The Q113 Algeria Petrochemicals Report examines how new government legislation has made the
country''s petrochemicals market more attractive to investors and international oil companies (IOC) alike.
However, it also warns that the gloomy global economic climate has had a negative impact on the US and
European economies, with an inevitable impact on demand for Algerian petrochemicals. This report
considers Algeria’s search for new petrochemicals markets and warns that the country faces tough
competition from strong Middle Eastern and new Asian industries, as it looks to emerging markets and
developing economies to generate business.
Furthermore, BMI explores the opportunities for long-term growth which emanate from the automotive
and construction sectors – both domestically and elsewhere in Sub-Saharan Africa (SSA). The impact of a
potential decline in oil and gas resources on domestic consumption and hydrocarbons imports is also
addressed.
The recent government announcement concerning an increase in the state-owned Oil and Gas company
Sonatrach’s investment budget will also be considered, as it will not only result in a number of
exploration and production (E&P) ventures with foreign companies and investors, seeking to capitalise on
Algeria’s 600 trillion cubic feet of unconventional and shale gas reserves, but will also have an impact on
the petrochemicals industry further downstream, not least because these could hold the ethane resources
necessary to power new cracker capacity.
The start-up of the 1mn tpa methanol complex, which was planned by Sonatrach and is being built by a
consortium of companies led by Kuwait’s Qurain Petrochemical Industries Company (QPIC), is still
suffering delays, and is not expected to enter production until 2014 due to Sonatrach being restructured.
With 1.1mn tonnes per annum (tpa) of ethylene production capacity, integrated downstream plants and
low labour costs, the US$3bn petrochemical complex at Arzew should be more economical than smaller
and often isolated European facilities.
Over the last quarter, BMI has revised the following forecasts/views:
Delays in current projects indicate that the realisation of the country’s full potential in
petrochemicals is unlikely over the forecast period. These delays will not only raise costs and
reduce margins in the long term, they will create a more opaque business environment that will
undermine progress and put the industry’s significant cost advantages – in terms of domestic
natural gas feedstock availability – at risk.
Algeria Petrochemicals Report Q1 2013
© Business Monitor International Ltd Page 6
New government incentives that are being used to kick-start an automotives production industry
in Algeria could have an extremely beneficial effect on related petrochemicals consumption.
Similarly, a number of new construction and transport infrastructure projects, including a
highway, tram extensions, a port and the world''s third largest mosque, will have an equally
marked impact on domestic demand, particularly for those petrochemicals used in construction,
such as poly vinyl chloride (PVC).
The closing of the Skikda complex during H212 has not noticeably affected the Algerian
petrochemicals market, mainly because production was raised and then stockpiled prior to the
closure. It is due to re-open this quarter and production should resume as normal.
The change in government tax legislation makes foreign investment and partnerships in the
hydrocarbons industry more likely in the future. The former law established an ''exceptional
profits tax'' to be levied at rates of 5-50% on the full value of foreign companies'' gross Algerian
average daily oil production volumes for each calendar month in which Brent crude averaged
more than US$30 per barrel (bbl). This resulted in huge tax expenses and subsequent lawsuits
from angry foreign oil companies. This is no longer in effect and so foreign interest should grow
accordingly.
If reports of a government allocation of US$14bn to build three new fertiliser plants, with a
capacity of 35mn tpa, by 2020 are correct, then BMI believes that this could take care of all
domestic demand and still leave sizeable amounts for export.
Overall, the petrochemicals market will undergo a period of massive change over the next decade as
unconventional shale and gas reserves are produced which will dynamics at play within the market. Given
the vast reserves thought to be available in Algeria, the impact of these hydrocarbons resources cannot be
underestimated.
Algeria Petrochemicals Industry 2013
country''s petrochemicals market more attractive to investors and international oil companies (IOC) alike.
However, it also warns that the gloomy global economic climate has had a negative impact on the US and
European economies, with an inevitable impact on demand for Algerian petrochemicals. This report
considers Algeria’s search for new petrochemicals markets and warns that the country faces tough
competition from strong Middle Eastern and new Asian industries, as it looks to emerging markets and
developing economies to generate business.
Furthermore, BMI explores the opportunities for long-term growth which emanate from the automotive
and construction sectors – both domestically and elsewhere in Sub-Saharan Africa (SSA). The impact of a
potential decline in oil and gas resources on domestic consumption and hydrocarbons imports is also
addressed.
The recent government announcement concerning an increase in the state-owned Oil and Gas company
Sonatrach’s investment budget will also be considered, as it will not only result in a number of
exploration and production (E&P) ventures with foreign companies and investors, seeking to capitalise on
Algeria’s 600 trillion cubic feet of unconventional and shale gas reserves, but will also have an impact on
the petrochemicals industry further downstream, not least because these could hold the ethane resources
necessary to power new cracker capacity.
The start-up of the 1mn tpa methanol complex, which was planned by Sonatrach and is being built by a
consortium of companies led by Kuwait’s Qurain Petrochemical Industries Company (QPIC), is still
suffering delays, and is not expected to enter production until 2014 due to Sonatrach being restructured.
With 1.1mn tonnes per annum (tpa) of ethylene production capacity, integrated downstream plants and
low labour costs, the US$3bn petrochemical complex at Arzew should be more economical than smaller
and often isolated European facilities.
Over the last quarter, BMI has revised the following forecasts/views:
Delays in current projects indicate that the realisation of the country’s full potential in
petrochemicals is unlikely over the forecast period. These delays will not only raise costs and
reduce margins in the long term, they will create a more opaque business environment that will
undermine progress and put the industry’s significant cost advantages – in terms of domestic
natural gas feedstock availability – at risk.
Algeria Petrochemicals Report Q1 2013
© Business Monitor International Ltd Page 6
New government incentives that are being used to kick-start an automotives production industry
in Algeria could have an extremely beneficial effect on related petrochemicals consumption.
Similarly, a number of new construction and transport infrastructure projects, including a
highway, tram extensions, a port and the world''s third largest mosque, will have an equally
marked impact on domestic demand, particularly for those petrochemicals used in construction,
such as poly vinyl chloride (PVC).
The closing of the Skikda complex during H212 has not noticeably affected the Algerian
petrochemicals market, mainly because production was raised and then stockpiled prior to the
closure. It is due to re-open this quarter and production should resume as normal.
The change in government tax legislation makes foreign investment and partnerships in the
hydrocarbons industry more likely in the future. The former law established an ''exceptional
profits tax'' to be levied at rates of 5-50% on the full value of foreign companies'' gross Algerian
average daily oil production volumes for each calendar month in which Brent crude averaged
more than US$30 per barrel (bbl). This resulted in huge tax expenses and subsequent lawsuits
from angry foreign oil companies. This is no longer in effect and so foreign interest should grow
accordingly.
If reports of a government allocation of US$14bn to build three new fertiliser plants, with a
capacity of 35mn tpa, by 2020 are correct, then BMI believes that this could take care of all
domestic demand and still leave sizeable amounts for export.
Overall, the petrochemicals market will undergo a period of massive change over the next decade as
unconventional shale and gas reserves are produced which will dynamics at play within the market. Given
the vast reserves thought to be available in Algeria, the impact of these hydrocarbons resources cannot be
underestimated.
Algeria Petrochemicals Industry 2013
Published: October 2012 No. of Pages: 61 Price: US $ 1175
Table of Contents
Executive Summary 5
SWOT Analysis 7
Algeria Petrochemicals Industry SWOT ... 7
Algeria Political SWOT 8
Algeria Economic SWOT .. 8
Global Petrochemicals Overview . 10
Global Oil Products Price Outlook ... 14
Table: BMI''s Refined Products Forecasts ... 15
Table: Middle East Outperforms In Terms of Passenger Growth 19
Africa Regional Overview .. 24
Table: Africa’s Gas Reserves, 2012 (bcm) .. 24
Table: Africa’s Oil Reserves, 2012 (bn bbl) 24
Table: Africa’s Cracker Capacity, 2011-2017 (’000 tpa) ... 27
Algeria Market Overview... 28
Market Structure . 29
Table: Algeria Cracker Capacity, 2009-2016 (‘000 tpa) 32
Industry Trends And Developments 33
Upstream 33
Olefins And Polyolefin 35
Table: Petrochemical Capacity At The Planned Arzew Complex 36
Methanol . 38
Fertiliser . 38
Petrochemicals Risk/Reward Ratings .. 40
Middle East and Africa Regional Petrochemicals Risk/Reward Ratings ... 40
Table: Middle East And Africa Petrochemicals Risk/Reward Ratings . 42
Algeria Risk/Reward Ratings .. 42
Industry Forecast Scenario ... 44
Table: Arzew Complex Capacities, 2014 (’000 tonnes) .. 46
Table: Algeria’s Petrochemicals Sector, 2010-2017 (‘000tpa, unless otherwise stated) . 46
Macroeconomic Forecast .. 47
Table: Algeria – Economic Activity 49
Company Monitor .. 50
Sonatrach 50
Glossary Of Terms 53
Table: Glossary Of Petrochemicals Terms . 53
BMI Methodology .. 54
Algeria Petrochemicals Report Q1 2013
© Business Monitor International Ltd Page 4
How We Generate Our Industry Forecasts . 54
Chemicals And Petrochemicals Industry 54
Cross Checks .. 55
Risk/ Reward Ratings .. 56
Table: Petrochemicals Business Environment Indicators And Rationale . 56
Table: Weighting Of Indicators .. 57
Country Snapshot: Algeria Demographic Data ... 58
Section 1: Population .. 58
Table: Demographic Indicators, 2005-2030 ... 58
Table: Rural/Urban Breakdown, 2005-2030 .. 59
Section 2: Education And Healthcare . 59
Table: Education Levels, 2002-2025 .. 59
Table: Healthcare – Vital Statistics, 2005-2030 . 59
Section 3: Labour Market And Spending Power . 60
Table: Employment Indicators, 2001-2006 . 60
Table: Consumer Expenditure, 2000-2012 (US$) ... 60Table: BMI''s Refined Products Forecasts
Table: Middle East Outperforms In Terms of Passenger Growth
Table: Africa’s Gas Reserves, (bcm)
Table: Africa’s Oil Reserves, (bn bbl)
Table: Africa’s Cracker Capacity, - (’ tpa)
Table: Algeria Cracker Capacity, - (‘ tpa)
Table: Petrochemical Capacity At The Planned Arzew Complex
Table: Middle East And Africa Petrochemicals Risk/Reward Ratings
Table: Arzew Complex Capacities, (’ tonnes)
Table: Algeria’s Petrochemicals Sector, - (‘tpa, unless otherwise stated)
Table: Algeria – Economic Activity
Table: Glossary Of Petrochemicals Terms
Table: Petrochemicals Business Environment Indicators And Rationale
Table: Weighting Of Indicators
Table: Demographic Indicators, -
Table: Rural/Urban Breakdown, -
Table: Education Levels, -
Table: Healthcare – Vital Statistics, -
Table: Employment Indicators, -
Table: Consumer Expenditure, - (US$)
SWOT Analysis 7
Algeria Petrochemicals Industry SWOT ... 7
Algeria Political SWOT 8
Algeria Economic SWOT .. 8
Global Petrochemicals Overview . 10
Global Oil Products Price Outlook ... 14
Table: BMI''s Refined Products Forecasts ... 15
Table: Middle East Outperforms In Terms of Passenger Growth 19
Africa Regional Overview .. 24
Table: Africa’s Gas Reserves, 2012 (bcm) .. 24
Table: Africa’s Oil Reserves, 2012 (bn bbl) 24
Table: Africa’s Cracker Capacity, 2011-2017 (’000 tpa) ... 27
Algeria Market Overview... 28
Market Structure . 29
Table: Algeria Cracker Capacity, 2009-2016 (‘000 tpa) 32
Industry Trends And Developments 33
Upstream 33
Olefins And Polyolefin 35
Table: Petrochemical Capacity At The Planned Arzew Complex 36
Methanol . 38
Fertiliser . 38
Petrochemicals Risk/Reward Ratings .. 40
Middle East and Africa Regional Petrochemicals Risk/Reward Ratings ... 40
Table: Middle East And Africa Petrochemicals Risk/Reward Ratings . 42
Algeria Risk/Reward Ratings .. 42
Industry Forecast Scenario ... 44
Table: Arzew Complex Capacities, 2014 (’000 tonnes) .. 46
Table: Algeria’s Petrochemicals Sector, 2010-2017 (‘000tpa, unless otherwise stated) . 46
Macroeconomic Forecast .. 47
Table: Algeria – Economic Activity 49
Company Monitor .. 50
Sonatrach 50
Glossary Of Terms 53
Table: Glossary Of Petrochemicals Terms . 53
BMI Methodology .. 54
Algeria Petrochemicals Report Q1 2013
© Business Monitor International Ltd Page 4
How We Generate Our Industry Forecasts . 54
Chemicals And Petrochemicals Industry 54
Cross Checks .. 55
Risk/ Reward Ratings .. 56
Table: Petrochemicals Business Environment Indicators And Rationale . 56
Table: Weighting Of Indicators .. 57
Country Snapshot: Algeria Demographic Data ... 58
Section 1: Population .. 58
Table: Demographic Indicators, 2005-2030 ... 58
Table: Rural/Urban Breakdown, 2005-2030 .. 59
Section 2: Education And Healthcare . 59
Table: Education Levels, 2002-2025 .. 59
Table: Healthcare – Vital Statistics, 2005-2030 . 59
Section 3: Labour Market And Spending Power . 60
Table: Employment Indicators, 2001-2006 . 60
Table: Consumer Expenditure, 2000-2012 (US$) ... 60Table: BMI''s Refined Products Forecasts
Table: Middle East Outperforms In Terms of Passenger Growth
Table: Africa’s Gas Reserves, (bcm)
Table: Africa’s Oil Reserves, (bn bbl)
Table: Africa’s Cracker Capacity, - (’ tpa)
Table: Algeria Cracker Capacity, - (‘ tpa)
Table: Petrochemical Capacity At The Planned Arzew Complex
Table: Middle East And Africa Petrochemicals Risk/Reward Ratings
Table: Arzew Complex Capacities, (’ tonnes)
Table: Algeria’s Petrochemicals Sector, - (‘tpa, unless otherwise stated)
Table: Algeria – Economic Activity
Table: Glossary Of Petrochemicals Terms
Table: Petrochemicals Business Environment Indicators And Rationale
Table: Weighting Of Indicators
Table: Demographic Indicators, -
Table: Rural/Urban Breakdown, -
Table: Education Levels, -
Table: Healthcare – Vital Statistics, -
Table: Employment Indicators, -
Table: Consumer Expenditure, - (US$)
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