Global developments, European Challenges

1. Global developments, European Challenges February 1, 2005 Huub Meessen SABIC EuroPetrochemicals B.V. Shaping Success

2. Chemical industry in Europe is yet again at a cross road There is no security on this earth, there is only opportunity Douglas MacArthur

3. Contents • Competitive pressures in Europe • Competitive pressures in Europe • SABIC strategy

4. Europe N. Am. Asia ME S. Am. Middle East and Asia determine the global game Global PE demand from 61 mln tons in 2004 to 76 mln tons in 2009 • 2/3 of the global capacity expansions center around the Middle East and Asia Pacific • Asian demand growth is approximately half of the global growth • ME can supply to Asia and Europe (and lands at lowest cost) • Americas and Europe increasingly local for local

5. Market Share of imports in WE 35% 30% 25% LDPE 20% LLDPE HDPE 15% 10% 5% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Imports will take most of WE market growth • Imports will claim market shares of more than 20% in PE by 2009 • Share of ME in imports raises from 50% today to over 75% in 2009

6. PE delivered Cost and Price curve development Delivered cost Price Some specialties will remain Non feasible small and old assets that will be scrapped or replaced EUR/ton WE cost leader capacity will increase Middle east imports will increase 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cumulative volume European Producers need to scrap and very selectively build (1)

7. Plant age versus total Polyethylene capacity in Europe 45 LDPE 40 HDPE 35 LLDPE 30 Average line size development in Europe Plant age (yrs) 25 50% oldest capacity 20 50% newest capacity Typical line size for new plant 15 LDPE 10 5 0 HDPE 0 1000 2000 3000 4000 5000 6000 7000 8000 Total installed capacity in Europe (kta) LLDPE LDPE: 27 yrs HDPE: 20 yrs LLDPE: 10 yrs 50 % of capacity is older than 0 100 200 300 400 Average line size in kta European Producers need to scrap and very selectively build (2)

8. 1600 1400 1200 1000 Polyolefine price in EUR/ton 800 600 Historical range 400 Medium range 200 Peak values 0 0 20 40 60 Oil price in $/bll Value Chain needs to absorb structural increased price levels (1) Oil and Naphtha determine WE integrated cost position OPEC can no longer control price within preferred range A paradigm shift in pricing is logical consequence Historical rangeMedium range Peak values Oil ($/bll) 15 - 25 25 – 45 > 45 AVG PE/PP (EUR/t) 500 - 1000 800 – 1300 1000 - 1500 Price levels will fluctuate between 800 and 1300 Euro/t

9. Injection moulding Extrusion coating Extrusion PE-film Extrusion Pipes Blow moulding Value Chain needs to absorb structural increased price levels (2) PE is serving a wide variety of markets, adding a lot of value at low cost per consumer West-European consumers use approximately 35 kg of PE per capita per year WE consumers will be faced with only 10 euro higher cost per year when PE prices become 300 euro/ton higher

10. Contents • Competitive pressures in Europe • Competitive pressures in Europe • SABIC strategy

11. SABIC global ambition • Become one of the top 5 global petrochemical companies in 2015 • Increase sales to 30 billion USD by 2015 • Polyolefins are major contributor to turn-over • Grow faster in polyolefins than the market • Leverage SABIC’s unique cost position in KSA

12. SABIC’s new European Head Office is under construction SABIC strategy for Europe: think global, act local • Within our global strategy of expansion and the European context, we will: • Complete Best in Class manufacturing sites • Build on formidable cost position in Middle East • Use SABIC’s unique complementary strengths

13. EurOPE1: European Olefins and Polyolefins Expansion 1. Expansion of cracker in Geleen 2. World-scale LDPE tubular line based on SABTEC technology 3. World-scale PP plant 4. State-of-the-art bimodal HDPE plant SABIC EPC already has excellent cost position.

14. European polyolefin sales 2.000 Polyolefin capacities per site 6 1.500 5 PE PP 4 1.000 3 ktons per site Mln tons per year 2 500 1 0 0 BP BP Basell EPC Dow Dow EPC SABIC Exxon Mobil Basell SABIC Repsol Mobil Polimeri Repsol Borealis Borealis Exxon Polimeri after after EurOPE1 Total PC EurOPE1 Total PC 250 Average polyolefin line size 200 150 ktons per line 100 50 0 BP Dow EPC Basell SABIC Exxon Mobil Repsol after Polimeri EurOPE1 Total PC Borealis EurOPE1 will bring SABIC EPC to undisputed cost leadership • SABIC EPC ranking after EurOPE1 • the 2nd largest seller in Europe • the largest average line size • the largest capacity per site

15. Focal area European assets Manufacturing center Vast Gas reserves SABIC’s coverage of Europe

16. Conclusions • Middle East and Asia determine the global game • By 2009 imports will take more than 20% of the WE market; • approx. 75% will come from the ME • Producers need to scrap and very selectively build in Europe • tremendous amount of scrap potential • cost leaders annually beat inflation • The Value Chain needs to adapt to structural increased price levels • it’s not expected that oil prices will fall back to historical range • SABIC is ready for the future !

17. Sharing our futures Thank you