DECEMBER 2014 CAPITAL MARKETS DAY
THE MIDDLE EAST IMPACT
FORWARD-LOOKING STATEMENTS
This presentation contains ‘forward-looking statements’, based on currently available plans and forecasts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future, and Vopak cannot guarantee the accuracy and completeness of forward-looking statements.
These risks and uncertainties include, but are not limited to, factors affecting the realization of ambitions and financial expectations, developments regarding the potential capital raising, exceptional income and expense items, operational developments and trading conditions, economic, political and foreign exchange developments and changes to IFRS reporting rules.
Statements of a forward-looking nature issued by the company must always be assessed in the context of the events, risks and uncertainties of the markets and environments in which Vopak operates. These factors could lead to actual results being materially different from those expected, and Vopak does not undertake to publicly update or revise any of these forward-looking statements.
Various sources are used in this presentation including among others: Wood MacKenzie, IEA, IHS and Vopak intelligence
• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 2 • • • • • • • • • • • • • • • • • • • • • • • • • • • • REGION AT A GLANCE
Fujairah , UAE REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
UNIQUE GEOGRAPHIC POSITION IN THE WORLD IN THE CENTER OF TRADE BETWEEN EAST AND WEST
Geographic position
Resources and Production population Balance and mix
Terminal Political developments
Terminal(s) at hub location
Middle East: a region shaped by resources
4 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
POPULATION GROWTH DRIVING LOCAL DEMAND FOR ENERGY PRODUCTS
Population reached ~180 million (2014) Overall GDP value growth at 5.9% CAGR (2014 – 2018)
Population (in millions) GDP per country 220 In trillion current USD Iran 3.000 AVG GDP/ Capita Qatar 15.000 200 Iraq Saudi Arabia Kuwait 14.000 13.000 180 Yemen 2.500 Islamic Republic of Iran Oman 12.000 Saudi Arabia United Arab Emirates Yemen 160 11.000 Other Middle East Iraq Bahrain 140 2.000 10.000 9.000 120 8.000 1.500 100 7.000 6.000 80 1.000 5.000 60 4.000 3.000 40 500 2.000 20 1.000
0 0
0
1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
1994 1980 1982 1984 1986 1988 1990 1992 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 The Middle East defined as: Saudi Arabia, Yemen, Iraq, Iran, Oman, Kuwait, Bahrein, Qatar, United Arab Emirates.
Left chart data source: US census bureau database, October 2014. Right chart data source: World Trade Organization (WTO) database; international monetary funds (IMF) database; ICIS (ATEC) database, November 2014. Note: for some countries and years no data is available (i.E. Iraq prior to 2004 and Yemen prior to 1990)
5 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
REGIONAL TREND TOWARDS DIVERSIFICATION SINCE 2004 A REMARKABLE JUMP IN NON-OIL SECTOR REVENUES
Demographics of the Middle East (2014) Non-oil outpaces oil-related export growth
100+ MaleFemale Population Population (in millions) (in millions) Export value in trillion current USD CAGR growth 2000 - 2013 95-99 1.400 90-94 Goods - Fuels & Mining 85-89 1.300 Goods - Agriculture 80-84 1.200 Goods - Chemicals 75-79 Goods - Other 70-74 1.100 Services 65-69 1.000 60-64 900 55-59 +12.7% 50-54 800 45-49 700 40-44 600 35-39 30-34 500 25-29 400 20-24 300 15-19 +15.9% 10-14 200 5-9 100 0-4 0 12 10 8 6 4 2 0 0 2 4 6 8 10 12 2000 2005 2010 2013 A continuous flow of new investments in oil, gas and petrochemical projects signals a strong desire to create downstream infrastructure, adding value to natural resources locally and jobs for the young population on the back of availability of cheap feedstock and ample funds to invest.
Left chart data source: US census bureau database, October 2014. Right chart data source: World Trade Organization (WTO) database, November 2014
6 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
ECONOMIC OUTLOOK & DRIVERS CONTINUOUS FLOW OF INVESTMENTS NOT DISTURBED BY LOCAL TENSIONS
Middle East economic developments & drivers
• Positive economic developments and diversification • Oil revenues • Energy and feedstock supplier of Europe and Asia • Political instability and security issues
Projects planned Q4 2014 with a value of US$ 254 billion
100.000 TRANSPORT 80.000 POWER
60.000 OIL INDUSTRIAL 40.000 GAS CONSTRUCTION 20.000 CHEMICAL 0 KSA IRAN UAE IRAQ QATAR KUWAIT OMAN Source: MEED, Vopak intelligence
7 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
POLITICAL DEVELOPMENTS & DECISION-MAKERS ROYAL FAMILIES BUILT ON THE TRIBAL SYSTEM
Middle East decision making • Royal families • House of Saud (KSA) • House of Nahyan (Emirates) • House of Sabah (Kuwait) • House of Khalifa (Bahrain) • House of Thani (Qatar) • House of Said (Oman) • Tribal leaders • National oil & chemical companies
Gulf cooperation council • Established in 1981 with the objective to create amongst others a regional economic market and strengthen relations to achieve unity between member states
8 CMD 2014 INCREASING FLOWS
Fujairah, UAE REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
THE INCREDIBLE SUCCES STORY OF A REGION THAT PUT ITSELF ON THE MAP WITHIN A CENTURY
Largest chemical exporter in the world?
2030 Downstream integration
First 2015 independent storage terminals 2010 Chemical production 1980 First refineries
Export crude 1950
1900
10 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
MIDDLE EAST CENTER OF GRAVITY WITH SIGNIFICANTLY LARGE PRODUCT RESERVES IN THE KSA AND IRAN
Regional distribution of proven oil & gas reserves Global share of proven oil reserves in %
MIDDLE EAST 8%2% 9% S. & CENT. AMERICA 238,2 k NORTH AMERICA 14% Million 48% Tons EUROPE & EURASIA AFRICA 19% ASIA PACIFIC
Global share of proven gas reserves in %
6%4% MIDDLE EAST 8% EUROPE & EURASIA 185,7 8% Trillion 43% ASIA PACIFIC Cubic Meters AFRICA
Oil in k million ton 31% NORTH AMERICA Gas in k trillion cbm S. & CENT. AMERICA
Source: BP Statistical Review of World Energy 2014
11 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
MIDDLE EAST REFINING CAPACITY EXPANDING
AND UPGRADING TO MEET HIGH VALUE SPECIFICATIONS
Middle East refinery market, 2014 Refining capacity per country • 46 refineries In 1,000x barrels per day (2014 - 2020) • 7.7 million barrels per day
• 10% of global refining capacity 3.400 • 90% owned by NOC’s 3.200 Refining capacity 3.000 Additions • Expansions & upgrades to add 2.5 million barrels per day 2.800 Upgrades • New marketing companies 2.600 2.400 Refining capacity per # units (2014 - 2020) 2.200 2.000 25 1.800 Current refineries # 1.600 20 Additions # 1.400 Upgrades # 1.200 15 1.000 800 10 600 5 400 200 0 0 Iraq Iran UAE KSA Kuwait Oman Qatar Yemen Bahrain -200 KSA Iran Iraq Kuwait UAE Qatar Bahrein Oman Yemen Data source: wood Mackenzie, October 2014
12 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS GROWTH CAPACITY FOR LOCAL DEMAND
YET 9% GROWTH IN EXPORT EXPECTED MAINLY IN MIDDLE DISTILLATES
Middle East refined product exports Export of products to grow 9% in 2015 (in Mtons)
• 129 million tons exports in 2013 180 1% 2% -1% 1% • 66% of exports leave the gulf 5% 160 9% • Regional trade driven by fuel oil 6% 0% • Increase of middle distillates exports >2015 140 120 Naphtha 100 Jet / Kero Destinations Middle East output in 2013 80 Gasoline Gasoil 34% Asia 60 Africa Fuel Oil 47% 40 Europe & Med Americas 20 Middle East 0% - 12% 2010 2013 2014 2015 2016 2017 2018 2019 2020 7%
Source: Middle East petroleum databook, October 2014, FGE
13 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
IMPACT OIL PRICE ON BUDGETS NATIONAL BUDGETS MAY TURN DEFICIT
Government budgets’ break-even oil price (2014)
140 US $ per barrel
Iran
130 DEFICIT Bahrein
120
Iraq 110
100
Brent crude oil price US $ per barrel 90 Saudi Arabia
80
SURPLUS Oman 70 Kuwait Qatar
UAE
60 2013 2014 Data source: US energy information administration (EIA), November 2014; The Economist, October 2014
14 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
MIDDLE EAST PRODUCES 136M TONS CHEMICALS KSA HAS 55% SHARE OF MIDDLE EAST LIQUID EXPORTS IN 2014
Middle East chemical market 2014 Middle East liquid exports to grow by 32% in Ktons • 32 steam crackers • 19% global capacity • Main destination Asia • 80% owned by NOC/NCC’s
• 2 new crackers on naphtha 60.000 • Sabic OTC • New marketing companies 50.000 Bahrain UAE Middle East chemical production capacity in Ktons 40.000 Kuwait Oman 200.000 Qatar 30.000 Iran 150.000 ME Liquid Export KSA 20.000 ME Liquid 100.000 Integrated
ME Non- 10.000 50.000 Liquid Production
0 0 2014 2020 2014 2020 Source: ICIS database, & VME assessment
15 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
KEY CHEMICAL PROJECTS UNTIL 2020 WILL MAINLY HAPPEN IN SAUDI ARABIA
Middle East key chemical projects 1. Sadara, Jubail 2. Sabic Expansions, Jubail 3. Petro Rabigh II, Rabigh 4. Al Karaana, Qatar 5. Chemaweyaat, Ruwais 6. Aramco, Jizan 7. ORPIC, Sohar
8. Sabic oil-to-chemicals, Yanbu
9. Various in Iran
- Bulk & intermediate chemical exports 2013 - Potential chemical exports >2016 - Ref: jubail 2013 is ~60mio tons total
- Chemical imports 2013 ex ME - Potential chemical imports >2016 ex ME - Regional distribution Source: Vopak intelligence
16 CMD 2014 MIDDLE EAST AND VOPAK
Fujairah, UAE REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS VOPAK ROLE IN THE MIDDLE EAST HUB AND INDUSTRIAL TERMINALS
Hub terminals Gasses Distribution terminals CmdIndustrial 2014 terminals
Major hubs, Terminals facilitating Import distribution Industrial and supporting growth in global gas terminals in major chemicals terminals, intercontinental markets markets with structural in the Americas, the products flows deficits Middle East and Asia
18 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS KEY ACCOUNT MANAGEMENT LEVERAGING THE NETWORK
Vopak in the Middle East • Vopak maintains regular contact with all National Oil Companies and National Chemical Companies in the region
Account management
• Network connection
• Ease of business
• Joint development of supply chains
• Product studies
• Aim to facilitate storage at origin and destination
19 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
EXAMPLE: MARKETING + ACCOUNT MANAGEMENT MEG WITH MIDDLE EAST ORIGIN AT MORE THAN HALF OF OUR TERMINALS
Sabtank – Al Jubail
Others 114 31%
Middle East 259KT Middle Others 69% Others East 184 37 9% 197KT 48% 52%
Middle East 369KT 91%
Sabtank - Yanbu
Middle East 271KT 38%
Middle Others East 437 43KT 62% 100%
MEG export terminal
MEG import terminal ex Middle East
MEG import terminal ex Other
NOTES: WE ARE ONLY ACTING AS OPERATOR IN SABTANK TERMINALS WHERE VOPAK HAS A 10% INTEREST IN A JOINT SERVICE COMPANY. THIS REPRESENTS 2013 VOPAK STORAGE IN KT.
20 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS COMPETITION IN THE CHEMICAL MARKET IS MAINLY ESTABLISHED IN THE FREE ZONES OF THE UAE
Chemical storage capacity Arabian Gulf & Oman 294kcbm of independent storage capacity in 2014 (excl Ruwais & Qatar)
400.000 2.500.000 Solvochem Third Coast 350.000 Third Coast
Solvochem 300.000 Exir Iran
250.000 Oiltanking Odfjell Oiltanking Odfjell Terminals & Co Star Energy 2.000.000 200.000 Terminals & Co Oiltanking Petrochem Dow Jebel Ali 150.000 Terminal Petrochem 100.000 Sasol Horizon Jebel Ali 50.000 Chem Terminals 1.500.000 ACT Star Energy - Oiltanking 2013 2014 2015 2016 2017 2018 2019 2020 PCQ2 Multi Purpose Shell Jebel Ali Chemicals New built capacity needed Terminal Petrochem From 2016 onwards (rotation 6) 1.000.000 100.000 Base case market storage demand (3.5%) Petrochem 80.000 Best case market storage demand (5%) Worst case market storage demand (2%) Horizon Jebel Ali 60.000 Chem Terminals 40.000 500.000 ACT
20.000 PCQ2 CBM- 2013 2014 2015 2016 2017 2018 2019 2020 Sabtank Jubail (20.000) - 2013 2014 2015 2016 2017 2018 2019 2020 (40.000)
Source: Vopak intelligence
21 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS JOINT VENTURE AND PARTNERSHIPS WITH THREE TERMINALS ALREADY SUCCESSFULLY OPERATIONAL
Vopak in KSA
• Vopak and Sabic are JV partners in the operating company Sabtank Jubail and Sabtank Yanbu • Vopak and Sabic are JV partners in the Jubail terminal expansion of PCQ2
Vopak in UAE
• Vopak, Horizon, Fujairah government and Kuwait Independent Petroleum Group are JV partners in the VHFL terminal in Fujairah
22 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS EXAMPLE: PCQ2 - INDUSTRIAL TERMINAL LONG TERM PARTNERSHIP WITH SABIC SINCE 1995
SASREF Chemicals PCQ1 (refined products)
41
Chemicals PCQ 2
29 42 52 31 28
34 36 43 Aramco
21 Sulphur 32 53 Chemicals PCQ 1 Chemicals Fertilizers 27 22 26 33 35 37 44 23 Iron Ore 24 25
23 CMD 2014 REGION INCREASING MIDDLE EAST AND QUESTIONS AND AT A GLANCE FLOWS VOPAK ANSWERS
SUMMARY
Job and value creation driving investments in the region
• Growing population leads to increasing demand for energy and jobs • Proximity to high growth export markets • World class infrastructure and economies of scale
Higher integration of refinery and downstream clusters with focus on specialty chemical production
• Additional oil and diversified chemical production leads to increased global export
Vopak well positioned in partnerships with Middle East oil & chemical companies • Through local presence, global network and account management Vopak has potential to grow in the hub location and industrial terminalling
24 CMD 2014 QUESTIONS AND ANSWERS
Global SHE Day, Sabtank We have built our company over 400 years on trust and reliability
Royal Vopak I Westerlaan 10 I 3016 CK Rotterdam I The Netherlands I Tel: +31 10 400 2911 I Fax: +31 10 413 9829 I www.vopak.com