Refining & Petrochemicals - Oil & Money 2019 – Day 2

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Language: en

00:00:03.840
thank you first of all for sticking
00:00:05.570 00:00:05.580 around I know that this is the last
00:00:07.250 00:00:07.260 panel of the day we won't keep you too
00:00:08.930 00:00:08.940 long I promise with me I have see a
00:00:11.780 00:00:11.790 Taliban independent consultant with a
00:00:13.669 00:00:13.679 long experience in the refining and
00:00:15.589 00:00:15.599 chemical industry John hours of Turner
00:00:17.779 00:00:17.789 Mason and company and PMS Prasad of
00:00:20.030 00:00:20.040 Reliance Industries now Prasad you and I
00:00:23.600 00:00:23.610 were speaking earlier about refiners
00:00:26.540 00:00:26.550 getting into chemicals and you have some
00:00:28.310 00:00:28.320 personal experience with that so I
00:00:29.720 00:00:29.730 wanted you I wanted to ask you about
00:00:31.280 00:00:31.290 that and also to ask everybody about
00:00:34.310 00:00:34.320 what role chemicals can play for
00:00:36.590 00:00:36.600 refiners in developing more of a green
00:00:39.319 00:00:39.329 economy a clean economy all part of this
00:00:42.169 00:00:42.179 energy transition that we've been
00:00:43.520 00:00:43.530 speaking about please the did Emin
00:00:53.119 00:00:53.129 everybody expected the demand for
00:00:55.219 00:00:55.229 transportation fuels is going to reduce
00:00:58.069 00:00:58.079 maybe not immediately but maybe over
00:01:01.069 00:01:01.079 that decade or two decades so what are
00:01:03.079 00:01:03.089 the opportunities for the refiners
00:01:05.500 00:01:05.510 basically you know petrochemicals and
00:01:09.050 00:01:09.060 chemicals is still a growing market and
00:01:11.870 00:01:11.880 as dr. Abdul Aziz who said earlier the
00:01:15.740 00:01:15.750 only place where the crude demand will
00:01:18.350 00:01:18.360 increase is in to the chemicals and the
00:01:20.810 00:01:20.820 petrochemicals and that's what we
00:01:22.969 00:01:22.979 believed not today about a long time ago
00:01:26.090 00:01:26.100 and if you look at our refinery the way
00:01:28.279 00:01:28.289 we have a 1.4 million barrels of
00:01:31.599 00:01:31.609 refinery at one location and from day
00:01:38.300 00:01:38.310 one its integrated with Paris island
00:01:41.899 00:01:41.909 petroleum and polypropylene and and we
00:01:46.730 00:01:46.740 also have refined the off gases which
00:01:49.010 00:01:49.020 are typically wasted converted into
00:01:51.709 00:01:51.719 ethylene and propylene and so lots of
00:01:56.060 00:01:56.070 petrochemical integration with further
00:01:59.090 00:01:59.100 glycol and polyethylene and rubber so
00:02:03.289 00:02:03.299 it's a truly integrated complex and it
00:02:06.169 00:02:06.179 was conceived that way back in the late
00:02:08.600 00:02:08.610 90s
00:02:09.930 00:02:09.940 it was built that way and today we have
00:02:12.860 00:02:12.870 probably about over 20% of the crude
00:02:16.620 00:02:16.630 that we process goes straight into the
00:02:18.810 00:02:18.820 petrochemicals and we still have
00:02:21.150 00:02:21.160 potential with other feedstocks to take
00:02:24.120 00:02:24.130 it too easily to over 30% but what we
00:02:27.510 00:02:27.520 are trying to do they're trying to plan
00:02:30.330 00:02:30.340 for the next eight years say by 28:29 in
00:02:37.620 00:02:37.630 phases where as we see the demand going
00:02:41.580 00:02:41.590 down if we see that then we are ready to
00:02:45.420 00:02:45.430 with the technologies and the plants to
00:02:48.390 00:02:48.400 convert up to let's say in about eight
00:02:51.240 00:02:51.250 years maybe up to 70% of the crude that
00:02:54.330 00:02:54.340 we process into petrochemicals okay is
00:02:59.460 00:02:59.470 that a something that the rest of you
00:03:01.260 00:03:01.270 see happening in the rest of the
00:03:02.550 00:03:02.560 industry for example if there were to be
00:03:04.410 00:03:04.420 a new-build refinery what would you
00:03:08.490 00:03:08.500 recommend in terms of its chemical
00:03:10.200 00:03:10.210 capabilities for both of you for both
00:03:12.300 00:03:12.310 huge on and you see odd one stores yet
00:03:15.890 00:03:15.900 okay with reference to as was said by
00:03:19.770 00:03:19.780 dr. at work the the outlook for the use
00:03:25.170 00:03:25.180 of transportation fuels looks like it's
00:03:29.220 00:03:29.230 going to hit a peak in the coming 10 to
00:03:33.930 00:03:33.940 20 year time frame now the I would like
00:03:38.850 00:03:38.860 to make one comment about that now we we
00:03:41.880 00:03:41.890 say it's peaking but I think everybody
00:03:43.860 00:03:43.870 needs to understand that in osed
00:03:46.440 00:03:46.450 countries which is 36 nations or the
00:03:50.729 00:03:50.739 transportation fuel is about the same
00:03:54.930 00:03:54.940 amount of transportation fuel that is
00:03:57.750 00:03:57.760 consumed in the non-oecd countries so if
00:04:01.259 00:04:01.269 you're going to build a new build
00:04:03.180 00:04:03.190 refinery and petrochemical then you will
00:04:06.870 00:04:06.880 build it in a non-oecd country number
00:04:11.640 00:04:11.650 one that's where the demand is and it is
00:04:14.550 00:04:14.560 where the growth for the oil industry is
00:04:17.130 00:04:17.140 now there is something that is what we
00:04:21.630 00:04:21.640 call
00:04:22.870 00:04:22.880 intelligent integration and that's where
00:04:26.080 00:04:26.090 you're able to take your refining
00:04:30.070 00:04:30.080 processes and your petrochemical
00:04:32.740 00:04:32.750 processes and actually link them so they
00:04:36.400 00:04:36.410 use feeds from each other and what you
00:04:41.350 00:04:41.360 and the process of doing that the
00:04:43.840 00:04:43.850 objective of which is to minimize your
00:04:46.570 00:04:46.580 waste now this is something that I've
00:04:49.720 00:04:49.730 had experiences with in in one of the
00:04:53.830 00:04:53.840 companies that I was the CEO of a pet
00:04:55.870 00:04:55.880 rabbit it we took a refinery and we
00:04:58.390 00:04:58.400 added to it a petrochemical 2.4 million
00:05:01.630 00:05:01.640 on and we saw the opportunity to take
00:05:05.830 00:05:05.840 some of the waste and from that use that
00:05:09.940 00:05:09.950 for developing and creating shareholder
00:05:14.710 00:05:14.720 value around the petrochemical stream so
00:05:17.350 00:05:17.360 there and the nice thing about
00:05:18.550 00:05:18.560 petrochemicals if you look around this
00:05:20.140 00:05:20.150 room most everything in here is made
00:05:23.170 00:05:23.180 with some kind of petrochemical whether
00:05:25.150 00:05:25.160 it be your clothes your glasses your
00:05:27.940 00:05:27.950 watches your cell phone
00:05:29.710 00:05:29.720 especially the iPhones the carpeting the
00:05:34.560 00:05:34.570 insulation the paint that's all Petro
00:05:37.390 00:05:37.400 chemical petrochemical is here to stay
00:05:40.090 00:05:40.100 and as dr. Shaw mentioned that's where
00:05:45.400 00:05:45.410 the the growth rate of the 30% growth
00:05:50.680 00:05:50.690 rate for the coming 10 years is going to
00:05:54.220 00:05:54.230 be in the petrochemical field there are
00:05:56.560 00:05:56.570 lots of opportunities and it's from a
00:06:01.170 00:06:01.180 eco friendly perspective I think what we
00:06:05.680 00:06:05.690 will find is companies will find the
00:06:09.220 00:06:09.230 opportunity not only to make economic
00:06:10.920 00:06:10.930 value out of it but they will also look
00:06:13.390 00:06:13.400 at opportunities to actually create more
00:06:17.940 00:06:17.950 eco-friendly facilities by doing the
00:06:22.630 00:06:22.640 linkage of them together now I agree
00:06:26.050 00:06:26.060 with both Prasad INSEAD and dr abdulaziz
00:06:30.370 00:06:30.380 on and what other people have said
00:06:32.590 00:06:32.600 earlier that
00:06:33.460 00:06:33.470 certainly petrochemicals will be a major
00:06:35.200 00:06:35.210 part of the growth picture for refiners
00:06:37.030 00:06:37.040 I'm a little more bullish on fuel
00:06:39.910 00:06:39.920 you know transportation fuels certainly
00:06:41.740 00:06:41.750 in ten to fifteen twenty years it's
00:06:44.260 00:06:44.270 going to peak out it's already probably
00:06:46.420 00:06:46.430 hit its peak in developed countries but
00:06:48.970 00:06:48.980 we see we still see a lot of growth in
00:06:50.560 00:06:50.570 transportation fuels in the undeveloped
00:06:52.330 00:06:52.340 countries and when you look at the
00:06:54.250 00:06:54.260 volume we were talking to over sixty
00:06:55.900 00:06:55.910 million barrels a day of transportation
00:06:57.550 00:06:57.560 fuels even if you held steady that's a
00:07:00.130 00:07:00.140 big big deal and so the refiners going
00:07:02.530 00:07:02.540 to continue to be a big producers of
00:07:03.940 00:07:03.950 transportation fuels I think what Prasad
00:07:06.160 00:07:06.170 said is is and what reliance is doing is
00:07:08.710 00:07:08.720 very smart is to provide themselves
00:07:10.780 00:07:10.790 optionality to react to the market
00:07:12.880 00:07:12.890 conditions because there will be periods
00:07:14.560 00:07:14.570 of time when transportation feels like
00:07:16.330 00:07:16.340 we've seen over the last three or four
00:07:17.560 00:07:17.570 years turns rotational field growth is
00:07:19.360 00:07:19.370 very strong because of low prices out I
00:07:21.580 00:07:21.590 always like to put in perspective and I
00:07:23.770 00:07:23.780 don't you know that's not saying that
00:07:25.450 00:07:25.460 this won't be yet in the u.s. back in
00:07:28.990 00:07:29.000 before I even started working in the
00:07:31.000 00:07:31.010 business when I was still in college and
00:07:32.320 00:07:32.330 I everybody was saying that gasoline
00:07:34.840 00:07:34.850 demand and us Pete
00:07:36.310 00:07:36.320 in 1978 okay well it didn't it didn't
00:07:40.240 00:07:40.250 peak that was the consensus and I
00:07:42.100 00:07:42.110 started working with exon exon those
00:07:43.780 00:07:43.790 exons view at that time when I started
00:07:45.700 00:07:45.710 work for him that gasoline demand in the
00:07:47.890 00:07:47.900 US had peaked well it took a while 93 I
00:07:50.740 00:07:50.750 think it surpassed that peak but then in
00:07:54.100 00:07:54.110 2007 you know when we had the financial
00:07:56.590 00:07:56.600 crisis but I said 2007 gasoline demand
00:07:59.350 00:07:59.360 US has peaked well we didn't take as
00:08:01.780 00:08:01.790 long that time you know so we PAP
00:08:03.070 00:08:03.080 surpassed that here in the last three
00:08:04.480 00:08:04.490 years now we do believe that it's
00:08:07.360 00:08:07.370 probably peaked now this year's probably
00:08:10.390 00:08:10.400 less than last year in US but it we
00:08:11.860 00:08:11.870 hadn't been peaked and the rest of the
00:08:13.390 00:08:13.400 world so there's still a lot of
00:08:14.860 00:08:14.870 opportunities on a transportation fuel
00:08:16.390 00:08:16.400 side but I do agree on the growth side
00:08:18.340 00:08:18.350 on the petrochemicals and it's smart to
00:08:20.920 00:08:20.930 provide that option and and it's been
00:08:23.260 00:08:23.270 going on for a while my first job at
00:08:24.970 00:08:24.980 Exxon was at Bay town which is was at
00:08:27.370 00:08:27.380 that time a very highly integrated
00:08:29.670 00:08:29.680 refinery with the petrochemical complex
00:08:31.930 00:08:31.940 and and an old fence plant and have
00:08:33.670 00:08:33.680 integrated even more since then so it's
00:08:35.800 00:08:35.810 something that refiners have known for a
00:08:37.779 00:08:37.789 while and now it's becoming even more
00:08:39.520 00:08:39.530 important to petrochemical side of the
00:08:41.460 00:08:41.470 the main feature now on more of like a
00:08:44.460 00:08:44.470 geographical basis you you had mentioned
00:08:47.220 00:08:47.230 that if you're building out a new
00:08:48.870 00:08:48.880 refinery you want to do it close to your
00:08:50.280 00:08:50.290 market where the where the demand growth
00:08:51.900 00:08:51.910 is right right I wonder though to what
00:08:55.200 00:08:55.210 degree changes in supply are factoring
00:08:58.260 00:08:58.270 into this for example in the United
00:08:59.640 00:08:59.650 States with the shale revolution massive
00:09:01.920 00:09:01.930 increase in natural gas liquids massive
00:09:04.650 00:09:04.660 increase in light crude and we've seen
00:09:07.200 00:09:07.210 that kind of disrupt that thinking or at
00:09:08.880 00:09:08.890 least so it seems to me as somebody
00:09:10.080 00:09:10.090 who's not exactly in the industry but
00:09:12.060 00:09:12.070 just watching it
00:09:13.710 00:09:13.720 what role does that kind of supply
00:09:15.990 00:09:16.000 growth play when you're thinking about
00:09:18.900 00:09:18.910 building out or expanding capacity
00:09:20.310 00:09:20.320 especially given that the United States
00:09:22.530 00:09:22.540 now has established itself as such a
00:09:24.150 00:09:24.160 massive premier supplier of at this
00:09:27.930 00:09:27.940 point all liquids to the rest of the
00:09:30.300 00:09:30.310 world well if if I can take this first
00:09:35.940 00:09:35.950 go ahead Z sure the you're absolutely
00:09:39.870 00:09:39.880 correct about the US but I would say
00:09:43.230 00:09:43.240 that there are three things I believe
00:09:46.050 00:09:46.060 that are very important for the success
00:09:47.790 00:09:47.800 of a petrochemical facility number one
00:09:50.610 00:09:50.620 is easy access and economically
00:09:55.910 00:09:55.920 attractive access to the feed the oil in
00:10:00.000 00:10:00.010 the gas
00:10:01.220 00:10:01.230 number two is proximity to the market
00:10:06.680 00:10:06.690 you have to be in close within a close
00:10:12.120 00:10:12.130 distance of the current and future
00:10:15.690 00:10:15.700 market growth and number three is access
00:10:20.100 00:10:20.110 to financial opportunities for you to be
00:10:27.510 00:10:27.520 able to build the facilities that are
00:10:29.579 00:10:29.589 required the u.s. meets one maybe two of
00:10:35.010 00:10:35.020 those factors it's not exactly close to
00:10:39.150 00:10:39.160 the growing market conditions the
00:10:42.630 00:10:42.640 growing market for the petrochemical
00:10:45.110 00:10:45.120 side and and this in petrochemicals that
00:10:48.930 00:10:48.940 you you have to look at to you break it
00:10:51.420 00:10:51.430 down into two different segments number
00:10:54.360 00:10:54.370 is what you call the commodity
00:10:56.250 00:10:56.260 petrochemicals and and these are readily
00:10:59.940 00:10:59.950 available and it doesn't matter where
00:11:02.940 00:11:02.950 you buy them they're basically priced
00:11:05.250 00:11:05.260 almost the same and they have this same
00:11:07.890 00:11:07.900 specs then you have what they call
00:11:09.960 00:11:09.970 specialty petrochemicals that's when you
00:11:12.630 00:11:12.640 get into adhesives catalysts detergents
00:11:17.390 00:11:17.400 the elastomers and the specialty
00:11:22.610 00:11:22.620 petrochemicals are basically for the
00:11:25.590 00:11:25.600 most part generically they are consumed
00:11:28.260 00:11:28.270 by middle-class so you take a look at
00:11:32.670 00:11:32.680 the world and you say where is the
00:11:35.370 00:11:35.380 growing middle class 25% of the
00:11:38.160 00:11:38.170 population right now is within that
00:11:40.670 00:11:40.680 middle class which is $40,000 to 120,000
00:11:45.480 00:11:45.490 dollars per family okay now where is it
00:11:50.030 00:11:50.040 that's in Northeast Asia it's in the
00:11:55.320 00:11:55.330 Middle East and eventually sleeping
00:11:57.960 00:11:57.970 giant of Africa and then you say okay
00:12:01.110 00:12:01.120 now that's that's the growing middle
00:12:03.750 00:12:03.760 class of the future so where do you want
00:12:06.510 00:12:06.520 to put your petrochemical facility we
00:12:09.690 00:12:09.700 are where you have access to the
00:12:13.530 00:12:13.540 reserves oil and gas and you have a
00:12:18.840 00:12:18.850 proximity to this growing middle class
00:12:22.019 00:12:22.029 and you have access to funding now being
00:12:29.850 00:12:29.860 a Saudi I'll tell you Saudi Arabia
00:12:33.440 00:12:33.450 because of its proximity to Africa
00:12:40.440 00:12:40.450 there isn't a continent or there isn't a
00:12:42.780 00:12:42.790 country closer to Africa than Saudi
00:12:44.550 00:12:44.560 Arabia you go through the Red Sea and
00:12:47.510 00:12:47.520 the nice thing about Saudi Arabia is you
00:12:50.490 00:12:50.500 can build the facility anywhere in the
00:12:52.230 00:12:52.240 west western region and you can go to
00:12:54.510 00:12:54.520 anywhere in Africa so looking at that
00:12:59.430 00:12:59.440 you say that in my mind whether it be
00:13:04.380 00:13:04.390 Saudi Arabia whether it be in the Gulf
00:13:06.030 00:13:06.040 region
00:13:06.720 00:13:06.730 those are area
00:13:08.370 00:13:08.380 that would that fall in the middle of
00:13:10.710 00:13:10.720 where the growing middle class of the
00:13:12.900 00:13:12.910 world is and for that reason I would I
00:13:16.470 00:13:16.480 would beg to differ about the you know
00:13:20.340 00:13:20.350 it's not just reserves it's the other
00:13:24.450 00:13:24.460 two factors that come into play it will
00:13:27.270 00:13:27.280 make it more difficult for the u.s.
00:13:29.820 00:13:29.830 because of the transportation cost to be
00:13:33.180 00:13:33.190 more competitive but you know R&D will
00:13:37.830 00:13:37.840 always find ways to reduce the costs and
00:13:40.080 00:13:40.090 that'll be a challenge for the
00:13:42.090 00:13:42.100 petrochemical facilities in the United
00:13:44.370 00:13:44.380 States to overcome that for some of you
00:13:47.540 00:13:47.550 yep just to supplement Cortez yes a US
00:13:55.710 00:13:55.720 has the resource and has rightly said
00:13:58.950 00:13:58.960 the natural gas liquids and there'll be
00:14:02.420 00:14:02.430 plenty and the light fruits you know
00:14:06.330 00:14:06.340 when you process them actually we are
00:14:08.550 00:14:08.560 creating a glut of the light distillates
00:14:10.920 00:14:10.930 in the market but if you go back and see
00:14:17.810 00:14:17.820 it's now two and a half years we have
00:14:21.000 00:14:21.010 been importing we have a virtual
00:14:22.380 00:14:22.390 pipeline over the sea of importing heat
00:14:25.020 00:14:25.030 air so if we are in a country where the
00:14:28.860 00:14:28.870 demand is strong and growing 1.3 billion
00:14:33.870 00:14:33.880 people and we have a four hundred
00:14:36.600 00:14:36.610 million middle class so and in India
00:14:40.650 00:14:40.660 finding if you have the right project
00:14:43.020 00:14:43.030 and if it is the right you know the
00:14:45.570 00:14:45.580 promoter or whatever the company finding
00:14:49.470 00:14:49.480 has never been a problem so you have the
00:14:52.080 00:14:52.090 demand and ROI
00:14:54.150 00:14:54.160 today at the per capita consumption for
00:14:57.090 00:14:57.100 polymers and plastics in India is but
00:14:59.970 00:14:59.980 10kg compared to 30 kg in the rest of
00:15:03.330 00:15:03.340 the world so there's a lot of room to
00:15:04.980 00:15:04.990 grow and the people are grown and as the
00:15:08.880 00:15:08.890 economy is growing because the middle
00:15:10.890 00:15:10.900 class you know it used to be 200 million
00:15:14.100 00:15:14.110 a few
00:15:14.569 00:15:14.579 years ago and today it's between close
00:15:17.389 00:15:17.399 approaching 400 so you have a growing
00:15:19.729 00:15:19.739 middle class and you also have as I said
00:15:23.929 00:15:23.939 funding is never a problem and feed
00:15:29.059 00:15:29.069 stopped we don't have the feedstock in
00:15:31.729 00:15:31.739 India but what stopped us today I import
00:15:35.989 00:15:35.999 almost like 2 million tons of etn per
00:15:38.869 00:15:38.879 year and so you have another opportunity
00:15:45.439 00:15:45.449 here but that doesn't mean the u.s. see
00:15:50.960 00:15:50.970 the because of the very low I mean
00:15:53.629 00:15:53.639 because of the ETA and rejection and the
00:15:55.400 00:15:55.410 low price of e10 and the low price of
00:15:57.829 00:15:57.839 natural gas actually if you see the
00:16:00.590 00:16:00.600 manufacturing competitiveness of us has
00:16:03.619 00:16:03.629 suddenly come back which was in the case
00:16:06.439 00:16:06.449 so and transporting polymers across the
00:16:11.179 00:16:11.189 continent it's not that difficult of
00:16:13.789 00:16:13.799 course writing the freight rates are
00:16:15.379 00:16:15.389 hired because of I am or and whatever
00:16:17.030 00:16:17.040 else but so we need to you know you have
00:16:21.379 00:16:21.389 to be competitive and in the current
00:16:23.419 00:16:23.429 context as we talked earlier and dr.
00:16:26.299 00:16:26.309 Abdul Aziz said you also need to be
00:16:29.509 00:16:29.519 mindful of how do you continue to look
00:16:31.669 00:16:31.679 at your carbon footprint and how do you
00:16:33.679 00:16:33.689 reduce and how do you deal with all
00:16:36.109 00:16:36.119 these polymers into a circular economy
00:16:38.030 00:16:38.040 and a sector economy doesn't mean you
00:16:41.179 00:16:41.189 know just removing waste but it you need
00:16:44.150 00:16:44.160 to continues to reconstruct and
00:16:47.989 00:16:47.999 regenerate you know that's a kind of
00:16:50.030 00:16:50.040 thing so when you make polymers how do
00:16:52.159 00:16:52.169 you reduce the energy footprint so rate
00:16:53.840 00:16:53.850 is the carbon how do you collect them or
00:16:55.729 00:16:55.739 you segregate how did you process right
00:16:58.400 00:16:58.410 and and what do you do out of the
00:17:01.189 00:17:01.199 reprocess mathilde you produce some
00:17:03.289 00:17:03.299 value added like we have an example last
00:17:07.009 00:17:07.019 year we have taken 2 million PET bottles
00:17:12.590 00:17:12.600 and then of course we have a now
00:17:15.679 00:17:15.689 building a plan to go to six million six
00:17:18.470 00:17:18.480 billion my apologies two billion last
00:17:21.079 00:17:21.089 year to six billion and what are we
00:17:23.210 00:17:23.220 producing producing highly
00:17:26.350 00:17:26.360 actually they generate so much value
00:17:29.620 00:17:29.630 because these are all fashionable
00:17:32.320 00:17:32.330 clothing so you are actually not using
00:17:36.430 00:17:36.440 it for landfill which typically people
00:17:39.670 00:17:39.680 do but use high-value produce high-value
00:17:43.240 00:17:43.250 products so you're creating value yes we
00:17:46.240 00:17:46.250 also have an option take all the waste
00:17:48.310 00:17:48.320 and then today rather than landfill we
00:17:51.160 00:17:51.170 have found a use how to along with the
00:17:53.620 00:17:53.630 bitumen you used too low I mean lay the
00:17:56.890 00:17:56.900 roads and we have seen the longevity of
00:17:59.860 00:17:59.870 those roads is much better so if we
00:18:02.830 00:18:02.840 don't have any India the typical problem
00:18:04.810 00:18:04.820 is potholes because of the monsoon and
00:18:06.850 00:18:06.860 the intensity of rain and we found this
00:18:09.730 00:18:09.740 so you need to innovate and you need to
00:18:12.340 00:18:12.350 find examples and so like plastic waste
00:18:16.420 00:18:16.430 everybody talks a plastic plate in the
00:18:18.430 00:18:18.440 oceans and in the marine life in danger
00:18:20.650 00:18:20.660 in the marine life so single-use
00:18:22.810 00:18:22.820 plastics are being banned and that's a
00:18:26.230 00:18:26.240 right way to do but then how do we and
00:18:29.430 00:18:29.440 actually if you see it also loses a
00:18:32.860 00:18:32.870 tremendous value because in 95 percent
00:18:35.710 00:18:35.720 of the value of this single-use plastic
00:18:38.260 00:18:38.270 the flexible packaging what we call is
00:18:40.540 00:18:40.550 gone after a very short single-use now
00:18:45.220 00:18:45.230 how do you recover that value so that is
00:18:50.050 00:18:50.060 where you know I mean what we are trying
00:18:53.200 00:18:53.210 to do is so that in some way we are not
00:18:58.480 00:18:58.490 exactly there it's yes in terms of
00:19:01.060 00:19:01.070 recycling we can say we are doing
00:19:02.470 00:19:02.480 tremendous amount of recycling but that
00:19:04.870 00:19:04.880 as a dr. Abdul Aziz say you know this
00:19:08.410 00:19:08.420 cycling is not the answer the circular
00:19:10.750 00:19:10.760 economy how quickly we get there that is
00:19:13.690 00:19:13.700 the answer and that's what we are always
00:19:15.340 00:19:15.350 trying to aim so John I wanted to ask
00:19:19.720 00:19:19.730 you about that a little bit you know
00:19:21.490 00:19:21.500 with in environmental awareness creeping
00:19:24.040 00:19:24.050 up and as you said the middle class is
00:19:25.690 00:19:25.700 expanding as the middle class expands I
00:19:27.820 00:19:27.830 think it's awareness of and concern
00:19:29.320 00:19:29.330 about the environment is going to expand
00:19:30.910 00:19:30.920 as well if you're a refiner or a
00:19:33.250 00:19:33.260 petrochemical player how do you balance
00:19:36.100 00:19:36.110 the need for profits with the
00:19:38.640 00:19:38.650 need to be a responsible environmental
00:19:40.800 00:19:40.810 citizen and with your social license you
00:19:43.410 00:19:43.420 know until we get to this circular
00:19:44.970 00:19:44.980 economy that people have been talking
00:19:46.440 00:19:46.450 about what what do you what do you see
00:19:48.630 00:19:48.640 happening in that regard well I think
00:19:50.430 00:19:50.440 you know again this is not a new thing
00:19:53.550 00:19:53.560 for refineries I think especially in the
00:19:55.050 00:19:55.060 United States they've been focused on
00:19:57.060 00:19:57.070 efficiency and energy conservation for a
00:19:58.860 00:19:58.870 long time when I first started a
00:20:00.360 00:20:00.370 business with 1980 when what price is
00:20:03.780 00:20:03.790 very high you know energy conservation
00:20:05.640 00:20:05.650 was you know maybe our main focus at
00:20:07.890 00:20:07.900 that time we monitored energy usage at
00:20:11.160 00:20:11.170 every single unit at every single area
00:20:13.410 00:20:13.420 on a daily basis and and certainly low
00:20:16.170 00:20:16.180 prices to get that emphasis away but I
00:20:18.840 00:20:18.850 think markets markets have a important
00:20:22.950 00:20:22.960 role in markets an important role to
00:20:24.150 00:20:24.160 play then and will have in the future to
00:20:26.190 00:20:26.200 incentivize efficient usage of the
00:20:29.700 00:20:29.710 resources that you have and I think the
00:20:32.250 00:20:32.260 US refiners have been very good about
00:20:35.180 00:20:35.190 you know the ones that have been
00:20:37.260 00:20:37.270 efficient and using resources of also at
00:20:40.560 00:20:40.570 the same time been the more profitable
00:20:42.240 00:20:42.250 refiners they're the ones that have
00:20:44.010 00:20:44.020 survived we've had a lot of inefficient
00:20:46.470 00:20:46.480 refineries in the u.s. shut down and by
00:20:49.500 00:20:49.510 and large they've been ones that also
00:20:50.880 00:20:50.890 we're not as efficient from the
00:20:53.490 00:20:53.500 environmental and you know social
00:20:55.500 00:20:55.510 license stand points so I think the u.s.
00:20:59.460 00:20:59.470 are fighting history is a very
00:21:00.630 00:21:00.640 responsible industry from a
00:21:04.160 00:21:04.170 environmental and social licence and
00:21:07.170 00:21:07.180 corporate and government standpoint and
00:21:08.970 00:21:08.980 and a big part of it is is you know once
00:21:11.790 00:21:11.800 they got one half sizes
00:21:12.840 00:21:12.850 it comes from market in its proper
00:21:16.050 00:21:16.060 market incentives not from top-down
00:21:18.570 00:21:18.580 government regulations yep and and you
00:21:22.740 00:21:22.750 do it much more efficiently through
00:21:24.930 00:21:24.940 market-based incentives and and we've
00:21:28.470 00:21:28.480 seen that we've seen that in the
00:21:30.120 00:21:30.130 countries that have the the like in the
00:21:34.410 00:21:34.420 u.s. market-based incentives the the
00:21:37.020 00:21:37.030 industry is more is cleaner more
00:21:39.990 00:21:40.000 efficient less energy usage and they
00:21:43.470 00:21:43.480 just do things better so you know a
00:21:45.450 00:21:45.460 proper carbon you know if we if we could
00:21:48.960 00:21:48.970 come up with the proper carbon pricing
00:21:50.880 00:21:50.890 mechanism
00:21:51.910 00:21:51.920 as we heard Bob Dudley mentioned earlier
00:21:53.680 00:21:53.690 and others earlier that's the that's the
00:21:55.570 00:21:55.580 right way to reduce carbon usages
00:21:57.430 00:21:57.440 through a simple carbon pricing as long
00:22:01.780 00:22:01.790 as you get the proper carbon pricing in
00:22:03.820 00:22:03.830 place and a consistent one all these
00:22:05.940 00:22:05.950 these these cap and trade programs and
00:22:09.520 00:22:09.530 things like that they're already
00:22:10.510 00:22:10.520 complicated they tend to be very
00:22:13.270 00:22:13.280 inefficient and very easy to manipulate
00:22:16.170 00:22:16.180 a simple market-based process is a way
00:22:19.690 00:22:19.700 to get to this more you know post carbon
00:22:22.900 00:22:22.910 environment oh we have about four and a
00:22:26.710 00:22:26.720 half minutes left I wanted to check and
00:22:28.270 00:22:28.280 see if there are any questions from the
00:22:29.890 00:22:29.900 audience
00:22:38.070 00:22:38.080 Michelle Faust Rice University on the
00:22:40.660 00:22:40.670 very interesting idea about trying to
00:22:43.300 00:22:43.310 position refining to serve Africa how
00:22:46.480 00:22:46.490 would you do that in terms of feedstock
00:22:48.270 00:22:48.280 you would need some natural gas probably
00:22:51.250 00:22:51.260 for blending or something yeah Saudi gas
00:22:56.410 00:22:56.420 sorry yes it's it's readily available
00:23:09.540 00:23:09.550 the one of the things that happens in
00:23:13.720 00:23:13.730 Saudi Arabia is when when when the
00:23:15.580 00:23:15.590 government commits through the Ministry
00:23:18.370 00:23:18.380 of Energy
00:23:19.390 00:23:19.400 they make long-term commitments they
00:23:21.970 00:23:21.980 will make 2025 year commitments where
00:23:25.750 00:23:25.760 you will be given the Ethan the sales
00:23:28.900 00:23:28.910 gas and the oil supply that doesn't get
00:23:32.020 00:23:32.030 done anywhere else in the world and it's
00:23:34.660 00:23:34.670 a matter of and they will only do that
00:23:36.730 00:23:36.740 if the gas can or the oil or the liquid
00:23:43.060 00:23:43.070 whatever the feed is required is
00:23:45.730 00:23:45.740 available okay so it's not something
00:23:49.030 00:23:49.040 that is done with any kind of an
00:23:52.270 00:23:52.280 assumption moving forward and that's
00:23:54.190 00:23:54.200 what's different about Saudi Arabia is
00:23:56.080 00:23:56.090 you have security of of supply I
00:24:00.840 00:24:00.850 wouldn't
00:24:03.229 00:24:03.239 be too worried about that for the simple
00:24:10.159 00:24:10.169 reason that even if gas gas sales gas
00:24:16.219 00:24:16.229 becomes an issue there's always LNG and
00:24:20.049 00:24:20.059 there is there are currently this was
00:24:26.810 00:24:26.820 what was it three months ago I mean also
00:24:30.200 00:24:30.210 CEO of Saudi Aramco signed an MoU with
00:24:33.409 00:24:33.419 an American company that is looking at
00:24:36.919 00:24:36.929 an LNG facility in Port Arthur so there
00:24:41.659 00:24:41.669 is a way and it means and the in Saudi
00:24:47.930 00:24:47.940 Arabia one of the the interesting things
00:24:50.930 00:24:50.940 is you want to create an economy that is
00:24:56.299 00:24:56.309 cyclical in nature and one that creates
00:24:58.969 00:24:58.979 jobs and the petrochemical industry does
00:25:01.279 00:25:01.289 that it creates in the primary secondary
00:25:05.239 00:25:05.249 and tertiary manufacturing so the
00:25:09.229 00:25:09.239 government will go out of its way
00:25:10.869 00:25:10.879 supported by Saudi Aramco to secure
00:25:17.299 00:25:17.309 those feedstocks so that the the job can
00:25:20.930 00:25:20.940 be jobs can be created for the very very
00:25:24.769 00:25:24.779 young workforce of the demographics in
00:25:28.729 00:25:28.739 Saudi Arabia
00:25:29.329 00:25:29.339 more than 50 percent of the workforce is
00:25:32.539 00:25:32.549 below the age of 30 very young you have
00:25:37.549 00:25:37.559 to create jobs for them we have about
00:25:40.639 00:25:40.649 one minute yes please
00:25:49.149 00:25:49.159 Herman France and energy intelligence I
00:25:53.180 00:25:53.190 think you will at a session as he as I
00:25:55.460 00:25:55.470 asked John where several of the
00:26:00.610 00:26:00.620 presenters indicated that we somehow
00:26:03.740 00:26:03.750 constructing so of nine million barrels
00:26:05.960 00:26:05.970 that they have new refining capacity
00:26:07.149 00:26:07.159 globally if we believe we really believe
00:26:11.720 00:26:11.730 that oil the mound is likely to plateau
00:26:14.570 00:26:14.580 sometime in the 2030s and you build a
00:26:18.020 00:26:18.030 new refinery to date well last year
00:26:19.909 00:26:19.919 perhaps 50 years or so ago CC and the
00:26:22.580 00:26:22.590 u.s. you have refineries they're never
00:26:24.560 00:26:24.570 really finished because you keep
00:26:26.240 00:26:26.250 rebuilding and constructing new parts of
00:26:29.060 00:26:29.070 it so what is that going to do to the
00:26:31.279 00:26:31.289 worlds of finding industry you have
00:26:32.960 00:26:32.970 China keeps building India keep building
00:26:35.270 00:26:35.280 Middle Eastern countries keep building
00:26:38.180 00:26:38.190 more and more capacity how how what kind
00:26:43.610 00:26:43.620 of capacity will these refineries run if
00:26:46.430 00:26:46.440 indeed we reach a big bounce sometime in
00:26:49.909 00:26:49.919 the 2030
00:26:50.930 00:26:50.940 well I think that's a very good question
00:26:52.820 00:26:52.830 you know refining industry in the
00:26:54.799 00:26:54.809 petrochemical industry or both and as
00:26:57.919 00:26:57.929 all manufacturing histories have been
00:26:59.450 00:26:59.460 notorious is over building themselves
00:27:01.220 00:27:01.230 out of business and the one good thing
00:27:05.270 00:27:05.280 is we're at a good starting point now in
00:27:07.430 00:27:07.440 the last four years demand has exceeded
00:27:10.370 00:27:10.380 refinery capacity additions you know
00:27:13.279 00:27:13.289 fairly significantly so we're at a at a
00:27:15.980 00:27:15.990 highest utilization level on a global
00:27:17.930 00:27:17.940 basis that we've been for 10 years and
00:27:20.600 00:27:20.610 and it's particularly in the US and Asia
00:27:24.490 00:27:24.500 not so in Latin America and Africa where
00:27:27.500 00:27:27.510 they haven't been able to run their
00:27:29.539 00:27:29.549 refineries very efficiently but there
00:27:31.520 00:27:31.530 will be some less efficient refineries
00:27:33.409 00:27:33.419 shut down around the world I think IMO
00:27:36.350 00:27:36.360 will drive some of that refineries now
00:27:39.409 00:27:39.419 that produce I sulfur fuel oil and in
00:27:42.440 00:27:42.450 our in regions that that aren't well
00:27:48.080 00:27:48.090 situated and they're not well funded so
00:27:49.970 00:27:49.980 we do see a new round of shutdowns on a
00:27:53.120 00:27:53.130 global basis over the next five years
00:27:55.270 00:27:55.280 and as you mentioned a nine million is
00:27:58.399 00:27:58.409 number that
00:27:59.440 00:27:59.450 that goes further out we have five
00:28:01.840 00:28:01.850 million barrels a day of new refinery
00:28:03.670 00:28:03.680 capacity being added over the next three
00:28:05.590 00:28:05.600 or four years and and that will result
00:28:08.440 00:28:08.450 in some marginal plants coming down and
00:28:12.010 00:28:12.020 not starting up so you're replacing old
00:28:14.500 00:28:14.510 inefficient non-economic plants with
00:28:17.380 00:28:17.390 newer more efficient plants and I do
00:28:19.720 00:28:19.730 think this fear of global of peat demand
00:28:23.020 00:28:23.030 will at least to some extent help limit
00:28:27.340 00:28:27.350 over capacity or building because people
00:28:31.180 00:28:31.190 are aware that everybody's aware that we
00:28:32.830 00:28:32.840 all hear that today we've heard it
00:28:34.210 00:28:34.220 everywhere there is this peak demand
00:28:36.400 00:28:36.410 that's coming up and we're actually
00:28:37.660 00:28:37.670 again a little more bullish on demand a
00:28:39.190 00:28:39.200 lot of people but we think that fear
00:28:41.080 00:28:41.090 itself will help limit or capacity and
00:28:43.990 00:28:44.000 over-expansion very much thank you very
00:28:53.830 00:28:53.840 much
00:28:54.910 00:28:54.920 [Applause]
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