00:00:03.840 thank you first of all for sticking 00:00:05.57000:00:05.580 around I know that this is the last 00:00:07.25000:00:07.260 panel of the day we won't keep you too 00:00:08.93000:00:08.940 long I promise with me I have see a 00:00:11.78000:00:11.790 Taliban independent consultant with a 00:00:13.66900:00:13.679 long experience in the refining and 00:00:15.58900:00:15.599 chemical industry John hours of Turner 00:00:17.77900:00:17.789 Mason and company and PMS Prasad of 00:00:20.03000:00:20.040 Reliance Industries now Prasad you and I 00:00:23.60000:00:23.610 were speaking earlier about refiners 00:00:26.54000:00:26.550 getting into chemicals and you have some 00:00:28.31000:00:28.320 personal experience with that so I 00:00:29.72000:00:29.730 wanted you I wanted to ask you about 00:00:31.28000:00:31.290 that and also to ask everybody about 00:00:34.31000:00:34.320 what role chemicals can play for 00:00:36.59000:00:36.600 refiners in developing more of a green 00:00:39.31900:00:39.329 economy a clean economy all part of this 00:00:42.16900:00:42.179 energy transition that we've been 00:00:43.52000:00:43.530 speaking about please the did Emin 00:00:53.11900:00:53.129 everybody expected the demand for 00:00:55.21900:00:55.229 transportation fuels is going to reduce 00:00:58.06900:00:58.079 maybe not immediately but maybe over 00:01:01.06900:01:01.079 that decade or two decades so what are 00:01:03.07900:01:03.089 the opportunities for the refiners 00:01:05.50000:01:05.510 basically you know petrochemicals and 00:01:09.05000:01:09.060 chemicals is still a growing market and 00:01:11.87000:01:11.880 as dr. Abdul Aziz who said earlier the 00:01:15.74000:01:15.750 only place where the crude demand will 00:01:18.35000:01:18.360 increase is in to the chemicals and the 00:01:20.81000:01:20.820 petrochemicals and that's what we 00:01:22.96900:01:22.979 believed not today about a long time ago 00:01:26.09000:01:26.100 and if you look at our refinery the way 00:01:28.27900:01:28.289 we have a 1.4 million barrels of 00:01:31.59900:01:31.609 refinery at one location and from day 00:01:38.30000:01:38.310 one its integrated with Paris island 00:01:41.89900:01:41.909 petroleum and polypropylene and and we 00:01:46.73000:01:46.740 also have refined the off gases which 00:01:49.01000:01:49.020 are typically wasted converted into 00:01:51.70900:01:51.719 ethylene and propylene and so lots of 00:01:56.06000:01:56.070 petrochemical integration with further 00:01:59.09000:01:59.100 glycol and polyethylene and rubber so 00:02:03.28900:02:03.299 it's a truly integrated complex and it 00:02:06.16900:02:06.179 was conceived that way back in the late 00:02:08.60000:02:08.610 90s 00:02:09.93000:02:09.940 it was built that way and today we have 00:02:12.86000:02:12.870 probably about over 20% of the crude 00:02:16.62000:02:16.630 that we process goes straight into the 00:02:18.81000:02:18.820 petrochemicals and we still have 00:02:21.15000:02:21.160 potential with other feedstocks to take 00:02:24.12000:02:24.130 it too easily to over 30% but what we 00:02:27.51000:02:27.520 are trying to do they're trying to plan 00:02:30.33000:02:30.340 for the next eight years say by 28:29 in 00:02:37.62000:02:37.630 phases where as we see the demand going 00:02:41.58000:02:41.590 down if we see that then we are ready to 00:02:45.42000:02:45.430 with the technologies and the plants to 00:02:48.39000:02:48.400 convert up to let's say in about eight 00:02:51.24000:02:51.250 years maybe up to 70% of the crude that 00:02:54.33000:02:54.340 we process into petrochemicals okay is 00:02:59.46000:02:59.470 that a something that the rest of you 00:03:01.26000:03:01.270 see happening in the rest of the 00:03:02.55000:03:02.560 industry for example if there were to be 00:03:04.41000:03:04.420 a new-build refinery what would you 00:03:08.49000:03:08.500 recommend in terms of its chemical 00:03:10.20000:03:10.210 capabilities for both of you for both 00:03:12.30000:03:12.310 huge on and you see odd one stores yet 00:03:15.89000:03:15.900 okay with reference to as was said by 00:03:19.77000:03:19.780 dr. at work the the outlook for the use 00:03:25.17000:03:25.180 of transportation fuels looks like it's 00:03:29.22000:03:29.230 going to hit a peak in the coming 10 to 00:03:33.93000:03:33.940 20 year time frame now the I would like 00:03:38.85000:03:38.860 to make one comment about that now we we 00:03:41.88000:03:41.890 say it's peaking but I think everybody 00:03:43.86000:03:43.870 needs to understand that in osed 00:03:46.44000:03:46.450 countries which is 36 nations or the 00:03:50.72900:03:50.739 transportation fuel is about the same 00:03:54.93000:03:54.940 amount of transportation fuel that is 00:03:57.75000:03:57.760 consumed in the non-oecd countries so if 00:04:01.25900:04:01.269 you're going to build a new build 00:04:03.18000:04:03.190 refinery and petrochemical then you will 00:04:06.87000:04:06.880 build it in a non-oecd country number 00:04:11.64000:04:11.650 one that's where the demand is and it is 00:04:14.55000:04:14.560 where the growth for the oil industry is 00:04:17.13000:04:17.140 now there is something that is what we 00:04:21.63000:04:21.640 call 00:04:22.87000:04:22.880 intelligent integration and that's where 00:04:26.08000:04:26.090 you're able to take your refining 00:04:30.07000:04:30.080 processes and your petrochemical 00:04:32.74000:04:32.750 processes and actually link them so they 00:04:36.40000:04:36.410 use feeds from each other and what you 00:04:41.35000:04:41.360 and the process of doing that the 00:04:43.84000:04:43.850 objective of which is to minimize your 00:04:46.57000:04:46.580 waste now this is something that I've 00:04:49.72000:04:49.730 had experiences with in in one of the 00:04:53.83000:04:53.840 companies that I was the CEO of a pet 00:04:55.87000:04:55.880 rabbit it we took a refinery and we 00:04:58.39000:04:58.400 added to it a petrochemical 2.4 million 00:05:01.63000:05:01.640 on and we saw the opportunity to take 00:05:05.83000:05:05.840 some of the waste and from that use that 00:05:09.94000:05:09.950 for developing and creating shareholder 00:05:14.71000:05:14.720 value around the petrochemical stream so 00:05:17.35000:05:17.360 there and the nice thing about 00:05:18.55000:05:18.560 petrochemicals if you look around this 00:05:20.14000:05:20.150 room most everything in here is made 00:05:23.17000:05:23.180 with some kind of petrochemical whether 00:05:25.15000:05:25.160 it be your clothes your glasses your 00:05:27.94000:05:27.950 watches your cell phone 00:05:29.71000:05:29.720 especially the iPhones the carpeting the 00:05:34.56000:05:34.570 insulation the paint that's all Petro 00:05:37.39000:05:37.400 chemical petrochemical is here to stay 00:05:40.09000:05:40.100 and as dr. Shaw mentioned that's where 00:05:45.40000:05:45.410 the the growth rate of the 30% growth 00:05:50.68000:05:50.690 rate for the coming 10 years is going to 00:05:54.22000:05:54.230 be in the petrochemical field there are 00:05:56.56000:05:56.570 lots of opportunities and it's from a 00:06:01.17000:06:01.180 eco friendly perspective I think what we 00:06:05.68000:06:05.690 will find is companies will find the 00:06:09.22000:06:09.230 opportunity not only to make economic 00:06:10.92000:06:10.930 value out of it but they will also look 00:06:13.39000:06:13.400 at opportunities to actually create more 00:06:17.94000:06:17.950 eco-friendly facilities by doing the 00:06:22.63000:06:22.640 linkage of them together now I agree 00:06:26.05000:06:26.060 with both Prasad INSEAD and dr abdulaziz 00:06:30.37000:06:30.380 on and what other people have said 00:06:32.59000:06:32.600 earlier that 00:06:33.46000:06:33.470 certainly petrochemicals will be a major 00:06:35.20000:06:35.210 part of the growth picture for refiners 00:06:37.03000:06:37.040 I'm a little more bullish on fuel 00:06:39.91000:06:39.920 you know transportation fuels certainly 00:06:41.74000:06:41.750 in ten to fifteen twenty years it's 00:06:44.26000:06:44.270 going to peak out it's already probably 00:06:46.42000:06:46.430 hit its peak in developed countries but 00:06:48.97000:06:48.980 we see we still see a lot of growth in 00:06:50.56000:06:50.570 transportation fuels in the undeveloped 00:06:52.33000:06:52.340 countries and when you look at the 00:06:54.25000:06:54.260 volume we were talking to over sixty 00:06:55.90000:06:55.910 million barrels a day of transportation 00:06:57.55000:06:57.560 fuels even if you held steady that's a 00:07:00.13000:07:00.140 big big deal and so the refiners going 00:07:02.53000:07:02.540 to continue to be a big producers of 00:07:03.94000:07:03.950 transportation fuels I think what Prasad 00:07:06.16000:07:06.170 said is is and what reliance is doing is 00:07:08.71000:07:08.720 very smart is to provide themselves 00:07:10.78000:07:10.790 optionality to react to the market 00:07:12.88000:07:12.890 conditions because there will be periods 00:07:14.56000:07:14.570 of time when transportation feels like 00:07:16.33000:07:16.340 we've seen over the last three or four 00:07:17.56000:07:17.570 years turns rotational field growth is 00:07:19.36000:07:19.370 very strong because of low prices out I 00:07:21.58000:07:21.590 always like to put in perspective and I 00:07:23.77000:07:23.780 don't you know that's not saying that 00:07:25.45000:07:25.460 this won't be yet in the u.s. back in 00:07:28.99000:07:29.000 before I even started working in the 00:07:31.00000:07:31.010 business when I was still in college and 00:07:32.32000:07:32.330 I everybody was saying that gasoline 00:07:34.84000:07:34.850 demand and us Pete 00:07:36.31000:07:36.320 in 1978 okay well it didn't it didn't 00:07:40.24000:07:40.250 peak that was the consensus and I 00:07:42.10000:07:42.110 started working with exon exon those 00:07:43.78000:07:43.790 exons view at that time when I started 00:07:45.70000:07:45.710 work for him that gasoline demand in the 00:07:47.89000:07:47.900 US had peaked well it took a while 93 I 00:07:50.74000:07:50.750 think it surpassed that peak but then in 00:07:54.10000:07:54.110 2007 you know when we had the financial 00:07:56.59000:07:56.600 crisis but I said 2007 gasoline demand 00:07:59.35000:07:59.360 US has peaked well we didn't take as 00:08:01.78000:08:01.790 long that time you know so we PAP 00:08:03.07000:08:03.080 surpassed that here in the last three 00:08:04.48000:08:04.490 years now we do believe that it's 00:08:07.36000:08:07.370 probably peaked now this year's probably 00:08:10.39000:08:10.400 less than last year in US but it we 00:08:11.86000:08:11.870 hadn't been peaked and the rest of the 00:08:13.39000:08:13.400 world so there's still a lot of 00:08:14.86000:08:14.870 opportunities on a transportation fuel 00:08:16.39000:08:16.400 side but I do agree on the growth side 00:08:18.34000:08:18.350 on the petrochemicals and it's smart to 00:08:20.92000:08:20.930 provide that option and and it's been 00:08:23.26000:08:23.270 going on for a while my first job at 00:08:24.97000:08:24.980 Exxon was at Bay town which is was at 00:08:27.37000:08:27.380 that time a very highly integrated 00:08:29.67000:08:29.680 refinery with the petrochemical complex 00:08:31.93000:08:31.940 and and an old fence plant and have 00:08:33.67000:08:33.680 integrated even more since then so it's 00:08:35.80000:08:35.810 something that refiners have known for a 00:08:37.77900:08:37.789 while and now it's becoming even more 00:08:39.52000:08:39.530 important to petrochemical side of the 00:08:41.46000:08:41.470 the main feature now on more of like a 00:08:44.46000:08:44.470 geographical basis you you had mentioned 00:08:47.22000:08:47.230 that if you're building out a new 00:08:48.87000:08:48.880 refinery you want to do it close to your 00:08:50.28000:08:50.290 market where the where the demand growth 00:08:51.90000:08:51.910 is right right I wonder though to what 00:08:55.20000:08:55.210 degree changes in supply are factoring 00:08:58.26000:08:58.270 into this for example in the United 00:08:59.64000:08:59.650 States with the shale revolution massive 00:09:01.92000:09:01.930 increase in natural gas liquids massive 00:09:04.65000:09:04.660 increase in light crude and we've seen 00:09:07.20000:09:07.210 that kind of disrupt that thinking or at 00:09:08.88000:09:08.890 least so it seems to me as somebody 00:09:10.08000:09:10.090 who's not exactly in the industry but 00:09:12.06000:09:12.070 just watching it 00:09:13.71000:09:13.720 what role does that kind of supply 00:09:15.99000:09:16.000 growth play when you're thinking about 00:09:18.90000:09:18.910 building out or expanding capacity 00:09:20.31000:09:20.320 especially given that the United States 00:09:22.53000:09:22.540 now has established itself as such a 00:09:24.15000:09:24.160 massive premier supplier of at this 00:09:27.93000:09:27.940 point all liquids to the rest of the 00:09:30.30000:09:30.310 world well if if I can take this first 00:09:35.94000:09:35.950 go ahead Z sure the you're absolutely 00:09:39.87000:09:39.880 correct about the US but I would say 00:09:43.23000:09:43.240 that there are three things I believe 00:09:46.05000:09:46.060 that are very important for the success 00:09:47.79000:09:47.800 of a petrochemical facility number one 00:09:50.61000:09:50.620 is easy access and economically 00:09:55.91000:09:55.920 attractive access to the feed the oil in 00:10:00.00000:10:00.010 the gas 00:10:01.22000:10:01.230 number two is proximity to the market 00:10:06.68000:10:06.690 you have to be in close within a close 00:10:12.12000:10:12.130 distance of the current and future 00:10:15.69000:10:15.700 market growth and number three is access 00:10:20.10000:10:20.110 to financial opportunities for you to be 00:10:27.51000:10:27.520 able to build the facilities that are 00:10:29.57900:10:29.589 required the u.s. meets one maybe two of 00:10:35.01000:10:35.020 those factors it's not exactly close to 00:10:39.15000:10:39.160 the growing market conditions the 00:10:42.63000:10:42.640 growing market for the petrochemical 00:10:45.11000:10:45.120 side and and this in petrochemicals that 00:10:48.93000:10:48.940 you you have to look at to you break it 00:10:51.42000:10:51.430 down into two different segments number 00:10:54.36000:10:54.370 is what you call the commodity 00:10:56.25000:10:56.260 petrochemicals and and these are readily 00:10:59.94000:10:59.950 available and it doesn't matter where 00:11:02.94000:11:02.950 you buy them they're basically priced 00:11:05.25000:11:05.260 almost the same and they have this same 00:11:07.89000:11:07.900 specs then you have what they call 00:11:09.96000:11:09.970 specialty petrochemicals that's when you 00:11:12.63000:11:12.640 get into adhesives catalysts detergents 00:11:17.39000:11:17.400 the elastomers and the specialty 00:11:22.61000:11:22.620 petrochemicals are basically for the 00:11:25.59000:11:25.600 most part generically they are consumed 00:11:28.26000:11:28.270 by middle-class so you take a look at 00:11:32.67000:11:32.680 the world and you say where is the 00:11:35.37000:11:35.380 growing middle class 25% of the 00:11:38.16000:11:38.170 population right now is within that 00:11:40.67000:11:40.680 middle class which is $40,000 to 120,000 00:11:45.48000:11:45.490 dollars per family okay now where is it 00:11:50.03000:11:50.040 that's in Northeast Asia it's in the 00:11:55.32000:11:55.330 Middle East and eventually sleeping 00:11:57.96000:11:57.970 giant of Africa and then you say okay 00:12:01.11000:12:01.120 now that's that's the growing middle 00:12:03.75000:12:03.760 class of the future so where do you want 00:12:06.51000:12:06.520 to put your petrochemical facility we 00:12:09.69000:12:09.700 are where you have access to the 00:12:13.53000:12:13.540 reserves oil and gas and you have a 00:12:18.84000:12:18.850 proximity to this growing middle class 00:12:22.01900:12:22.029 and you have access to funding now being 00:12:29.85000:12:29.860 a Saudi I'll tell you Saudi Arabia 00:12:33.44000:12:33.450 because of its proximity to Africa 00:12:40.44000:12:40.450 there isn't a continent or there isn't a 00:12:42.78000:12:42.790 country closer to Africa than Saudi 00:12:44.55000:12:44.560 Arabia you go through the Red Sea and 00:12:47.51000:12:47.520 the nice thing about Saudi Arabia is you 00:12:50.49000:12:50.500 can build the facility anywhere in the 00:12:52.23000:12:52.240 west western region and you can go to 00:12:54.51000:12:54.520 anywhere in Africa so looking at that 00:12:59.43000:12:59.440 you say that in my mind whether it be 00:13:04.38000:13:04.390 Saudi Arabia whether it be in the Gulf 00:13:06.03000:13:06.040 region 00:13:06.72000:13:06.730 those are area 00:13:08.37000:13:08.380 that would that fall in the middle of 00:13:10.71000:13:10.720 where the growing middle class of the 00:13:12.90000:13:12.910 world is and for that reason I would I 00:13:16.47000:13:16.480 would beg to differ about the you know 00:13:20.34000:13:20.350 it's not just reserves it's the other 00:13:24.45000:13:24.460 two factors that come into play it will 00:13:27.27000:13:27.280 make it more difficult for the u.s. 00:13:29.82000:13:29.830 because of the transportation cost to be 00:13:33.18000:13:33.190 more competitive but you know R&D will 00:13:37.83000:13:37.840 always find ways to reduce the costs and 00:13:40.08000:13:40.090 that'll be a challenge for the 00:13:42.09000:13:42.100 petrochemical facilities in the United 00:13:44.37000:13:44.380 States to overcome that for some of you 00:13:47.54000:13:47.550 yep just to supplement Cortez yes a US 00:13:55.71000:13:55.720 has the resource and has rightly said 00:13:58.95000:13:58.960 the natural gas liquids and there'll be 00:14:02.42000:14:02.430 plenty and the light fruits you know 00:14:06.33000:14:06.340 when you process them actually we are 00:14:08.55000:14:08.560 creating a glut of the light distillates 00:14:10.92000:14:10.930 in the market but if you go back and see 00:14:17.81000:14:17.820 it's now two and a half years we have 00:14:21.00000:14:21.010 been importing we have a virtual 00:14:22.38000:14:22.390 pipeline over the sea of importing heat 00:14:25.02000:14:25.030 air so if we are in a country where the 00:14:28.86000:14:28.870 demand is strong and growing 1.3 billion 00:14:33.87000:14:33.880 people and we have a four hundred 00:14:36.60000:14:36.610 million middle class so and in India 00:14:40.65000:14:40.660 finding if you have the right project 00:14:43.02000:14:43.030 and if it is the right you know the 00:14:45.57000:14:45.580 promoter or whatever the company finding 00:14:49.47000:14:49.480 has never been a problem so you have the 00:14:52.08000:14:52.090 demand and ROI 00:14:54.15000:14:54.160 today at the per capita consumption for 00:14:57.09000:14:57.100 polymers and plastics in India is but 00:14:59.97000:14:59.980 10kg compared to 30 kg in the rest of 00:15:03.33000:15:03.340 the world so there's a lot of room to 00:15:04.98000:15:04.990 grow and the people are grown and as the 00:15:08.88000:15:08.890 economy is growing because the middle 00:15:10.89000:15:10.900 class you know it used to be 200 million 00:15:14.10000:15:14.110 a few 00:15:14.56900:15:14.579 years ago and today it's between close 00:15:17.38900:15:17.399 approaching 400 so you have a growing 00:15:19.72900:15:19.739 middle class and you also have as I said 00:15:23.92900:15:23.939 funding is never a problem and feed 00:15:29.05900:15:29.069 stopped we don't have the feedstock in 00:15:31.72900:15:31.739 India but what stopped us today I import 00:15:35.98900:15:35.999 almost like 2 million tons of etn per 00:15:38.86900:15:38.879 year and so you have another opportunity 00:15:45.43900:15:45.449 here but that doesn't mean the u.s. see 00:15:50.96000:15:50.970 the because of the very low I mean 00:15:53.62900:15:53.639 because of the ETA and rejection and the 00:15:55.40000:15:55.410 low price of e10 and the low price of 00:15:57.82900:15:57.839 natural gas actually if you see the 00:16:00.59000:16:00.600 manufacturing competitiveness of us has 00:16:03.61900:16:03.629 suddenly come back which was in the case 00:16:06.43900:16:06.449 so and transporting polymers across the 00:16:11.17900:16:11.189 continent it's not that difficult of 00:16:13.78900:16:13.799 course writing the freight rates are 00:16:15.37900:16:15.389 hired because of I am or and whatever 00:16:17.03000:16:17.040 else but so we need to you know you have 00:16:21.37900:16:21.389 to be competitive and in the current 00:16:23.41900:16:23.429 context as we talked earlier and dr. 00:16:26.29900:16:26.309 Abdul Aziz said you also need to be 00:16:29.50900:16:29.519 mindful of how do you continue to look 00:16:31.66900:16:31.679 at your carbon footprint and how do you 00:16:33.67900:16:33.689 reduce and how do you deal with all 00:16:36.10900:16:36.119 these polymers into a circular economy 00:16:38.03000:16:38.040 and a sector economy doesn't mean you 00:16:41.17900:16:41.189 know just removing waste but it you need 00:16:44.15000:16:44.160 to continues to reconstruct and 00:16:47.98900:16:47.999 regenerate you know that's a kind of 00:16:50.03000:16:50.040 thing so when you make polymers how do 00:16:52.15900:16:52.169 you reduce the energy footprint so rate 00:16:53.84000:16:53.850 is the carbon how do you collect them or 00:16:55.72900:16:55.739 you segregate how did you process right 00:16:58.40000:16:58.410 and and what do you do out of the 00:17:01.18900:17:01.199 reprocess mathilde you produce some 00:17:03.28900:17:03.299 value added like we have an example last 00:17:07.00900:17:07.019 year we have taken 2 million PET bottles 00:17:12.59000:17:12.600 and then of course we have a now 00:17:15.67900:17:15.689 building a plan to go to six million six 00:17:18.47000:17:18.480 billion my apologies two billion last 00:17:21.07900:17:21.089 year to six billion and what are we 00:17:23.21000:17:23.220 producing producing highly 00:17:26.35000:17:26.360 actually they generate so much value 00:17:29.62000:17:29.630 because these are all fashionable 00:17:32.32000:17:32.330 clothing so you are actually not using 00:17:36.43000:17:36.440 it for landfill which typically people 00:17:39.67000:17:39.680 do but use high-value produce high-value 00:17:43.24000:17:43.250 products so you're creating value yes we 00:17:46.24000:17:46.250 also have an option take all the waste 00:17:48.31000:17:48.320 and then today rather than landfill we 00:17:51.16000:17:51.170 have found a use how to along with the 00:17:53.62000:17:53.630 bitumen you used too low I mean lay the 00:17:56.89000:17:56.900 roads and we have seen the longevity of 00:17:59.86000:17:59.870 those roads is much better so if we 00:18:02.83000:18:02.840 don't have any India the typical problem 00:18:04.81000:18:04.820 is potholes because of the monsoon and 00:18:06.85000:18:06.860 the intensity of rain and we found this 00:18:09.73000:18:09.740 so you need to innovate and you need to 00:18:12.34000:18:12.350 find examples and so like plastic waste 00:18:16.42000:18:16.430 everybody talks a plastic plate in the 00:18:18.43000:18:18.440 oceans and in the marine life in danger 00:18:20.65000:18:20.660 in the marine life so single-use 00:18:22.81000:18:22.820 plastics are being banned and that's a 00:18:26.23000:18:26.240 right way to do but then how do we and 00:18:29.43000:18:29.440 actually if you see it also loses a 00:18:32.86000:18:32.870 tremendous value because in 95 percent 00:18:35.71000:18:35.720 of the value of this single-use plastic 00:18:38.26000:18:38.270 the flexible packaging what we call is 00:18:40.54000:18:40.550 gone after a very short single-use now 00:18:45.22000:18:45.230 how do you recover that value so that is 00:18:50.05000:18:50.060 where you know I mean what we are trying 00:18:53.20000:18:53.210 to do is so that in some way we are not 00:18:58.48000:18:58.490 exactly there it's yes in terms of 00:19:01.06000:19:01.070 recycling we can say we are doing 00:19:02.47000:19:02.480 tremendous amount of recycling but that 00:19:04.87000:19:04.880 as a dr. Abdul Aziz say you know this 00:19:08.41000:19:08.420 cycling is not the answer the circular 00:19:10.75000:19:10.760 economy how quickly we get there that is 00:19:13.69000:19:13.700 the answer and that's what we are always 00:19:15.34000:19:15.350 trying to aim so John I wanted to ask 00:19:19.72000:19:19.730 you about that a little bit you know 00:19:21.49000:19:21.500 with in environmental awareness creeping 00:19:24.04000:19:24.050 up and as you said the middle class is 00:19:25.69000:19:25.700 expanding as the middle class expands I 00:19:27.82000:19:27.830 think it's awareness of and concern 00:19:29.32000:19:29.330 about the environment is going to expand 00:19:30.91000:19:30.920 as well if you're a refiner or a 00:19:33.25000:19:33.260 petrochemical player how do you balance 00:19:36.10000:19:36.110 the need for profits with the 00:19:38.64000:19:38.650 need to be a responsible environmental 00:19:40.80000:19:40.810 citizen and with your social license you 00:19:43.41000:19:43.420 know until we get to this circular 00:19:44.97000:19:44.980 economy that people have been talking 00:19:46.44000:19:46.450 about what what do you what do you see 00:19:48.63000:19:48.640 happening in that regard well I think 00:19:50.43000:19:50.440 you know again this is not a new thing 00:19:53.55000:19:53.560 for refineries I think especially in the 00:19:55.05000:19:55.060 United States they've been focused on 00:19:57.06000:19:57.070 efficiency and energy conservation for a 00:19:58.86000:19:58.870 long time when I first started a 00:20:00.36000:20:00.370 business with 1980 when what price is 00:20:03.78000:20:03.790 very high you know energy conservation 00:20:05.64000:20:05.650 was you know maybe our main focus at 00:20:07.89000:20:07.900 that time we monitored energy usage at 00:20:11.16000:20:11.170 every single unit at every single area 00:20:13.41000:20:13.420 on a daily basis and and certainly low 00:20:16.17000:20:16.180 prices to get that emphasis away but I 00:20:18.84000:20:18.850 think markets markets have a important 00:20:22.95000:20:22.960 role in markets an important role to 00:20:24.15000:20:24.160 play then and will have in the future to 00:20:26.19000:20:26.200 incentivize efficient usage of the 00:20:29.70000:20:29.710 resources that you have and I think the 00:20:32.25000:20:32.260 US refiners have been very good about 00:20:35.18000:20:35.190 you know the ones that have been 00:20:37.26000:20:37.270 efficient and using resources of also at 00:20:40.56000:20:40.570 the same time been the more profitable 00:20:42.24000:20:42.250 refiners they're the ones that have 00:20:44.01000:20:44.020 survived we've had a lot of inefficient 00:20:46.47000:20:46.480 refineries in the u.s. shut down and by 00:20:49.50000:20:49.510 and large they've been ones that also 00:20:50.88000:20:50.890 we're not as efficient from the 00:20:53.49000:20:53.500 environmental and you know social 00:20:55.50000:20:55.510 license stand points so I think the u.s. 00:20:59.46000:20:59.470 are fighting history is a very 00:21:00.63000:21:00.640 responsible industry from a 00:21:04.16000:21:04.170 environmental and social licence and 00:21:07.17000:21:07.180 corporate and government standpoint and 00:21:08.97000:21:08.980 and a big part of it is is you know once 00:21:11.79000:21:11.800 they got one half sizes 00:21:12.84000:21:12.850 it comes from market in its proper 00:21:16.05000:21:16.060 market incentives not from top-down 00:21:18.57000:21:18.580 government regulations yep and and you 00:21:22.74000:21:22.750 do it much more efficiently through 00:21:24.93000:21:24.940 market-based incentives and and we've 00:21:28.47000:21:28.480 seen that we've seen that in the 00:21:30.12000:21:30.130 countries that have the the like in the 00:21:34.41000:21:34.420 u.s. market-based incentives the the 00:21:37.02000:21:37.030 industry is more is cleaner more 00:21:39.99000:21:40.000 efficient less energy usage and they 00:21:43.47000:21:43.480 just do things better so you know a 00:21:45.45000:21:45.460 proper carbon you know if we if we could 00:21:48.96000:21:48.970 come up with the proper carbon pricing 00:21:50.88000:21:50.890 mechanism 00:21:51.91000:21:51.920 as we heard Bob Dudley mentioned earlier 00:21:53.68000:21:53.690 and others earlier that's the that's the 00:21:55.57000:21:55.580 right way to reduce carbon usages 00:21:57.43000:21:57.440 through a simple carbon pricing as long 00:22:01.78000:22:01.790 as you get the proper carbon pricing in 00:22:03.82000:22:03.830 place and a consistent one all these 00:22:05.94000:22:05.950 these these cap and trade programs and 00:22:09.52000:22:09.530 things like that they're already 00:22:10.51000:22:10.520 complicated they tend to be very 00:22:13.27000:22:13.280 inefficient and very easy to manipulate 00:22:16.17000:22:16.180 a simple market-based process is a way 00:22:19.69000:22:19.700 to get to this more you know post carbon 00:22:22.90000:22:22.910 environment oh we have about four and a 00:22:26.71000:22:26.720 half minutes left I wanted to check and 00:22:28.27000:22:28.280 see if there are any questions from the 00:22:29.89000:22:29.900 audience 00:22:38.07000:22:38.080 Michelle Faust Rice University on the 00:22:40.66000:22:40.670 very interesting idea about trying to 00:22:43.30000:22:43.310 position refining to serve Africa how 00:22:46.48000:22:46.490 would you do that in terms of feedstock 00:22:48.27000:22:48.280 you would need some natural gas probably 00:22:51.25000:22:51.260 for blending or something yeah Saudi gas 00:22:56.41000:22:56.420 sorry yes it's it's readily available 00:23:09.54000:23:09.550 the one of the things that happens in 00:23:13.72000:23:13.730 Saudi Arabia is when when when the 00:23:15.58000:23:15.590 government commits through the Ministry 00:23:18.37000:23:18.380 of Energy 00:23:19.39000:23:19.400 they make long-term commitments they 00:23:21.97000:23:21.980 will make 2025 year commitments where 00:23:25.75000:23:25.760 you will be given the Ethan the sales 00:23:28.90000:23:28.910 gas and the oil supply that doesn't get 00:23:32.02000:23:32.030 done anywhere else in the world and it's 00:23:34.66000:23:34.670 a matter of and they will only do that 00:23:36.73000:23:36.740 if the gas can or the oil or the liquid 00:23:43.06000:23:43.070 whatever the feed is required is 00:23:45.73000:23:45.740 available okay so it's not something 00:23:49.03000:23:49.040 that is done with any kind of an 00:23:52.27000:23:52.280 assumption moving forward and that's 00:23:54.19000:23:54.200 what's different about Saudi Arabia is 00:23:56.08000:23:56.090 you have security of of supply I 00:24:00.84000:24:00.850 wouldn't 00:24:03.22900:24:03.239 be too worried about that for the simple 00:24:10.15900:24:10.169 reason that even if gas gas sales gas 00:24:16.21900:24:16.229 becomes an issue there's always LNG and 00:24:20.04900:24:20.059 there is there are currently this was 00:24:26.81000:24:26.820 what was it three months ago I mean also 00:24:30.20000:24:30.210 CEO of Saudi Aramco signed an MoU with 00:24:33.40900:24:33.419 an American company that is looking at 00:24:36.91900:24:36.929 an LNG facility in Port Arthur so there 00:24:41.65900:24:41.669 is a way and it means and the in Saudi 00:24:47.93000:24:47.940 Arabia one of the the interesting things 00:24:50.93000:24:50.940 is you want to create an economy that is 00:24:56.29900:24:56.309 cyclical in nature and one that creates 00:24:58.96900:24:58.979 jobs and the petrochemical industry does 00:25:01.27900:25:01.289 that it creates in the primary secondary 00:25:05.23900:25:05.249 and tertiary manufacturing so the 00:25:09.22900:25:09.239 government will go out of its way 00:25:10.86900:25:10.879 supported by Saudi Aramco to secure 00:25:17.29900:25:17.309 those feedstocks so that the the job can 00:25:20.93000:25:20.940 be jobs can be created for the very very 00:25:24.76900:25:24.779 young workforce of the demographics in 00:25:28.72900:25:28.739 Saudi Arabia 00:25:29.32900:25:29.339 more than 50 percent of the workforce is 00:25:32.53900:25:32.549 below the age of 30 very young you have 00:25:37.54900:25:37.559 to create jobs for them we have about 00:25:40.63900:25:40.649 one minute yes please 00:25:49.14900:25:49.159 Herman France and energy intelligence I 00:25:53.18000:25:53.190 think you will at a session as he as I 00:25:55.46000:25:55.470 asked John where several of the 00:26:00.61000:26:00.620 presenters indicated that we somehow 00:26:03.74000:26:03.750 constructing so of nine million barrels 00:26:05.96000:26:05.970 that they have new refining capacity 00:26:07.14900:26:07.159 globally if we believe we really believe 00:26:11.72000:26:11.730 that oil the mound is likely to plateau 00:26:14.57000:26:14.580 sometime in the 2030s and you build a 00:26:18.02000:26:18.030 new refinery to date well last year 00:26:19.90900:26:19.919 perhaps 50 years or so ago CC and the 00:26:22.58000:26:22.590 u.s. you have refineries they're never 00:26:24.56000:26:24.570 really finished because you keep 00:26:26.24000:26:26.250 rebuilding and constructing new parts of 00:26:29.06000:26:29.070 it so what is that going to do to the 00:26:31.27900:26:31.289 worlds of finding industry you have 00:26:32.96000:26:32.970 China keeps building India keep building 00:26:35.27000:26:35.280 Middle Eastern countries keep building 00:26:38.18000:26:38.190 more and more capacity how how what kind 00:26:43.61000:26:43.620 of capacity will these refineries run if 00:26:46.43000:26:46.440 indeed we reach a big bounce sometime in 00:26:49.90900:26:49.919 the 2030 00:26:50.93000:26:50.940 well I think that's a very good question 00:26:52.82000:26:52.830 you know refining industry in the 00:26:54.79900:26:54.809 petrochemical industry or both and as 00:26:57.91900:26:57.929 all manufacturing histories have been 00:26:59.45000:26:59.460 notorious is over building themselves 00:27:01.22000:27:01.230 out of business and the one good thing 00:27:05.27000:27:05.280 is we're at a good starting point now in 00:27:07.43000:27:07.440 the last four years demand has exceeded 00:27:10.37000:27:10.380 refinery capacity additions you know 00:27:13.27900:27:13.289 fairly significantly so we're at a at a 00:27:15.98000:27:15.990 highest utilization level on a global 00:27:17.93000:27:17.940 basis that we've been for 10 years and 00:27:20.60000:27:20.610 and it's particularly in the US and Asia 00:27:24.49000:27:24.500 not so in Latin America and Africa where 00:27:27.50000:27:27.510 they haven't been able to run their 00:27:29.53900:27:29.549 refineries very efficiently but there 00:27:31.52000:27:31.530 will be some less efficient refineries 00:27:33.40900:27:33.419 shut down around the world I think IMO 00:27:36.35000:27:36.360 will drive some of that refineries now 00:27:39.40900:27:39.419 that produce I sulfur fuel oil and in 00:27:42.44000:27:42.450 our in regions that that aren't well 00:27:48.08000:27:48.090 situated and they're not well funded so 00:27:49.97000:27:49.980 we do see a new round of shutdowns on a 00:27:53.12000:27:53.130 global basis over the next five years 00:27:55.27000:27:55.280 and as you mentioned a nine million is 00:27:58.39900:27:58.409 number that 00:27:59.44000:27:59.450 that goes further out we have five 00:28:01.84000:28:01.850 million barrels a day of new refinery 00:28:03.67000:28:03.680 capacity being added over the next three 00:28:05.59000:28:05.600 or four years and and that will result 00:28:08.44000:28:08.450 in some marginal plants coming down and 00:28:12.01000:28:12.020 not starting up so you're replacing old 00:28:14.50000:28:14.510 inefficient non-economic plants with 00:28:17.38000:28:17.390 newer more efficient plants and I do 00:28:19.72000:28:19.730 think this fear of global of peat demand 00:28:23.02000:28:23.030 will at least to some extent help limit 00:28:27.34000:28:27.350 over capacity or building because people 00:28:31.18000:28:31.190 are aware that everybody's aware that we 00:28:32.83000:28:32.840 all hear that today we've heard it 00:28:34.21000:28:34.220 everywhere there is this peak demand 00:28:36.40000:28:36.410 that's coming up and we're actually 00:28:37.66000:28:37.670 again a little more bullish on demand a 00:28:39.19000:28:39.200 lot of people but we think that fear 00:28:41.08000:28:41.090 itself will help limit or capacity and 00:28:43.99000:28:44.000 over-expansion very much thank you very 00:28:53.83000:28:53.840 much 00:28:54.91000:28:54.920 [Applause]
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