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18-20 November 2006

Saudi Energy Forum. 18-20 November 2006. SIPCHEM OLEFINS & DERIVATIVES COMPLEX. a Snapshot. Future. BDO Start-up,. Integrated Olefins Complex Start-up. Acetyl Complex Start-up. Methanol Start-up. IPO. Ammonia Start-up. Company Incorporated. By 2011 Sipchem will invest ~ $ 10 billion.

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18-20 November 2006

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  1. Saudi Energy Forum 18-20 November 2006 SIPCHEM OLEFINS & DERIVATIVES COMPLEX

  2. a Snapshot.. Future BDO Start-up, Integrated Olefins Complex Start-up Acetyl Complex Start-up Methanol Start-up IPO Ammonia Start-up Company Incorporated By 2011 Sipchem will invest ~ $ 10 billion

  3. Phase I & II Current Projects • Methanol • Butanediol & THF • Carbon Monoxide • Acetic Acid & Acetic Anhydride • Vinyl Acetate Monomer

  4. Current Projects • Methanol and BDO Plants are operating at full capacity (total production : 1.05 Million TPY) • Downstream integration from Methanol to Acetyl Chain • Acetyl Chain : CO, Acetic Acid & VAM due for start up end 2008 (production : 1.14 Million TPY) – approx. 50% captive and local use • By 2010, approx 50% of our methanol production will be “captive” used in downstream productions • Target markets: Saudi Arabia, Asia and Europe : exports dropping from 90% to 50% - maximizing local & captive use.

  5. Phase III Olefins & Derivatives Complex • Grass Root Project • more than 15 World Scale Plants • ~ US$ 7.0 Billion (+) Investments • first in Jubail 2

  6. Integrated Olefins Complex • Ethane and Propane feedstock allocated contingent on meeting set targets and milestones with MINPET. • ~1.3 MMTPA Cracker • Total of 18 products including 6 products chains • Full integration in other added value downstream products • Massive investment program of ~ US$ 7.0 Billion + (estimate) • Involvement of International Companies in JV & Product Offtake • State of Art Technologies • Start Up 2011

  7. Forward Integration.. Value Added Downstream Chemicals & Performance Products Polymers Bimodal HDPE (butene1) PP (ICP E/P Rubber based) EVA / LDPE (~ 800 KTA) Methyl Methacrylate (MMA) Acrylonitrile Sodium Cyanide Polyacetal / PMMA EVOH / PVOH / PVB (~650 KTA) Acrylic Fibers (PAN based) Carbon Fibers (PAN Based) Films Finished Products (~150 KTA) Cracker Ethylene & Propylene (~1.3 MMTPA) Maximizing local conversion

  8. Maximum Integration Phase 1 Phase 2 Phase 3 H2 MMA CO Methanol H2 Ammonia Acetic Acid BDO ACN VAM EVA Polyolefins Downstream

  9. Key Partners (co-signatories to the feedstock allocation letter) • Mitsui & Co., Japan • DuPont , USA • Lucite, UK • Others: in progress

  10. Gulf Petchem Capacities by 2011 (Primary ProductsProduced by Sipchem)

  11. Status • Industrial Licenses have been obtained • Significant progress in technologies selection, JV participation and offtake with five international companies • Selected Financial & Legal Advisors – actively determining Optimal Capital Structure for the complex • Awarded PMC Contract for the project – completing detailed study and projects definitions

  12. Investment Plans • Sipchem will form a New Public Co. (IPO) to own the Complex (50% Sipchem, 50% Public) • Primary Products & Specialties will be set up in partnership with reputable foreign companies. • Downstream & finished products will be set up in partnership with experienced local and international partners

  13. Project Financing • Required Funding (preliminary estimate) : ~ US$ 7.0 Billion + • Gearing : 70/30 • Equity : ~ US$ 2.1 Billion • Debts : ~ US$ 4.9 Billion (SIDF, PIF, ECA & Banks)

  14. Benefits of Integration • Value Added Products – some with better margins • Opportunity to expand business value chain • Creation of more job opportunities • Optimization of Shared Services • Feedstock Cost Competitiveness - across the fence transfer • Import of high niche technologies in Kingdom • Enhancing the Kingdom’s Export Portfolio with specialty products

  15. Employee Plant Capacity per KTA $ mil. Inv. Cracker & Polymers 2,065 0.22 Chemicals & Performance 1,320 0.33 Products Films and other products 138 0.92 Overall 3,523 0.33 Jobs Creation!

  16. Challenges • Complex Project Structure • High Capital Investment • Involvement of Multiple Parties • Complex Execution & Financing • Access to Specialty know how and markets • Complete Integration to finished products • Loss of focus on core business • Impact on the growth of Saudi Petchem Industry

  17. Sipchem in 2011 • will position itself strongly in the market with: • Over 5 million tons per year production • Over US$ 10.0 billion total investments • Over US$ 3.7 billion of revenues • 3,000 employees • 20 technologies employed • Numerous opportunities for local conversion industries • A preferred Company by: customers, employment, community and investors

  18. Thank you

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