saudi Arabia which represents the majority of export volume.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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10. GCC Intra-Regional Trade (2012)

GCC intra-regional chemicals trade in value terms GCC Intra-Regional Chemicals Exports, $US million

Intra-GCC chemicals trade has reached $US 4.8 billion. Over the past decade, it has grown by an average of 21.2% per annum. Intra-GCC chemicals Ă RZV UHPDLQ UHODWLYHO\ VPDOO LQ WKH GCC overall chemicals exports.

In 2012 it represented only 9.1% of the chemicals export in value terms. Looking at the composition of intra-GCC chemicals export, polymers account for the majority.

In 2012, $US1.6 billion worth of polymers were shipped within the region which represents 33.5% of the regional chemicals trade.

Other commodity petrochemicals represent the second largest product segment in the regional chemicals trade. While volume wise they account for the majority, the relatively lower value of commodity petrochemical products in comparison with polymers is responsible for their lower share in intra-GCC chemicals trade in terms of value. In 2012 intra-GCC bulk petrochemicals exports reached $US1.2 billion.

4'814 CAGR (2002-2012)

21.2% 3'185 2'604 2'100

1'022 706

2002

2004

2006

2008

2010

2012

Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013

Petrochemicals

16.6%

Other petrochemicals

24.6%

20.3%

Basic Inorganics

33.5%

58.1%

Polymers

0.5% Fertilizers 1.5% Industrial Gases 3.0% Inorganic chemicals

5.0%

GCC Chemicals Exports by Product Segment, 2012 Total. $US 4.8 bn

Specialty chemicals

Consumer Chemicals

Intra-GCC export of consumer chemicals represent 20.3% of the regional chemicals trade measured in value terms. In 2012 it reached $US0.9 billion registering an average growth of 20% per annum between 2002 and 2012. Similarly, intra-GCC export of specialty chemicals is estimated at $US0.8 billion with an average growth over the past decade of 20% per annum.

Source: Gulf Petrochemicals & Chemicals Association, Customs Authorities, UN Comtrade, 2013

Gulf Petrochemicals & Chemicals Association

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10.

GCC Intra-Regional Trade (2012) 9. International Trade (2012)

GCC intra-regional trade in chemicals import Share of Intra-GCC Trade in GCC Chemicals Import Volume, 2012

32% 55%

58% 70%

74%

72% 82%

87%

18%

13%

Fertilizers

Inorganic Chemicals

68% 45%

42% 30%

Industrial Gases

Consumer Chemicals

Polymers

Petrochemicals (Excl Polymers)

26%

Specialty Chemicals

28%

Chemicals Total

Note: Based on volume of export Source: Gulf Petrochemicals & Chemicals Association, United Nations, 2013, Note: Due to the shipment period intra-regional import may not equal to intra-regional export in the same period.

Intra-GCC trade represents only 28% of total chemicals imported by the GCC countries measured in terms of volume. Looking at each individual product segment, the highest share of intra-GCC trade in all imports has been achieved by the industrial gases and consumer chemicals segments. Industrial gases and most of the consumer products are usually shipped shorter distances. Therefore, Intra-GCC trade represents a large share in total GCC import of these products: 68% of industrial gases and 45% of consumer chemicals are imported from within the region.

Another notable segment is plastics in primary forms.

Intra-GCC trade represented 42% of their total import measured in terms of volume. UAE is the largest importer of plastic resins; in 2012 over 1 million tons of plastics in primary forms were imported by the UAE alone.

92

Among other chemicals, inorganic chemicals are the largest product segment in GCC chemicals import.

Intra-GCC import accounts for 13% of the total 4.5 million tons of inorganic chemicals imported by the GCC countries. Qatar and Saudi Arabia are major importers of inorganic chemicals. Since inorganic chemicals are produced by using naturally occurring minerals, some of these minerals may not be available LQ WKH *&& DQG WKHUHIRUH LPSRUW LV HVVHQWLDO WR IXOĂ€OO the domestic demand.

Intra-GCC trade represents 28% of total chemicals imported by the GCC.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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10. GCC Intra-Regional Trade (2012)

11. E m ploym ent (20 1 2 )

Gulf Petrochemicals & Chemicals Association

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11.

EmploymentTrade (2012) 9. International (2012)

Employment in GCC chemicals industry by country Employment in the GCC chemicals industry, thousands people

CAGR (2008-2012)

13.5%

160

138.7 Employment (Thousands)

140

6.2

117.2 120

102.9 93.2

100

83.6

80

4.9 4.4 21.5

60

1.8 3.5

5.4 5.5

2.0 4.2

26.0

5.5 5.1

1.9 4.8

31.5

5.8 7.0

38.1

38.1

40 20

1.9 5.5

2.0 6.3

9.6

76.5 47.5

50.2

54.1

58.8

2008

2009

2010

2011

0 2012

Note: ,QFOXGHV HPSOR\PHQW LQ FKHPLFDOV VHFWRU FODVVLĂ€HG XQGHU QR ,6,& 5HY Source: National statistical authorities, UNIDO, GPCA, 2013

In 2012, more than 138,000 people were employed by WKH *&& &KHPLFDOV LQGXVWU\ 7KLV ÀJXUH UHSUHVHQWV direct employment by the industry – total number of people who work in the manufacturing plants, as well as people who work outside the plant but who belong to, and paid by, the company, such as sales representatives, supply chain personnel, supporting administration.

Direct employment grew by an average annual growth rate of 13.5% from 2008 to 2012. In 2012 alone direct employment grew by 18% in comparison with 2011.

Saudi Arabia is the largest employer retaining 55% of the regional workforce in the petrochemicals sector or 76,500 employees. Since 2008, chemicals industry employment is Saudi Arabia has grown on average by 12.7% per annum which is slightly lower than an overall GCC employment growth of the sector during the same period.

United Arab Emirates is the second largest employer in the chemicals sector with more than 38 000 employees which represents 27% of region’s total.

94

With the expansion of UAE chemicals sector over the past years, the employment has grown by an average 15.4% per annum between 2008 and 2012.

Chemical’s sector’s in Qatar employed more than 9,600 employees in 2012 and accounted for 7% of region’s total workforce in the sector. With the chemicals sector expansion in this state, employment has doubled since 2008 when Qatar employed around 4 400 people.

Oman and Kuwait have similar level of employment in the chemicals sector. In 2012, each of these countries employed more than 6,000 people. . While both Oman and Kuwait have seen an upward trend in their country’s employment level, Oman has grown faster.

Between 2008 and 2012, employment growth in Oman was 15.7% per annum while in Kuwait it was 5.7% per annum.

Bahrain is a minor producer in the region and therefore its employment in chemicals sector accounts for minor share of 1% in region’s total employment with modest employment growth of 2.6% per annum between 2008 and 2012.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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11. Employment (2012)

How many jobs depend on the chemicals industry?

Total Chemicals Related Employment in 2012 (thousands people)

416.1

554.7

138.7

Direct Employment

Indirect Employment

Total Chemicals Related Employment

Source: National statistical authorities, GPCA Estimates, 2013

The chemicals industry creates jobs not only within the industry itself but also generates employment indirectly. Such indirectly generated jobs can also be found in chemicals processing and manufacturing goods. Chemicals companies spend on equipment, maintenance, food and other services from local and foreign contractors and suppliers. All of the industries that create these indirect jobs are known as multipliers. Generally the amount of indirect employment generated by chemicals industry exceeds its direct employment.

In the GCC direct chemicals industry’s employment in 2012 reached 138.7 thousand people. However, total employment related to the chemicals industry (direct and indirect jobs) is estimated at around 555 thousand people.

Total employment related to the chemicals industry is estimated at around 555 thousand people.

Gulf Petrochemicals & Chemicals Association

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95

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11.

EmploymentTrade (2012) 9. International (2012)

Chemicals Industry’s employment: GCC vs. Global Top Employers in Chemicals Industry 2012 (thousands) 2'334

China European Union

1'189 605

India United States

513 400

Russia Brazil

270 214

Japan

173

Indonesia GCC

140.7

Thailand

136.6

Mexico

135

Ukraine

122

South Korea

121

Vietnam

89

Malaysia

75

Iran

72

Turkey

61

South Africa

60

Egypt

60

Canada

51

Note: Chemicals excluding pharmaceuticals, Countries and regions with more than 50 thousands of employees Source: CEFIC, GPCA, 2013

Based on estimations of International Labor Organization there are about 20 million people employed in the global chemical, pharmaceutical and rubber and tire industries. Employment in the global production of chemicals (excluding pharmaceuticals, plastics and rubber processing) is estimated at 7 to 8 million people. Employment in GCC chemicals industry accounted for 2% of world’s total in 2012 This rank the GCC 9th among countries employing more than 50 thousands employees in the chemicals industry.

96

China is the largest employer within the global chemicals industry, employing more than 2.3 million people in 2012 combined with one of the highest average employment growth between 2008 and 2012 of 6.3% per annum.

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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11. Employment (2012)

Employment Growth in the Chemicals Industry Employment Growth in Chemicals Industry of Selected Economies, CAGR (2008-2012) 13.5

GCC 6.3

China 4.9

Indonesia 3.6

Vietnam

3.1

Turkey

2.7

Malaysia

2.2

South Korea

1.9

Ukraine India

1.1

Thailand

1.0

Brazil Egypt

0.4 0.2

South Africa 0.1 Iran 0.0 Canada 0.0 -0.3 -0.6 -0.8 -2.0 -2.6

Russia Mexico European Union United States Japan

Note: Chemicals excluding pharmaceuticals, Countries and regions with more than 50 thousands of employees Source: CEFIC, GPCA, 2013

Gulf Petrochemicals & Chemicals Association

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97

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11.

EmploymentTrade (2012) 9. International (2012)

Employment in GCC chemicals industry by occupation GCC Chemicals employment by occupation type, 2012 (Thousands)

50.9 (36%)

140.7 (100%)

89.8 (64%)

Manufacturing type

Service type

Bahrain

51%

49%

Oman

55%

45%

UAE

55%

45%

Qatar

66%

34%

Saudi Arabia

69%

31%

Kuwait

69%

31%

Total Manufacturing type

Service type

Note: Manufacturing type occupations refer to early stages of manufacturing. Service occupations include R&D, sales, marketing, services, administrative support and management Source: GPCA Estimates based on questionnaire, 2013

Manufacturing includes a range of activities in addition to production. Manufacturing companies increasingly employ workers in non-production jobs which consist of service related occupations. Service activities such as R&D, marketing and sales, customer support and administration account for a large share manufacturing company activities. Around 36% of GCC chemicals employment is related to services.

Growing manufacturing industry in the region supports local service related industries such as telecom, travel, logistics providers, banks and IT services.

98

7KH RFFXSDWLRQDO SURĂ€OH RI WKH *&& FKHPLFDOV industry is similar to manufacturing. The majority of the employees are involved in actual production process. In 2012 manufacturing related personnel accounted for 64% of total number of employees which translate into 89 900 people. Within the service type occupations, administrative support occupations accounted for 18% of total employees in the chemicals industry in 2012, followed by sales & marketing (4%) and supply chain professionals (3%).

GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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11. Employment (2012)

Employment in GCC chemicals industry by occupation GCC Chemicals employment by occupation, 2012

15.3 (11%)

160

Employment (Thousands)

140 25.6 (18%)

120 100

6.1 (4%)

140.7 (100%)

3.9 (3%)

89.8 (64%)

80 60 40 20 0 Manufacturing

Administration

Sales & Marketing

Supply Chain

Others

Total

Source: GPCA Estimates based on questionnaire, 2013

Manufacturing related personnel accounted for 64% of employees in the GCC chemicals industry.

Gulf Petrochemicals & Chemicals Association

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99

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11.

EmploymentTrade (2012) 9. International (2012)

Employment in GCC manufacturing and chemicals industry GCC Manufacturing Employment, Top 5 Industries CAGR (2008-2012)

12.4% 2'000

1'829 1'713

1'800

1'488

Employment (Thousands)

1'600 1'400 1'200

724

1'329 764

1'145 648 558

1'000

117

461 800 600 400

75 83.6 155

88 102.9

82 93.2

98 117.2

138.7 265

221 201

179

244

290

177

198

213

194

219

235

268

294

2008

2009

2010

2011

2012

200 0

Fabricated metal products (ISIC 28)

Non-metallic mineral products (ISIC 26)

Chemicals & chemical products (ISIC 24)

Food products & beverages (ISIC 15)

Rubber & plastic products (ISIC 25)

Other Industries

Source: National statistical authorities, UNIDO, GPCA estimates, 2013

The GCC Chemicals industry is part of the manufacturing sector which is an important strategic sector for GCC region. Employment represents part of the social contribution of the industry to economy and human capital. GCC chemicals industry is the 4th largest industry in terms of employment and it employs 8% of the total manufacturing workforce.

While industry generates 31.3% of manufacturing GDP, it represents 8% of the total number employed in the manufacturing sector. Since 2004, employment in the chemicals sector has more than doubled from 57,900 in 2004 to 140,700 in 2012. This is in line with the overall growth of employment in the manufacturing sector during the same period.

GCC chemicals industry employs 8% of the total manufacturing workforce.

100 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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11. Employment (2012)

Workforce nationalization in GCC chemicals industry

GCC Workfroce nationalization in chemicals industry by country GPCA Members, 2012

GCC Chemicals industry, 2012 52%

Oman

48%

Saudi Arabia 35%

Bahrain

34%

GCC Kuwait Qatar UAE

25% 10% 9%

Oman

58%

Saudi Arabia

63%

Bahrain

75%

GCC

56%

Kuwait Qatar UAE

61% 19% 23%

Source: GPCA Questionnaire, National Statistical Authorities, 2013

Workforce nationalization is one of the growing challenges in the GCC. Workforce nationalization in the GCC chemicals industry was estimated at 34% in 2012. In contrast, workforce nationalization among GPCA members was 56% in the same year. GPCA members cover the following industry segments: Petrochemicals, Polymers and Basic Inorganics (Fertilizers and Inorganic Chemicals) referred as “major segmentsâ€? in this section. Since these major segments account for about 90% of the total chemicals production in the GCC region, their workforce nationalization rate can be taken as a proxy for the FKHPLFDOV LQGXVWU\ /RRNLQJ DW WKH GHWDLOV ZH Ă€QG the following characteristics in the GCC industry of chemistry: More than half of employees in major industry segments are national citizens: Figures for Oman, Saudi Arabia, Bahrain and Kuwait show that more than half of employees working in major chemcials industry segments are national citizens. Notably, workforce nationalization in Bahrain and Saudi Arabia in 2012 is the highest at 75% and 63% respectively. Kuwaiti chemicals companies’ employment of nationals

reached 61% of total workforce in 2012, followed by Oman where workforce nationalization was 58% in 2012.

Chemicals industry in Saudi Arabia, Kuwait and Qatar employ the largest number of nationals than in other manufacturing sectors: The chemicals industry in Qatar employs the largest number of nationals than in other manufacturing sectors – approximately 1000 national citizens in 2012.This represented 45% of all the nationals in the PDQXIDFWXULQJ VHFWRU LQ 4DWDU IROORZHG E\ WKH UHÀQLQJ sector which employed 21%. There is a similar trend in Saudi Arabia; approximately 36 500 nationals employed in the chemicals industry represented 28% of all nationals working for companies in the manufacturing sector. GPCA estimate that this is the largest number among other manufacturing industries.

In Kuwait, 1500 of nationals employed in the chemicals sector in 2012 represented 21% of all nationals in the manufacturing sector. Kuwait’s chemicals sector was WKH VHFRQG ODUJHVW HPSOR\HU RI QDWLRQDOV DIWHU UHÀQLQJ in 2012.

Gulf Petrochemicals & Chemicals Association 101

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11.

EmploymentTrade (2012) 9. International (2012)

Employee productivity in GCC chemicals and manufacturing sector GCC Employee Productivity Index, Chemicals and Manufacturing (2007=100) 160 140 121.9 121 9

120 100

93.8

80 60 40 20 0 2007

2008

2009

2010

Chemicals & Chemical products

2011

2012

Manufacturing

Source: UNIDO, Statistical Authorities, GPCA Estimates, 2013

3URGXFWLYLW\ LV FRPPRQO\ GHĂ€QHG DV D UDWLR RI D volume measure of output to a measure of input.

Employee productivity is particularly important in the economic and statistical analysis as it reveals a dynamic measure of economic growth, competitiveness, and living standards within an economy. Employee productivity (and all that it takes into account) helps to explain the principal economic foundations that are necessary for both economic growth and social development. Employee productivity depends on various issues including technological DGYDQFHPHQWV HQKDQFHG HIĂ€FLHQF\ DQG LQQRYDWLRQ as well as value of the output. Employee productivity in the GCC chemicals industry has been growing at an average annual growth rate of 3% between 2008 and 2012. In comparison, employee productivity in the GCC manufacturing sector has declines by 2.7% during the same period.

Looking at the historic year-on-year growth of employee productivity in chemicals and manufacturing sectors, productivity in the chemicals sector was growing at higher rate than the manufacturing total except for 2012 when it is estimated that manufacturing has outpaced chemicals sector due to the growth in other sectors. In 2012 labor productivity fell by 12% mostly due to the decline in prices of chemical products which affected the value of the chemicals sector’s output in the region. At the same time manufacturing sector productivity has increased by 2.7% year-on-year in 2012.

102 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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10. GCC Intra-Regional Trade (2012)

12. S ales R evenue (2012)

Gulf Petrochemicals & Chemicals Association 103

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12.

Sales Revenue (2012) 9. International Trade (2012)

GCC chemicals industry sales revenue GCC Chemicals Sales Revenue by Country

3.2% 0.6% Bahrain 4.2% Oman 4.8%

3.8% 0.6% Bahrain 4.0% Oman 4.2%

UAE

UAE

Kuwait

Qatar

Kuwait

12.0%

Qatar

2011 $US 81.7 billion

12.6% 2012 $US 81.7 billion

75.2% Saudi Arabia

74.8% Saudi Arabia

Note: Doesn’t include sales revenue of Industrial Gases, various Specialty Chemicals, Consumer Chemicals and Pharmaceuticals Source: Gulf Petrochemicals and Chemicals Association, 2013

Chemicals industry sales revenue is reported by the GPCA member companies and covers the following business segments: Petrochemicals (including basic petrochemicals, intermediates, downstream chemicals, polymers, fertilizers and inorganic chemicals. This includes sales of goods produced by the business RQO\ &XUUHQW ÀJXUHV GR QRW LQFOXGH VDOHV UHYHQXH of producers of Industrial Gases, various Specialty Chemicals and Consumer Chemicals.

In 2012, the industry reported US$81.7 billion in sales UHYHQXH :KLOH WKLV LV VLPLODU WR WKH ODVW \HDUҋV ÀJXUHV there have been several country-wise adjustments. In most of the GCC countries sales revenue declined in 2012 when compared to 2011. However, due to the new production capacity coming on stream in 2012, chemicals industry’s sales revenue has increased in Qatar and the UAE. In Qatar it grew by 4.6% reaching $US 10.3 billion and in the UAE by 17.7% reaching

$US 3 billion. As a result of this increase Qatar’s share in the regional industry’s sales revenue has increased from 12% in 2011 to 12.6% in 2012 and UAE’s share from 3.2% in 2011 to 3.8% in 2012.

Looking at the composition of sales revenue, the PDMRULW\ LV DWWULEXWHG WR WKH VDOHV RI ÀQH FKHPLFDOV which account for 45.4% of region’s total in 2012, followed by polymers which accounted for 22.1%. :KLOH ÀQH FKHPLFDOV DQG SRO\PHUV DFFRXQW IRU of GCC chemicals capacity, sales revenue from these products reached US$55 billion which represents the major share of 67.5% of region’s total.

GCC sales revenue from fertilizer production business in 2012 is estimated at $US6.6 billion which accounted for 8.1% of GCC’s total.

104 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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12. Sales Revenue (2012)

GCC chemicals industry sales revenue GCC Chemicals Sales Revenue by Segment, 2012 Total: $US 81.7 bn Performance Chemicals Polyolefins

Basic Chemicals

1.0%

6.4%

3.2% Others

6.7%

Innovative Plastics

7.1%

Fertilizers

8.1%

Polymers

45.4% Chemicals

22.1%

Source: Gulf Petrochemicals and Chemicals Association, 2013

Chemicals represent the majority of GCC sales revenue or 45.4%

In 2012, GCC chemicals industry reported US$81.7 billion in sales revenue

Gulf Petrochemicals & Chemicals Association 105

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12.

Sales Revenue (2012) 9. International Trade (2012)

Share of GCC in Global Chemicals Sales Revenues Global Chemicals sales, $US billion

3'857.7

Global Chemicals sales 2012 Total: $US 4,017 billion 4'017.8 2.0% GCC

3'199.9

Latin America 4.6%

NAFTA

Europe

16.8%

1.9% Rest of the World 30.5% China

21.5% 22.7% Asia (Excl China and GCC)

2010

2011

2012

Source: &HÀF )DFWV DQG )LJXUHV DQG *3&$ $QDO\VLV

2012 was a challenging year for the chemicals industry worldwide. Margins were lower especially for the chemicals producers from oil-based feedstock. Basic chemicals producers were able to maintain their sales position due the production expansion and high demand from industrial sectors. For other companies, FRQWLQXRXV SXVK WRZDUGV SURGXFWLRQ RI ÀQH FKHPLFDOV and specialties has provided opportunities to retain VDOHV SRVLWLRQV ODVW \HDU %DVHG RQ &HÀF )DFWV DQG Figures, global chemicals and pharmaceuticals sales grew year-on-year by 4.2% in 2012, down from 17.2% in 2011. Global chemicals and pharmaceuticals sales in 2012 reached $US 4,017 billion. The growth in 2012 was mainly driven by Asia and China in particular.

While China continued to be a major importer of chemicals, it is at the same time one of the largest producers globally. Chemicals sales of Chinese producers reached $US 1,223.7 billion in 2012 which accounted for 30.5% of world’s total. China’s Sinopec,

for instance, is ranked the second largest chemical company by ICIS in term of sales revenues in 2012 with $US 64,894 million.

In all other regions, chemicals sales revenues saw a decline in 2012. The highest year-on-year decline of 4.3% was observed in Europe where political and eurozone crises were felt by the chemicals producers. Total chemicals sales revenues in Europe are estimated at $US 864.6 billion which accounts for 21.5% of world’s total. As per ICIS’s ranking, among top 10 largest chemical companies 4 are European: Europe’s BASF is the largest chemicals company in the world with $US 95.100 million in sale revenues, followed by Shell ranked 6th, Lyondell Basell Industries ranked 7th and INEOS ranked 10th.

106 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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12. Sales Revenue (2012)

Share of GCC in Global Chemicals Sales Revenues While North America remains the leading region in global chemicals production, growth of sales revenues in 2012 was modest 1%, down from 10.4% in 2011.

North American, ExxonMobil is 3rd top chemical company worldwide, followed by Dow Chemicals ranked 4th and DuPont ranked 8th.

Sales revenues of producers in the GCC represented 2% of the global chemicals sales revenues in 2012.

Saudi Arabia’s Sabic was ranked by ICIS the 4th largest chemicals company in the world in 2012.

Global chemical sales, $US billion US$ billion

2011

2012

2012 Sales Growth

China

1043.5

1223.8

17.3%

Asia (excluding China and GCC)

895.8

910.4

1.6%

Europe

903.5

864.6

-4.3%

NAFTA

669.0

675.6

1.0%

Latin America

188.9

185.6

-1.8%

GCC

81.7

81.7

0.0%

Rest of the world

75.3

76.3

1.4%

3857.7

4017.8

4.2%

World Source: &HĂ€F )DFWV DQG )LJXUHV DQG *3&$ $QDO\VLV

Gulf Petrochemicals & Chemicals Association 107

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9. International Trade (2012)

108 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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10. GCC Intra-Regional 12. Sales Revenue Trade (2012)

13. R esear ch and D evelopm ent (20 11 )

Gulf Petrochemicals & Chemicals Association 109

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13.

Research and Development (2011) 9. International Trade (2012)

New patents in the field of chemistry worldwide and GCC :RUOZLGH 3DWHQW *UDQWV LQ WKH ÀHOG RI &KHPLVWU\

Environmental Technology CAGR (2005-2011)

Food Chemistry

7.4%

6.9%

7.5%

0.8% Nano-technology 15.4% Pharmaceutical

192'235 167'428 142'005

146'104

145'173

Macromolecular Chemistry, Polymers

149'116

125'299

Biotechnology

8.2% 8.4%

Surface Technology, Coating 2005

2006

2007

2008

2009

2010

2011 192,235

10.9% Materials, Metallurgy

9.1%

2011 Food Chemistry

12.5% Organic Fine Chemistry

10.1%

10.2% Chemical Engineering

Source: World Intellectual Property Organization (WIPO)

The chemicals industry is a business based on science, technology and knowledge. It plays a key role in the entire economy through its enabling function. Through advancements in innovation and WHFKQRORJ\ WKH FKHPLFDOV LQGXVWU\ WUDQVIHUV EHQHĂ€WV WR downstream industries. Many of the challenges faced by the society and industries can be solved through innovative breakthroughs in the chemistry. This means that the industry is an initiator and provider of solutions to problems, cost reductions and better productivity and improved product quality.

A key innovation indicators is the annual number of patents granted. Globally, chemicals industry is granted between 150,000 and 200,000 patents annually and on average there is 7.4% growth per year. This is approximately 20% to 22% of the total number of patents granted in all sectors.

110 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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13. Research and Development (2011)

New patents in the field of chemistry worldwide and GCC *&& 3DWHQW *UDQWV LQ WKH ÀHOG RI &KHPLVWU\

Others

155 CAGR (2005-2011)

28.1%

60

27.7% Organic Fine Chemistry

8.4%

116 Macromolecular Chemistry, Polymers

59

35

Pharmaceuticals

137

11.6%

2011 155

14.2%

35

19.4% Basic Materials Chemistry 2005

2006

2007

2008

2009

2010

Chemical Engineering

2011

18.7%

Note: %DVHG RQ NQRZQ SDWHQWV JUDQWHG ZLWK DSSOLFDQWŇ‹V RULJLQ LQ WKH *&& GRHVQŇ‹W LQFOXGH SDWHQWV LVVXHG E\ *&& SDWHQW RIĂ€FH Source: World Intellectual Property Organization (WIPO)

As reported by World Intellectual Property 2UJDQL]DWLRQ JUDQWHG SDWHQWV LQ WKH ÀHOG RI FKHPLVWU\ to applicants originated from the GCC and issued by WKH ,3 RIÀFHV RXWVLGH WKH UHJLRQ UHDFKHG LQ This does not include patents issued by the GCC 3DWLHQW 2IÀFH *&&32

Number of chemical-related patents reported by GPCA members granted in the past three years is between 550 and 750. When compared with the total number of patents issued worldwide in the corresponding years, GCC accounts for 0.4% of the chemistry patent granted.

*&& 3DWHQW *UDQWV LQ WKH ÀHOG RI &KHPLVWU\ 733

562

2010

540

2011

2012

Note: Based on known patents granted to GPCA members Source: World Intellectual Property Organization (WIPO)

Gulf Petrochemicals & Chemicals Association 111

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13.

Research and Development (2011) 9. International Trade (2012)

New patent applications in the field of chemistry worldwide and GCC 1HZ SDWHQW DSSOLFDWLRQV LQ WKH ÀHOG RI FKHPLVWU\ ZRUOGZLGH

Environmental Technology Food Chemistry

343'369

Macromolecular Chemistry, Polymers

6.3%

6.0% 0.7% Nano-technology 17.1% Pharmaceutical

7.5%

335'157 331'085 327'026

Surface Technology, Coating

324'082

317'751

2006

14.0% Organic Fine Chemistry

315'527 Materials, Metallurgy

2005

2011 315,527

8.2%

2007

2008

2009

2010

2011

8.5%

Chemical Engineering

9.1%

10.8% Basic Materials Chemistry 10.0% Biotechnology

Source: World Intellectual Property Organization (WIPO)

)RU WKH ÀUVW WLPH LQ WKH WRWDO QXPEHU RI SDWHQW DSSOLFDWLRQV ÀOHG ZRUOGZLGH H[FHHGHG WKH PLOOLRQ PDUN 7KH PLOOLRQ DSSOLFDWLRQV ÀOHG FRQVLVWHG RI 1.36 million resident and 0.78 million non-resident applications. In contrast, patent applications in the ÀHOG RI FKHPLVWU\ DUH VWHDGLO\ GHFOLQLQJ VLQFH ZKHQ D UHFRUG QXPEHU RI ZHUH ÀOHG %\ this number has dropped to 315,527 out of which top 5 segments were pharmaceuticals which accounted for IROORZHG E\ WKH RUJDQLF ÀQH FKHPLVWU\

basic materials chemistry (10.9%), biotechnology (10.6%) and chemical engineering (9.4%).

As reported by World Intellectual Property 2UJDQL]DWLRQ SDWHQW DSSOLFDWLRQV LQ WKH ÀHOG RI FKHPLVWU\ ÀOHG E\ WKH *&& FRPSDQLHV UHDFKHG LQ 2011 which represented 0.1% of worldwide chemistry related patent applications. Most of these patent DSSOLFDWLRQV ZHUH ÀOHG LQ WKH 8QLWHG 6WDWHV RI $PHULFD (138 patent applications), Europe (55 applications), China (23 applications), Japan (14 applications).

Current statistics doesn’t include patents issued by the *&& 3DWLHQW 2IÀFH *&&32 :KLOH *&& UHSUHVHQWHG relatively low share in worldwide total, growth of FKHPLVWU\ UHODWHG SDWHQW DSSOLFDWLRQV JUHZ VLJQLÀFDQWO\ over the past decade. Between 2001 and 2011, GCC patent applications grew by an average 19.5% per annum.

112 GCC Petrochemicals & Chemicals Industry Facts & Figures 2012

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13. Research and Development (2011)

New patent applications in the field of chemistry worldwide and GCC 1HZ SDWHQW DSSOLFDWLRQV LQ WKH ÀHOG RI FKHPLVWU\ *&&

6.1% 2.1% Surface Technology Coating 3.4% Materials 17.8% Basic Chemistry Pharmaceutical 5.9% Materials, Metallurgy

281

CAGR (2005-2011)

19.5%

Biotechnology

274

238 210 173

Environmental Technology

8.0%

128 99 46

54

63

77 Organic Fine Chemistry

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

2005-2011 1,403 patent applications

13.5% Macromolecular Chemistry,Polymers

21.7% 21.0% Chemical Engineering

Note: Based on known patents applications with applicant’s origin in the GCC Source: World Intellectual Property Organization (WIPO)

Gulf Petrochemicals & Chemicals Association 113

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13.

Research and Development (2011) 9. International Trade (2012)

R&D spending World R&D Spending in Chemicals Industry (2008-2012) $US billion

2012 World R&D Spending in Chemicals Industry, $US49 bn 0.8% GCC 0.8% 0.7% Taiwan 2.7% Rest of the World Switzerland 0.9% India 2.7% 24.8% EU-27 Korea Republic 4.4% Australia

CAGR (2008-2012)

8.1% 49.0 44.4 40.3 35.8

35.1 Japan

19.3%

22.0% USA 2008

2009

2010

2011

2012

China

20.9%

Note: Chemicals excluding pharmaceuticals Source: CEFIC, 2013

World R&D Spending in Chemicals Industry ($US million)

2012

EU-27

12,140.9

USA

10,763.5

China

10,229.0

Japan

9,427.2

Korea, Republic

2,177.0

India

1,326.9

Switzerland

463.8

Australia

397.4

GCC

380.0

Taiwan

325.9

Rest of world

1,320.7

World

48,952.4

Note: Chemicals excluding pharmaceuticals Source: CEFIC, 2013

Worldwide R&D spending among companies in the chemicals sector has reached $US49 billion in 2012 which is an increase of 10% in comparison with the previous year. Companies in European Union and

United States accounted for almost a half of world’s R&D spending in 2012 or $US22.9 billion.

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Acknowledgements GPCA secretariat extends thanks and appreciation for the following members for their close cooperation in sharing the data used to develop this publication: Abu Dhabi National Chemicals Company (ChemaWEyaat) Abu Dhabi Polymers Co. Ltd. (Borouge) Advanced Petrochemical Company CHEMANOL EQUATE Petrochemical Company Farabi Petrochemicals Company Gulf Petrochemical Industries Company (GPIC) NAMA Chemicals National Industrialization Company (TASNEE) National Petrochemical Industrial Company (NATPET) 2PDQ 2LO 5HĂ€QHULHV DQG 3HWUROHXP ,QGXVWULHV Company (ORPIC) Petrochemical Industries Company (PIC) Qatar Chemical Co. Ltd. (Q-Chem) Qatar Fertilizer Co. (QAFCO) QATAR FUEL ADDITIVES CO.LTD. (QAFAC) Qatar Petrochemicals Company Ltd. (QAPCO) 5DELJK 5HĂ€QLQJ 3HWURFKHPLFDO 3(752 5$%,*+

Ruwais Fertilizer Industries (FERTIL) Sadara Chemical Company Salalah Methanol Co. Saudi Arabian Mining Company (Ma’aden) Saudi Basic Industries Corporation (SABIC) Saudi International Petrochemical Company (SIPCHEM) S-Chem I References Throughout the report we sourced data from the following national and international statistical department and organizations: American Chemistry Council (ACC) Bahrain Central Informatics Organization European Chemical Industry Council (CEFIC) ICIS International Fertilizer Association (IFA) Kuwait Central Statistics Center Kuwait Customs Department Methanol Market Services Asia (MMSA) Oman National Center for Statistics and Information Qatar Statistical Authority Saudi Arabia Central Department of Statistics and Information Saudi Arabia Customs Department Statistics Center Abu Dhabi UAE Customs Department

UAE National Bureau of Statistics United Nations Industrial Development Organization (UNIDO) UN Statistics Division World Trade Organization (WTO) I Special thanks Special thanks for industry experts who have given their time and expertise to complete this report Dr. Moncef Hadhri, Chief Economist and Manager, European Chemical Industry Council (CEFIC) Dr. Thomas Kevin Swift, Chief Economist and Managing Director, American Chemistry Council (ACC) Shyam Upadhyaya, Chief Statistician, UNIDO Valentin Todorov, Information Management UNIDO Floris Landi, Graphic Designer,

I Feedback For more information and feedback on this report, please contact: Nora Ismagilova, Research and Studied nora@gpca.org.ae Disclaimer The data, analysis and other information contained in the annual report “GCC Petrochemicals & Chemicals Industry Facts and Figuresâ€? is for informational purposes only and is not intended WR SURYLGH DQ\ EXVLQHVV Ă€QDQFH DQG LQYHVWPHQW DGYLFH :KLOVW reasonable efforts were made to ensure the accuracy of the report, Gulf Petrochemicals and Chemicals Association (GPCA) makes no warranties and assumes no liability or responsibility for any inaccuracy, error, or for any loss or damage in regards with or attributed to any action or decision taken as a result of using information from the current report. “GCC Petrochemicals & Chemicals Industry Facts and Figuresâ€? may contain references to material from third parties and whose copyright must be acknowledged.

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