BMI's Executive Summary

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The development of Kuwait's petrochemical industry will centre on the expansion of the Equate complex, with capacity set to double from Q308. However, the country continues to fail in the regulatory and business environment, with excessive and burdensome bureaucracy along with a lack of ethane allocation likely to count against it in the competition for investment in the sector, according to BMI's latest Kuwait Petrochemicals Report.

Equate currently operates an ethane cracker with ethylene production capacity of 850,000tpa of ethylene, and downstream units with capacities of 600,000tpa of polyethylene (PE), 450,000tpa of ethylene glycol (EG) and 110,000tpa of polypropylene (PP). Equate and the Olefins II project at Shauiba will be run together as an enlarged, integrated entity, dubbed Greater Equate, with the addition of an ethane cracker with capacity for 850,000tpa of ethylene, 600,000tpa of EG, 300,000tpa of PE and 20,000tpa of propylene, to be assimilated into the existing propylene plant. Greater Equate is schedule to be operating at full capacity by Q109, with exports targeting Europe, China, South East Asia, the Middle East and North Africa. PIC and Dow Chemical are also building a complex at Shuaiba with capacity of 500,000tpa of ethylbenzene and 450,000tpa of styrene. MEGlobal, a joint venture between Dow Chemical and PIC, has also announced plans for a third EG plant at Shuaiba, but no details have been provided and the project would depend on further ethane allocations.

BMI has revised its method of risk scoring in the petrochemicals sector, introducing dynamic scores that reflect on future growth as well as current capacities and the size of the internal market, along with investment risk assessments of the political, economic and regulatory environments. As a result of our revision in our risk scoring, Kuwait has risen from fourth to second place in the petrochemicals business environment rankings for Middle East and Africa with 64.0 points, 0.2 points ahead of Qatar and 10 points behind Saudi Arabia. Kuwait is also 8.0 points ahead of the regional average of 56.0 points. The Kuwaiti petrochemicals industry is fairly attractive in regional terms, due to a low-risk business environment in general, and the fact that it is well placed geographically to export to Asia and meet growing regional demand. However, a narrow production portfolio, and until recently lack of additional gas reserves, as well as low production capacity, represent serious challenges to future growth. Kuwait's overall business environment can be considered somewhat unattractive in a regional context. There has been little progress in terms of deregulation and licensing of foreign companies in the upstream sector. Moreover, burdensome bureaucracy is hindering growth in petrochemicals, putting Kuwait at a disadvantage compared to other Gulf states in the competition for foreign investment.

Contents

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Chapter 1 - Executive Summary

Industry Developments

Kuwait Petrochemicals Business Environment

Chapter 2 - SWOT Analysis

Kuwait Petrochemicals Industry SWOT

Kuwait Political SWOT

Kuwait Economic SWOT

Kuwait Business Environment SWOT

Chapter 3 - Market Overview

Chapter 4 - Business Environment

Table: Middle East Rankings

Country Composite Risk Rating

Domestic Feedstock Availability

Petrochemicals Production

Petrochemicals Competitive Environment

Chapter 5 - Industry Trends and Developments

Industry Developments – Related Industries

Long-Term Plans of KPC

Chapter 6 - Industry Forecast Scenario

Table: Kuwait Petrochemicals Sector – Historical Data and Forecasts

Chapter 7 - Economic Outlook

Table: Economic Activity

Business Environment Outlook

Foreign Investment Policy

Political Developments

Chapter 8 - Company Monitor

Profiles

Petrochemicals Industries Company (PIC)

Equate Petrochemical Company

Chapter 9 - BMI Forecast Modelling

How we generate our industry forecasts

Chemicals & Petrochemicals Industry

Cross checks

Competitive Landscape for Middle East & Africa Petrochemicals Reports: Sample of Companies Ranked

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Comparative company analyses and rankings by US$ sales, % market share, employee size, registration date and ownership structure. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) on all leading international and national operators in each market, including competitive intelligence in the following: Overall geographic presence, competitive positioning against local companies; production capacity, sales and market share; joint ventures, foreign direct investment, projects and acquisitions strategy.