IPIC Ferrostaal Contracting LLC Prof. Dr. Reimelt 15 th March, 2010 – Global Logistic Forum Prof. Dr.-Ing. Stephan Reimelt CEO of IPIC Ferrostaal Contracting LLC Abu Dhabi and ChemaWEyaat – a logistic challenge

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 2 A. Abu Dhabi in the worldwide logistic network B. Overview Projects ChemaWEyaat and Tacaamol Agenda

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 3 The term logistics is often misinterpreted to mean purely transportation  Greek: "logos"— ratio, word, calculation, reason, speech, oration 1. Transport logistics Physical transport of goods Strategic level decisions: 1.Make to order vs. make to stock 2.Push vs. pull systems 3.Centralization vs. decentralization 4.Third party logistics (Make or Buy) 2. Production logistics Streamline and control of the flow of goods Supply Chain Elements like transportation, storage and handling methods, loading, organization of information flow always have to be analyzed from these two perspectives! A. Definition of logistics

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 4 Abu Dhabi needs to continue its logistic integration with regard to 1)Worldwide development 2)Regional development - Gulf region 3)Local development - United Arab Emirates [UAE] International connection through: A. Connecting Abu Dhabi to the world 1) Global 2) Regional 3) Local

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 5 Named countries possess largest oil reserves Middle East has important position in world oil reserves and trade routes A. 1.) Worldwide development

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi Middle East will represent 30% of all grassroots refineries A. 1.) Worldwide development North America South America Africa 2 22 Europe 0.3 Asia 8 Middle East 5.5 CIS 1 Announced Probable  New world class refining projects in Middle East mainly dedicated to export  Long term access to supply is key for new projects

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 7 Polyolefins Plastic goods  Global polymer production: Middle East from 5% in 2000 up to 18% in 2015 (estimate)  Global polymer demand: Asia from 34% in 2000 up to 45% in 2015 (estimate) Middle East to provide up to 40% of the incremental Asian demand for polyolefins 2015 Middle East is becoming a major exporting platform for polyolefins A. 1.) Worldwide development

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 8  Intra Gulf Cooperation Council [GCC] trade has quadrupled from $20 bil to $80 in 2009 (CAGR* of 120%)  Gulf countries are expanding their planned capacities: 1.Port Jebel Ali, Dubai, UAE (14 Mio. TEU) 2.Jeddah, Saudi Arabia (3.5 Mio. TEU) 3.Muscat, Oman (3.5 Mio. TEU) 4.Shaheed Rejae, Iran (3 Mio. TEU) 5.Manama, Bahrain (1.1 Mio TEU) 6.Abu Dhabi, UAE (0.6 Mio. TEU) 7.Doha, Qatar (0.4 Mio. TEU)  GCC rail network will be around 2,200 km long covering the coast of the Gulf and extending from Oman to Kuwait, passing through UAE, Qatar and Saudi Arabia. Expected completion by *CAGR= Compound Annual Growth Rate **TEU=Twenty-foot Equivalent Unit Arabian Gulf Region Arabian Gulf Intra GCC trade A. 2) Regional development

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 9 Substantial growth of trade volume in Abu Dhabi A. 3.) Local development  Rapid growth of imports and exports. Logistic facilities need to keep pace  At this stage, Dubai reflects the main hub of UAE  Dubai World Central Al Maktoum International Airport: world's largest passenger and cargo hub under construction  Abu Dhabi needs to expand as 80% of Abu Dhabi‘s imports come seaway; Port Mina Zayed is congested  Current Abu Dhabi projects: 1. Expansion of Abu Dhabi International Airport 2. Construction of port in Taweelah (Port Khalifa) Bn USD2006%2007%2008% Import Export Saldo

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 10 Major internal trade routes between hubs Oil and gas infrastructure A. 3.) Local development

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 11 1.Singapore is a city state with 2.7 m. inhabitants on a 40 x 25 km small island 2.No industrialized back-country, no heavy industries 3.Located in the „container belt“ - main contributor to success 4.In 1989 Singapore became the biggest container port of the world (4.36 m. TEU) 5.Today Singapore is ranked 1st in the World Banks Logistics Performance Index (UAE is ranked 20th) handling 28 Mio. TEU per annum Example of a success story A. Singapore

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 12 A. Abu Dhabi in the worldwide logistic network B. Overview Projects ChemaWEyaat and Tacaamol Agenda

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 13 1.“ChemaWEyaat” is the shortened name for Abu Dhabi National Chemicals Company. 2.It is ChemaWEyaat’s vision to develop a new Chemical Industrial City “Madeenat ChemaWEyaat” in the Khalifa Port Industrial Zone (KPIZ) which will host large integrated chemical complexes 3.Total investment volume first phase: more than US$ 10 bn. 4.Shipping of goods will be through new Khalifa Port (capacity 2030: 15 m. TEUs) Area A Heavy Industrial Area C Port Khalifa B. Introducing ChemaWEyaat

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 14 1.Tacaamol is a JV company between ChemaWEyaat and IPIC 2.It houses an Aromatics Complex, a Naphtha Cracker and an AUM (Ammonia, Urea Melamine) plant 3.IPIC Ferrostaal starts soon FEED (Front-End Engineering and Design) 4.Complex logistic requirements: after Phase 1 (2015) export of 4.8 m. metric tons B. First complex Tacaamol

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 15 Video

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 16 Basic Chemicals Ethylene Propylene Ammonia Methanol Commodity Polymers Polyethylene Polypropylene PVC Polystyrene PET Commodity Intermediates Ethylene Glycol Benzene Cumene/Phenol Styrene PX/OX Performance Polymers Polycarbonate ABS Nylon PMMA Synthetic Rubber Performance Chemicals Ethanolamines Melamine MDI/TDI Polyols Acrylates Increasing value addition Basic Hydrocarbons C3 C4 Pentane plus light Naphtha Medium Naphtha Heavy Naphtha B. First complex Tacaamol Paraxylene Benzene Cumene Phenol Acetone PP MEG DEG TEG DEA C8 HDPE C8 LLDPE Ammonia Urea MTBE Butadiene MEA TEA Argon 201 kta 184 kta 187 kta 566 kta 480 kta 433 kta 34 kta 33 kta 29 kta 3 kta 58 kta 870 kta 440 kta 372 kta 1655 kta 258 kta 4 kta 600 kta Propylene 10 kta Will require about 15% of Abu Dhabi‘s annual port capacity END PRODUCTS Abu Dhabi is focusing to increase its value added of downstream chemicals

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 17 B. Middle East chemicals exports Total export of liquid chemicals by Middle East in 2008 Export volume of ChemaWEyaat by development phases Sum 22.2 Mio. metric tons Phase 1 (2015) 4.8 Mio. mt (182 ships) Phase 2 (2018) 7.5 Mio. mt (290 ships) Phase 3 (2030) 19.7 Mio. mt (840 ships) 1.Abu Dhabi will turn into a major player in the worldwide petrochemical market 2.Modern Middle East chemical plants are likely to replace existing plants in Europe and the USA 3.This will eventually change worldwide shipping patterns

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 18 Zeppelin: “The cost for bagging and packaging […] amount to more than 6% of the polymer value. This has led in North America and Western Europe to a substantial increase in bulk shipments, which require less than 2% in packaging cost B. Supply chain elements of Tacaamol

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi ,000 1,200 WE Naphtha US Naphtha Japan Naphtha S'pore Naphtha China Naphtha WE Virgin Xylenes US Virgin Xylenes Japan Virgin Xylenes WE Toluene US Toluene Gulf Naph. Abu Dhabi ChemaWEyaat $ per ton PX -10% 0% 10% 20% 30% 40% 50% ROI Variable CostsFixed CostsFreightSGA* + Agents Tacaamol – Aromatics (PX) Cash Cost Competitiveness * Selling, General and Administrative Expenses B. Price structure analysis 1.Due to low feed costs for Abu Dhabi, logistic charges amount to a big part of the total cash cost 2.Extent of integration of logistic services into the value chain has to be considered

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 20 B. Concluding remarks Perspective Abu Dhabi / Middle East  Unique geo-strategic location at the cross- roads of Asia, Europe, Africa (as well in terms of ecological sustainability)  Strategic development priority of many Middle East governments  Continuous build-up of world-class logistics infrastructure  Rapidly growing domestic economies

IPIC Ferrostaal Contracting LLC Prof. Dr. ReimeltMarch 2010 The Global Logistics Forum Abu Dhabi 21 Thank you for your attention! شكرا جزيلا لإهتمامكم