The Industrial Gas Sector in the Middle East a regional overview Marcus Jakt 4th Middle East Industrial Gases Conference Dubai, UAE December 3-5, 2013 gasworld Business Intelligence Providing added insight and in-depth analysis: • Country and regional profiles • Financial performance • BI Online High value business information for the industry at an affordable cost Global Gases Market Valued at $74.1 Billion in 2012 Africa Middle East South Pacific 2% 3% Rim 6% North America 27% North Pacific Rim 24% South America 6% Indian sub- continent 2% Eastern Europe Western Europe 5% 25% Middle East Gases Market Valued at $2 Billion in 2012 Iraq 2% Others Saudi Arabia Oman 15% 29% 3% Qatar 5% Kuwait 5% Iran UAE 12% Turkey 15% 14% Middle East Gases Market Valued at $2 Billion in 2012 Delvar Afzar Gulf Cryo 5% Linde 5% Habas 17% 5% Air Liquide 7% NIGC Praxair 20% 4% Air Products 3% Abdullah Messer 1% Hashim Others 3% 30% Middle East Gases Market Valued at $2 Billion in 2012 OSP 11% Bulk 6% Packaged 11% Other 1% Captive 71% Note: if Captive Market added to total revenues, market size increases to ~$7 Billion in 2012 Middle East Revenue evolution & forecast 2000-2020 Gas Market Growth and Forecast, 2000-2020 4500 4000 3500 3000 Macro Economic 2500 Forecast $m 2000 Gas Intensity Forecast 1500 1000 500 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 between +6.1% p.a (low) to +9.3% p.a. (high) in 2012-2020 timeframe Turkey Gases Market Valued at $294 million in 2012 Air Liquide Others 4% 7% Messer Habas 10% 36% Linde 43% Turkey Gas Market Growth and Forecast by end-use sector 2000-2020 600.0 500.0 Others Glass 400.0 Healthcare Pulp & Paper 300.0 Electronics $m Food Gen Manufacturing 200.0 Metallurgy Refining & Energy 100.0 Chemicals - 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 between +6.7% p.a (low) to +8.8% p.a. (high) in 2012-2020 timeframe Turkey • IG market recorded impressive CAGR of 12.8% p.a. in 2002- 2012 timeframe • Deregulated, competitive economy increasingly driven by medium-to-heavy industry and service sector • Significant automotive, construction, and electronics industries active within the country • Large potential for further contracts related to captive- to-onsite conversion – AL has started the ball rolling Lebanon Gases Market Valued at $23 million in 2012 Others 14% SOAL/Air Liquide 40% Chehab Industrial & Medical Gas 46% Lebanon Gas Market Growth and Forecast by end-use sector 2000-2020 40.0 35.0 Others 30.0 Glass Healthcare 25.0 Pulp & Paper 20.0 Electronics $m Food 15.0 Gen Manufacturing Metallurgy 10.0 Refining & Energy 5.0 Chemicals - 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 between +4.5% p.a (low) to +7.1% p.a. (high) in 2012-2020 timeframe Lebanon • Relatively large healthcare sector – accounts for more than 25% of total IG revenues • Not much in the way of heavy industry. Predominantly a merchant market (bulk & packaged) & also import/export hub for N2O and special gases • Limited indigenous gas production capacity – currently only one operational merchant ASU (Chehab, 80 tpd) • AL suffering as a result of relying on ASU capacity in Syria (onsite/merchant ASU near Damascus). This has led to shortages and loss of market share Jordan Gases Market Valued at $25 million in 2012 Others RUM Gases 6% 8% Jordan Gases Middle East 46% Gases/ National Industrial Gas 40% Jordan Gas Market Growth and Forecast by end-use sector 2000-2020 40.0 35.0 Others 30.0 Glass Healthcare 25.0 Pulp & Paper 20.0 Electronics $m Food 15.0 Gen Manufacturing Metallurgy 10.0 Refining & Energy 5.0 Chemicals - 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 between +4.4% p.a (low) to +5.5% p.a. (high) in 2012-2020 timeframe Jordan • Market centred around supply of medical gases (mainly LOX) and cutting & welding gases for light manufacturing activities • Relative lack of heavy industries means limited scope for any tonnage business • Higher electricity pricing (due to subsidies being eliminated) has led to much lower capacity utilisation – and extensive imports from Kuwait and Saudi • CO2 is by and large also imported, mainly from Egypt and/or Saudi Saudi Arabia Gases Market Valued at $595 million in 2012 Riyadh Others Abdullah Oxygen 2% Hashim 2% 12% Linde/SIGAS 9% Air Liquide Al Khafrah Industrial Gases NIGC 6% 69% Saudi Arabia Gas Market Growth and Forecast by end-use sector 2000-2020 1,400.0 1,200.0 Others Glass 1,000.0 Healthcare 800.0 Pulp & Paper Electronics $m 600.0 Food Manufacturing 400.0 Metallurgy Refining 200.0 Chemicals - 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 between +6.7% p.a (low) to +10.8% p.a. (high) in 2012-2020 timeframe Saudi Arabia • Largest IG market in the Middle East – largely thanks to large downstream chemical and petrochemical sector. Industry also boosted by relatively low energy costs • Onsite trade historically ‘reserved’ for NIGC – but AL’s recent large onsite hydrogen contract for 300,000 3 Nm /hr of H2 at Yanbu alters this dynamic significantly • Linde/SIGAS and Air Products/Abdullah Hashim no doubt ‘waiting in the wings’ for similar projects • Growing industrial gas demand driven by continued expansion in petrochemical/chemical sector and state- encouraged efforts to diversify into other industries Yemen Gases Market Valued at $17 million in 2012 AGL 38% IYGC 39% Yemen BIT YEC 8% 15% Yemen Gas Market Growth and Forecast by end-use sector 2000-2020 35.0 30.0 Others Glass 25.0 Healthcare 20.0 Pulp & Paper Electronics $m 15.0 Food Gen Manufacturing 10.0 Metallurgy Refining & Energy 5.0 Chemicals - 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 between +6.1% p.a (low) to +9% p.a. (high) in 2012-2020 timeframe Yemen • Small market with limited business opportunities: little industrial activity, sometimes politically volatile backdrop • Nonetheless quite impressive growth registered during last decade (but from a low base) • Demand mainly driven by cutting & welding as well as medical requirements, but also some bulk gas in support of metallurgical and petrochemical industries • Possible future driver for demand: shale oil extraction. Some of Yemen’s geology may be suitable for such operations Oman Gases Market Valued at $58 million in 2012 National Gulf Oman Ind. Cryo Gases 2% 4% Muscat Man. ALSIG 21% 21% Ajwaa Gases 10% Al Wid M H Darwish Trading 34% 4% Bin Saloom 4% Oman Gas Market Growth and Forecast by end-use sector 2000-2020 140.0 120.0 Others Glass 100.0 Healthcare 80.0 Pulp & Paper Electronics $m 60.0 Food Manufacturing 40.0 Metallurgy Refining 20.0 Chemicals - 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 between +6.9% p.a (low) to +10.7% p.a. (high) in 2012-2020 timeframe Oman • Demand boosted by increase in construction activity related to new oil and gas processing plants in Sohar • ALSIG onsite plants operational since 2006 for petrochemical clients, AP/Abdullah Hashim onsite plants for steel client since 2012 • Authorities recognise importance of diversifying economy beyond oil sector • Going forward, IG revenues should benefit from development of steel and manufacturing activities UAE Gases Market Valued at $303 million in 2012 Others AP/ Ajwaa 2% 1% Arabian Industrial Gas 12% ROC Praxair (ex-EIG) Elixier (Linde/ 18% ADNOC JV) 53% AL/PHG 4% Gulf Sharjah Industrial Gas 3% 7% UAE Gas Market Growth and Forecast by end-use sector 2000-2020 700.0 600.0 Others Glass 500.0 Healthcare 400.0 Pulp & Paper Electronics $m 300.0 Food Manufacturing 200.0 Metallurgy Refining 100.0 Chemicals - 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 between +6.4% p.a (low) to +11% p.a. (high) in 2012-2020 timeframe UAE • Elixier EOR project has been main driver for recent growth surge: 2012 revenues up more than +108% on 2010 • Beyond hydrocarbon economy, substantial steel, glass and aluminium industries (in part to support Dubai- centric construction activities) • Substantial scope for further supply scheme business – good captive-to-onsite conversion potential remains • Elixier something of a one-off in terms of scale but nonetheless expect continued good demand growth across most end-user categories Qatar Gases Market Valued at $98 million in 2012 Qatar Oxygen Others 4% 2% NIGP 32% Air Liquide JV 45% Buzwair 17% Qatar Gas Market Growth and Forecast by end-use sector 2000-2020 250.0 200.0 Others Glass Healthcare 150.0 Pulp & Paper Electronics $m Food 100.0 Manufacturing Metallurgy 50.0 Refining Chemicals - 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 between +8.1% p.a (low) to +11.7% p.a. (high) in 2012-2020 timeframe Qatar • IG revenues predominantly from oil & gas sector currently – but expect some upside in steel and construction sectors also from Qatar 2022 World Cup event (though this not evident yet) • Good onsite activity thanks to GASAL’s supply contracts with Oryx GTL and Qatar Steel • However, much higher volumes of oxygen produced for Pearl GTL – though this was a sale-of-equipment rather than sale-of-gas project • Qatar Helium II Refining Facility operational as of mid- 2013 – tripling nominal capacity from 17.4m Nm3/year to 52.2m Nm3/year Bahrain Gases Market Valued at $25 million in 2012 Others 4% BMIG ROC Praxair 27% 15% Gulf Cryo 2% Yateem Oxygen 52% Bahrain Gas Market Growth and Forecast by end-use sector 2000-2020 50.0 45.0 40.0 Others Glass 35.0 Healthcare 30.0 Pulp & Paper 25.0 Electronics $m Food 20.0 Manufacturing 15.0 Metallurgy 10.0 Refining Chemicals 5.0 - 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 between +5.4% p.a (low) to +7.4% p.a.