PowerPoint Presentation · Saudi Aramco: Public Disclaimer The next slides contain forward-looking statements regarding future events based on current expectations, estimates, forecasts,

Saudi Aramco: Public

2017Water Treatment


Disclaimer

The next slides contain forward-looking statements regarding future events based on current expectations,

estimates, forecasts, and projections. The data is subject to updating, revision, further verification and

amendment without notice. No reliance may be placed for any purpose on the information or opinions

contained in this presentation or any other document or statement, or on the completeness, accuracy or

fairness of such information or opinions therein. No representation or warranty, express or implied, is made or

given by or on behalf of Saudi Aramco or its employees, or any other person as to the accuracy or completeness

or fairness of the information or opinions contained in this presentation and no responsibility or liability is

accepted by any of them for such information or opinions or for any errors, omissions, misstatements, negligent

or otherwise, or for any communication writtenor otherwise, contained or referred to in this presentation.

2


Table of Contents

• Introduction

• Membranes

• Sludge thickeners

• Filters

• PAM

• Coagulants


Table of Contents

• Introduction

• Membranes


• Filters

• PAM

• Coagulants


Key opportunities for localization – RO Membranes

1. Composition and demand to be determined after discussion with leading playersSource: Saudi Aramco analysis

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Input raw materials Manufacturing Assembly & integration, operations, and maintenance

• Establish local production of key input materials1 e.g. Chlorophenylsulfone and polysulfone

• No local production of these raw materials in KSA

• Diverse applications of membranes beyond just oil & gas (e.g. waste water treatment, desalination)

• Establish local manufacturing plants of RO membranes through partnerships with international players

• Additional demand of ~$550 MM in KSA and ~$914 MM in GCC by 2025

• Limited local production of RO membranes to service KSA and GCC demand

• Provide aftersales services i.e., replacement membranes, troubleshooting, upgrades, etc.

• Limited local aftersales services offered in KSA to improve customer experience


Demand for RO membranes is expected to grow to by a CAGR of 7% to reach ~$550 MM by 2025

105 108 111 114 118 121 125 129 132

118 141 168201 213 226 239 254 26992

98104

110117

124131

139147

2021

447

2024

7%

2025

549

2023

521495

2022

471

383

425

20202018

347

2017 2019

315

KSA RO membrane market size evolution

KSA local demand for RO membranes

justifies ~2-3 manufacturing

facilities in KSA as they add new desalination and waste water plants

Source: Saudi Aramco analysis, GWI

Value(MM USD)

Oi l & gas

Desalination

Wastewater


Opportunity for localization exists across all value chain domains

Opportunity for localizationLargely localized

Building blocks and intermediates

Raw materials

Manufacturing Finished goods

End customerAfter Sales

support

Transport

EtheleneSulfur

AmmoniaBenzineChlorine RO

membranes

PolyethylenePolypropylene

PolyamidePVC

PolystyreneNylon

Polysulfone

Transport

Assembly & integration

Chloro-phenyl-sulfone

Source: Saudi Aramco analysis

Value Chain for membranes

Manufacturing

membrane parts

and components:

Extrusion

Injection molding

Blow molding

Casting


SMEs can invest in key components and equipment required to manufacture membranes

Localization potential – Components and equipment

Source: Saudi Aramco analysis, Nexant report

• Module making facility comprising:

– Membrane spiral making machine

– Membrane cutting device

– Membrane rolling machine

– Spiral element trimming machine

– Product tube making machine

– End caps molding machine

– Outer hard wrapping machines

– Sonic welding machine

– Permeate and feed spacer automatic cutting machine

• Spiral element test benches

• Water filters

• Chemical dosing

• Circulating & high pressure pumps

Key equipment


Key messages and next steps

✓ Consumption of membranes in KSA is expected to increase to ~$550 MM in 2025,driven by various applications in oil & gas, desalination, and waste water treatment

✓ Building blocks for raw materials are available in abundance (e.g. i.e., chlorine, sulfur, ammonia, benzene)

✓ Building blocks can be leveraged to manufacture several raw materials essential to membrane manufacturing e.g. Polysulfone (with Chlorophenylsulfone)

✓ Limited presence of RO membrane manufacturers in KSA presents an opportunity for local players to localize manufacturing processes

Key messages


Salem Mohammed Alghamdi

Local Business Development

Saudi Aramco

[email protected]

In case you are interested in discussing this opportunity further, please contact

Ahmed Al Ebdah

IKTVA Support Unit

Saudi Aramco

[email protected]


Table of Contents

• Introduction

• Membranes


• Filters

• PAM

• Coagulants


Key opportunities for localization – Sludge Thickeners


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Sludge thickening chemicals

Component manufacturing and assembly

Installation and after sales

• Establish local production of key chemicals used in sludge thickening equipment1 e.g.iron chloride, iron chloro-sulfate

• No local production of these chemicals in KSA

• Availability of raw materials in KSA (i.e., iron, sulfur, chlorine)

• Diverse applications beyond sludge thickening (e.g. flocculants, coagulants)

• Manufacture sludge thickening equipment components

• Offer assembling services on-site for OEMs

• Demand expected to grow at ~6% CAGR and is expected to reach ~$380 MM by 2020

• Components such as routers, motors, casings, drains, etc. have a high potential for localization

• Localize installation and after sales services e.g. maintenance, installation, delivery, customer service, capability development, and consulting

• Limited players offering aftersales services especially in the water industry


Demand for sludge thickeners is expected to grow at a CAGR of 6% to reach ~$378 MM in the M. East by 2020

181 179 191218 234

194 209238

260284

39 4452

5255

6975

8087

95

2011

220

2018

318

2016

263

2015

270

2013

243

378

2019

347

289

20142012

223

2017

283

6%

2020

ME sludge treatment market size evolution

~50 new desalination and water treatment plants are expected to come online in KSA in the next 15 years- each plant will require additional sludge thickeners

Source: Saudi Aramco analysis, GWI

Value(MM USD)

Rest of MEKSA


Building blocks are available - opportunity for localization exists across all other value chain domains


Opportunity for localizationLargely localized/limited potential

Design Building blocks

Components and modules

Manufacturing and assembly


support

Transport

Value Chain for sludge thickeners

Done as part of a global R&D center

Carbon

Sludge thickener

equipment

Manufacture

components

such as screws,

drains, belts,

sieves, etc.

Iron

Steel

Distribution

& transport

Assembly

& integration

Chlorine

Iron

Sulfur

BlendingCoagulantsFlocculants

Iron ChlorideIron Chloro-

Sulfate

Chemicals


There are 3 main technologies used for sludge thickening, each having localization potential

Three main sludge thickening operations equipment


Component Localization

potential

Router High

LV Motor Medium

Seal Low

Drain line Low

Casing Medium

Centrifuge Gravity belt Drum


potential

Ramp High

Fence High

Belt High

Casing Medium


potential

Drum High

Ramp High

Sieve High

Screw Low

Casing Medium

Total CapEx

Total OpEx

$6.2 MM

$4.4 MM

Total CapEx

Total OpEx

$3.4 MM

$4.8 MM

Total CapEx

Total OpEx

$3.9 MM

$4.9 MM



✓ Basic raw material (iron, carbon, steel) are available in abundance

✓ KSA market size for sludge thickeners is expected to grow at a rapid pace of 10% to~$95 MM by 2020

✓ Opportunity exists to leverage raw materials to localize key components such as seals, screws, ramps, etc.

✓ Availability of such components will stimulate final manufacturing and assembly of sludge thickeners

✓ In addition to equipment, several chemicals essential to sludge thickeners can be localized in KSA e.g. iron-chlorosulfate, iron chloride, coagulants, and flocculants

✓ Local players can also offer assembly and integration services to install sludge thickener equipment at OEMs

Key messages




Saudi Aramco

[email protected]


Ahmed Al Ebdah

IKTVA Support Unit

Saudi Aramco

[email protected]


Table of Contents

• Introduction

• Membranes


• Filters

• PAM

• Coagulants


Key opportunities for localization – Filters


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Component manufacturing Assembly Testing & inspection

• Establish local filter manufacturing facilities for the three main types of filters: air, water, and oil & gas

• Limited presence of manufacturing facilities in KSA

• Presence of machining parts in KSA such as seals, rolls, etc.

• Offer assembly of filters at the manufacturing facility

• Offer installation on-site at the asset location

• Limited assembly and installation services offered in KSA

• Provide aftersales services i.e., replacement membranes, troubleshooting, upgrades, etc.

• Limited local aftersales services offered in KSA to improve customer experience


Demand for filters is expected to grow to by a CAGR of 5% to 64 ktpa in 2030

15 20 22 23 24 24 26 29 3418 12 13 14 15 15 16 17

21

9

6

2018

456

2017

426

2016

405

2015

385

2014 2019

645

3% 64

20302025

547

2020

48396

KSA filter market size evolution

KSA local demand for

filters justifies

~1-2 manufacturing

facilities in KSA as they add new desalination and

waste water plants

1: fi lter parts are for both gas and liquidsSource: Saudi Aramco analysis, GWI, UN Comtrade

8 12 11 16 23 24 26 27 29

Volume(KTPA)

Value($ MM)

Liquid filters

Gas & air filters

Fi l ter parts 1

111 186 231 235 161 166 171 176 181

75 78 99 114 98 101 104 107 110


Opportunity for localization exists across all value chain domains



Building blocks and intermediates

Manufacturingcomponents


support

Transport

PolypropyleneAluminum

IronSteel

Filters

Assembly & integration

Value Chain for filters

Manufacturing

filter parts and

components:

Rolls

Seals

Fiberglass

Film die

+Inspection

Testing

Finishedproducts

+

Transport

Gauges

Frame


Local players exist in KSA and can potentially make customized components for filter manufacturing

Parts Manufacturing process Localization potential

Manufacturing of filter machine parts

Source: Saudi Aramco analysis, public company profiles

Rolls Extrusion, injection molding

Seals Elastomer conversion

Gage Blow molding, casting

Fiberglass Melting, forming, sizing, winding, twisting,

drying

Frame / plate Extrusion

Film die Blow molding

HighLow –



✓ Consumption of filters in KSA and GCC is expected to increase to ~$459 MM by 2030, driven by various applications in oil & gas, desalination, and waste water treatment

✓ Building blocks for raw materials are available in abundance (e.g. i.e., aluminum, polypropylene)

✓ Limited presence of filter manufacturers in KSA presents an opportunity for local players to localize manufacturing processes

✓ Gap in local aftersales market presents an opportunity for KSA to localize assembly, maintenance, and operations service offerings

Key messages




Saudi Aramco

[email protected]


Ahmed Al Ebdah

IKTVA Support Unit

Saudi Aramco

[email protected]


Table of Contents

• Introduction

• Membranes


• Filters

• PAM

• Coagulants


PAM is an important chemical, with 50% of total production being used for water treatment

2

31: Misc. applications, i.e., mining, coating, dying, and printingSource: Technavio, A.T. Kearney

Global PAM market by application (2017-2021E)

Pulp & paper

Others1

Water mgmt.

Oil recovery

Applications & Market Opportunities ($ mn)

• Flocculant agent• Treatment of raw water,

urban sewage, and industrial wastewater

• Component of polymer-augmented flood systems

• Enhance the flow rate• Maximize the output

of oil from an existing well

• Fiber retention control • Drainage agent• Pigment settling agent • Dry-strength additive

• In mining: flocculants for either sedimentation or centrifugation

• Other: consumed in the sugar processing, superabsorbent resins, adhesives, and leather re-tanning sectors

Pri

ma

ryA

dd

itio

na

l

Polyacryla-mides (PAM)

47%

23%

18%

12%

Industries

+7%

3,349

20212017

2,525

1,6461,252

2017 2021

+7%

2021

1,006

2017

+7%

1,304

Not Exhaustive

XX% Share of global consumption

~3500 KT


Key opportunities for localization – PAM


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Input chemicals and materials

Blending and formulation

Logistics and supply chain

• Establish local production of key input materials1 e.g. Acrylonitrile and Acrylamide

• No local production of these raw materials in KSA

• Presence of building blocks in sufficient volumes in KSA

• Diverse applications of PAM beyond oil & gas, i.e., water treatment, mining, pulp and paper

• Establish blending facilities in KSA

• Additional demand of ~46 ktpa in KSA by 2020

• Diverse applications of blending and formulation beyond just PAM

• Provide handling services e.g. drums and iso containers

• Provide transportation and loading e.g. flatbed trailers and manifold trailers

• Demand for 20-30 additional iso tanks and drums by 2025

• Demand for ~1 additional flatbed and manifold trailers by 2025


KSA is expected to grow in line with global growth- 100% of PAM is imported presenting a clear opportunity

Source: : RCJY report, SRI reports, Technacvo, A.T. Kearney analysis

KSA PAM imports (‘000 MT)

There limited to no manufactures of PAM in the domestic market; significant potential exists to localize the supply

Key demand drivers for PAM include– Use of Chemical EOR

in Saudi Aramco

– Increased use of

drilling and completion

chemicals

– Increasing population

and industrial activity in

KSA

4643

38

46+6.5%

2020E2019E2018E2017E

Volume‘000 MT



Value Chain for PAM


Building blocks

Intermediates & raw materials

System houses

Finished goods

Propylene

Acrylonitrile

Ammonia

Transport Hydration of

acrylonitrile

to

synthesize

Acrylamide



support

Transport

PAM

Polymerization

of acrylamide

to synthesize

Polyacrylamide

(PAM)



✓ Consumption of PAM in KSA is expected to increase to ~46 ktpa in 2020, driving opportunities for raw material manufacturing, such as acrylonitrile due to presence of propelyne and ammonia in KSA

✓ Local players can also establish local blending facilities to synthesize chemicals across the value chain, i.e., acrylamide and polyacrylamide

Key messages


Khazisyed Ahmedjeelani

Industrial Development Department

Saudi Aramco

[email protected]



Table of Contents

• Introduction

• Membranes


• Filters

• PAM

• Coagulants


Key opportunities for localization – Coagulants


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Input chemicals and materials

Blending and formulation

• Establish local production of both organic and inorganic input materials and chemicals1 e.g. aluminum hydroxide and melamine

• No local production of several key chemicals in KSA

• Diverse applications of melamine and melamine formaldehyde beyond coagulants (e.g., paints, varnishes and laminates)

• Establish local blending facilities in KSA for final formulations

• Demand expected to grow by 8% to reach ~120 ktpa in KSA by 2018

• Limited presence of coagulant formulation services and laboratories

Logistics and supply chain

• Provide handling services e.g. drums and iso-containers

• Provide inspection and testing services for OEMs

• Demand for 20-30 additional iso containers to meet demand for coagulants

• Limited presence of inspection and testing services for water treatment chemicals in KSA


Demand for coagulants is expected to grow at 8% CAGR, achieving a market value of ~$205 MM in 2025

Source: : GWI, A.T. Kearney Analysis

KSA coagulant market ($million)

205

189

175162

150139

129119

110101

9487

+8%

202520242014 20232021 202220192017 202020162015 2018

Total Value$ mn

Key demand drivers for coagulants include– Increasing

population and

industrial activity in

KSA driving

increased water

consumption and hence treatment

Represents ~40-50ktpa demand

in 2018



Inorganic

Opportunity for localization

Largely localized

Coagulant

formulation

services

and

laboratories

Finished goods

End customer

Coagulants

After Salessupport

Transport

BlendingBuilding blocks and intermediates

Intermediates & raw materials


Value Chain for coagulants

Transport

OrganicUrea Melamine

Methanol

MelamineFormald-

ehyde

Sulfuric acid

Aluminum hydroxide

Aluminum sulfate, PACl

AluminumAluminum

chloride, ACH

IronFerric sulfate, ferrous sulfate

Chlorine Ferric chloride



✓ Building blocks, i.e., sulfuric acid, urea, and methanol, are available in KSA in sufficient volumes

✓ Consumption of coagulants in KSA is expected to increase to ~$205 mm in 2025,driving opportunities for additional raw material manufacturing, i.e., aluminum formaldehyde, melamine and melamine formaldehyde

✓ Limited presence of local blenders presents additional opportunities for local players to invest in blending facilities for final formulations

✓ Potential also exists to offer additional value added logistics and aftersales services, i.e., transportation, inspection, testing, etc.

Key messages


Khazisyed Ahmedjeelani

Industrial Development Department

Saudi Aramco

[email protected]


Documents

PowerPoint Presentation · Saudi Aramco: Public Disclaimer The next slides contain forward-looking statements regarding future events based on current expectations, estimates, forecasts,