OCI Partners LP
OCI Partners LP Corporate Presentation November 2016
Safe Harbor Provision Unless the context otherwise requires, references in this presentation to “our partnership,” “we,” “our,” “us” and similar terms, when used in a historical context, refer to the business and operations of OCI Beaumont LLC, a Texas limited liability company (“OCIB”) that OCI USA Inc. will contribute to OCI Partners LP in connection with this offering. When used in the present tense or future tense, those terms and “OCI Partners LP” and “OCIP” refer to OCI Partners LP, a Delaware limited partnership, and its subsidiaries, including OCIB. References to “our general partner” refer to OCI GP LLC, a Delaware limited liability company and a wholly owned subsidiary of OCI USA Inc. References to “OCI” refer to OCI N.V., a Dutch public limited liability company, and its consolidated subsidiaries other than us, our subsidiaries and our general partner. References to “OCI USA” refer to OCI USA Inc., a Delaware corporation, which is an indirect wholly owned subsidiary of OCI. References to “OCI Fertilizer” refer to OCI Fertilizer International B.V., a Dutch private limited liability company, which is an indirect wholly owned subsidiary of OCI. This presentation may contain forward‐looking statements that are based upon current expectations and involve a number of risks and uncertainties. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words “will,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Statements concerning our current estimates, expectations and projections about our future results, performance, prospects and opportunities and other statements, concerns, or matters that are not historical facts are "forward‐looking statements," as that term is defined under United States securities laws. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. Investors are cautioned that the following important factors, among others, may affect these forward‐looking statements. These factors include but are not limited to: risks and uncertainties with the respect to the quantities and costs of natural gas, the costs to acquire feedstocks and the price of the refined products we ultimately sell; management's ability to execute its strategy; our competitive position and the effects of competition; the projected growth of the industry in which we operate; changes in the scope, costs, and/or timing of capital projects; general economic and business conditions, particularly levels of spending relating to demand for methanol and ammonia; our ability to operate as an MLP; changes in the regulatory and/or environmental landscape; potential conflicts of interest between OCI USA and other unitholders; and other risks contained in our registration statement (including a prospectus) filed with the United States Securities and Exchange Commission (the “SEC”). Forward‐looking statements should not be read as a guarantee of future performance or results and will not be accurate indications of the times at or by which such performance or results will be achieved. Forward‐looking information is based on information available at the time and/or management's good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. OCI Partners LP undertakes no obligation to update or revise any such forward‐looking statements. The Partnership has filed a registration statement (including a prospectus) with the SEC for the offering to which this presentation relates. Before you invest, you should read the prospectus in that registration statement and other documents the Partnership has filed with the SEC for more complete information about the partnership and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the Partnership, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by emailing BofA Merrill Lynch at [email protected] or by calling either Barclays at (888) 603-5847 or Citigroup at (800) 831-9146. OCI Partners LP’s registration statement has not yet become effective and OCI Partners LP’s common units representing limited partnership interests may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. The offering of the common units representing limited partner interests is being made by means of the prospectus only, copies of which may be obtained from the underwriters as noted above. This presentation is not, and under no circumstances is to be construed to be, a prospectus, offering memorandum, advertisement and is not an offer to sell securities. The SEC and state securities regulators have not reviewed or determined if this presentation is truthful or complete. Non-GAAP Financial Measures Disclosure Today’s presentation includes certain non-GAAP financial measures as defined under Regulation G of the Securities Exchange Act of 1934, as amended. A reconciliation of those measures to the most directly comparable GAAP measures is available in the appendix to this presentation.
2
Partnership Overview
Partnership Overview Organizational Structure
OCI N.V. (NYSE Euronext Amsterdam: OCI:NA) 100% indirect ownership interest OCI USA Inc. 69,497,590 common units
OCI GP LLC (our general partner)
80% limited partner interest (1)
Non-economic general partner interest
Public Unitholders 17,500,000 common units
20% limited partner interest OCI Partners LP (NYSE: OCIP) 100% ownership interest
OCI Beaumont LLC
New Shares Issued Common Units (mm) Share Price ($) Total Capital ($)
New Capital Injection
Capital Structure
3,502,218 17.132
OCI NV units (mm) Public Unitholders units (mm)
69,497,590 17,500,000
79.88% 20.12%
60,000,000
Total Shares Outstanding
86,997,590
100%
___________________________________ (1) No excess distribution coverage and GP has non-economic interest and no incentive distribution rights
4
Partnership Overview Asset History of OCI Beaumont DuPont builds 600 Ktpa methanol plant, largest in the world at the time
Start-up of the ammonia plant built by Foster Wheeler with a Haldor Topsoe process design
1967
Ammonia production at the facility begins in December
2011
2000
Key Milestones
Debottlenecking process completed in 1Q 2015
2015
2011
2004 1997
1980s Modernization of The methanol unit using Lurgi GmbH’s Low Pressure Methanol technology
Plant Capacity (‘000 tpa)
OCI N.V. acquires minority stake securing 100% ownership of the plant
Terra shutsDown methanol production
Terra adds a 250 mtpa ammonia synthesis loop to The methanol plant
2011 OCI N.V. and its partner acquire the plant from Eastman Chemical
995
850
850
250
250
600
600
600
730
1967
1997
2003
4Q 2012
600
Methanol
Ammonia
265
Total Capacity
2012 Methanol production at the facility begins in July
1,244 331 913 1Q 2015 (Post-Debottleneck)
5
Partnership Overview OCI Partners Summary •
OCI’s facility near Beaumont, TX (“OCI Beaumont”) is an integrated methanol and ammonia facility strategically located on the Texas Gulf Coast
•
OCI N.V. acquired the Beaumont plant from Eastman Chemical Company in May 2011. Previously the Beaumont plant was owned by Terra Industries and DuPont, and was shut down from 2004 until OCI’s acquisition in 2011
•
Following a comprehensive upgrade, methanol and ammonia production commenced in July 2012 and December 2011, respectively
•
Partnership has completed all work related to debottlenecking project in 1Q 2015, with ammonia and methanol lines restarted in 2Q
•
–
Increased methanol production capacity by 25% to 912,500 mtpa
–
Increased ammonia production capacity by 25% to 331,000 mtpa
Partnership recently implemented a state-of-the-art methanol and ammonia truck loading facility on-site and expects to sell 80,000 mtpa via the new facility
Facility Overview Capacity Product
Methanol Ammonia
Pre – Debottlenecking Capacity
Key Information
Production During Full Year 2014
Current Production Capacity postDebottlenecking Project
Product Storage Capacity
Ownership
•
100%
Natural Gas Supply
•
Volumes contractually secured and pricing based on spot market
Distribution
•
Direct sales to customers by truck, pipeline, and barges
Metric Tons/Day
Metric Tons/ Year (1)
Metric Tons
Metric Tons/ Day
Metric Tons/ Year (1)
Metric Tons
2,000
730,000
617,031
2,500
912,500
42,000 (two tanks)
331,000
33,000 (two tanks)
726
264,990
259,214
___________________________________ (1) Assumes facility operates for a full year.
907
6
Partnership Overview
Superior Site with Strong Customer Relationships Methanol Customers
Selected Methanol Customers
Terms Lucite
Methanex Exxon Mobil
Arkema
Methanol Truck Terminal Barges Methanol Pipelines
Contract Life:
2-5 Years / Renewable
Pricing:
Jim Jordan Minus
Payment Terms: 25-30 Days
Delivery (2015) Truck 6% 49%
45% Barge
Pipeline
Key Customers:
Natural Gas Pipelines
Ammonia Customers Terms
Houston Pipe Line Lucite
Methanol Storage Kinder Morgan
Ammonia Pipeline
DuPont
Monthly
Pricing:
Tampa CFR Minus
Payment Terms: 30 Days
Ammonia DCP Midstream OCI Beaumont
Contract Life:
Delivery (2015) Pipeline
Truck
6% 11%
83% Barge
Key Customers:
Ammonia Storage Barges
Florida Gas Transmission
Gas Suppliers Suppliers
Hydrogen Pipeline Nitrogen Pipeline Ammonia Truck Terminal Air Products
Delivery (LTM) Pipeline
Air Liquide
100%
7
Partnership Overview
Debottlenecking Project Drives Distribution Growth Overview
Processes
The Partnership delayed the planned debottlenecking to January 2015 due to the holiday season to ensure all preturnaround construction activities are complete.
•
Install a selective catalytic reduction unit
•
Install an additional flare
•
Modify the convection section and heat exchangers
•
Construction completed in 1Q 2015.
•
•
Total cost was US$ 384 million for project; US$ 97.5 million for debottlenecking, US$ 124.4 million to improving reliability and US$ 162.1 million for ensuring environmental compliance
Increase the capacity of the synthesis gas compressor and the refrigeration compressor on the ammonia production unit
•
Replace and refurbish equipment that caused downtime
•
Both methanol and ammonia production lines have been running at or above design capacity since April 23, 2015
•
Capacity Increase Previous Capacity Product
Metric Metric Tons/Day Tons/Year
Benefits
Current Capacity Metric Metric % Tons/Day Tons/Year Increase
Methanol
2,000
730,000
2,500
912,500
25%
Ammonia
726
264,990
907
331,000
25%
•
Expands existing capacity
•
Expected to maximize operational availability
•
Increases efficiency of plant
•
Increases margins; current headcount will be maintained
8
Partnership Overview
Financial Overview and 3Q 2016 Results Summary Three Months Ended September 30 2016 2015 66,076 103,683 48,250 52,109 15,253 15,547 3,447 5,193
US$ thousand Revenues Cost of Goods Sold Depreciation Expense Selling, General and Administrative Expenses Income (loss) from Operations (before interest expense, other income (expense) and income tax expense) Interest Expense Interest Expense - Related Party Gain (loss) on disposition of fixed assets Other Income (Expense) Income (loss) from Operations (before tax expense) Income Tax Expense Net Income (loss) Total Debt Net Debt
Change -36% -7% -2% -34%
Nine Months Ended September 30 2016 2015 192,295 220,996 132,843 121,788 46,144 34,279 16,348 15,165
Change -13% 9% 35% 8%
(874)
30,834
-103%
(3,040)
49,764
-106%
10,104 143
7,278 51
39% 180%
28,869 245
11,569 152
150% 61%
(4)
11
-136%
(451)
16
-2919%
(16) (11,141) 556 (11,697)
(20) 23,496 353 23,143
-20% -147% 58% -151%
(5) (32,610) 589 (33,199)
100 38,159 646 37,513
-105% -185% -9% -188%
30-Sep-16 458,790 447,595
31-Dec-15 450,193 436,955
2% 2%
Sales Volumes 000 Metric Tons
9M 2016
Q3 2016
Q2 2016
Q1 2016
9M 2015
Q3 2015
Q2 2015
Q1 2015
Ammonia
247.9
81.3
69.9
96.7
157.9
73.3
49.1
35.5
Methanol
621.8
219.6
183.3
218.9
433.5
221.6
158.9
53.0
*Net Debt is defined as Total Debt minus Cash and Cash Equivalents *Total Debt is the outstanding principal portion of our Term Loan B Credit facility and Revolving Credit Facility less the unamortized portion of the Deferred Financing Cost and Original Issue Discount associated with these facilities
9
Partnership Overview
OCI Partners LP Long-Term Strategy • Maximize utilization rates of the debottlenecked plants
• Leverage sponsor’s technical know-how, expertise and track-record in identifying value-accretive projects and new investment opportunities
• Evaluate potential downstream projects for both methanol and ammonia to diversify product portfolio
• Maximize and maintain distributions to OCIP unitholders of 100% of cash available for distribution
• Maintain strong customer relationships near Beaumont, TX
10
Partnership Overview Investment Highlights
Producer of essential, global products: methanol and ammonia WA
Strong cash flow generation and OR significant step-up in projected ID revenue and EBITDA from debottlenecking project NV
UT
CA
Key barriers to entry include high capital requirements,AZ lengthy permitting process and proximity to customers / suppliers
MT
ME VT Supported byNH a technically
ND
WY
MN
SD
IL KS
NM TX
WV KY TN
AR MS LA
NJ
OH
IN
MO OK
strong sponsor, with an MA NY exceptional entrepreneurial CT track-record PA
MI
IA
NE CO
WI
AL
DC VA NC
Global low-cost producer due to SC U.S. natural gas advantage
GA
FL
Advantageous access to feedstock, customers and infrastructure
US methanol and ammonia markets suffer from an import deficit, which is expected to continue through at least 2018
11
Industry Overview
Industry Overview
Robust and Growing Global Methanol Market •
Methanol, also known as methyl alcohol or wood alcohol is the simplest of all alcohols
•
With its diversity of applications – from paints and plastics, furniture and carpeting, car parts and windshield wash fluid – methanol is one of the world’s most widely used industrial chemicals – Global demand in 2014 was roughly 72 million tons with 51% attributed to GDP-linked consumer and industrial products, while 37% is from fuel/energy related uses, and 12% is from methanol to olefins (“MTO”) / methanol to propylene (“MTP”) – Historical demand has been robust and is forecasted to remain so in the long term with China at the forefront China Leading Forecasted Industry Growth
2014 Global Methanol Demand by Derivative mn t/%
Merchant MTO/MTP 5%
mn t
All Other 14%
Formaldehyde 27%
250
Captive MTO/MTP 7%
N/E Asia
CAGR = 6.2%
S/E Asia/India
200 Acetic Acid 9%
Dimethyl Ether 9% Fuel Applications 12% Blues = GDP-core - 51% Purples = Fuel/Energy - 37% Grays = Methanol to olefins = 12%
China
300
Methyl Methacrylate 1% Biodiesel 5%
MTBE & TAME 11%
Note: Total demand = 72 million
___________________________________ Source: Argus JJ&A
ME/Africa
150
EU/Russia
100
South America
50 0
North America 2015
2020
2025
2030
2035
13
Industry Overview
Chinese MTO Changing Global Methanol Demand World Demand Growth (2000 - 2035E) (1) mn t 300
CAGR = 6.2%
250 200 150
CAGR = 6.3%
100 50 0
2000
2005
2010
2015 Core - GDP
Fuel
2020 MTO/MTP
CTO/CTP
2025
2030
(Coal to Olefins / Coal to Propylene)
•
Excluding CTO/CTP, 2015 methanol demand is estimated to be 78 million tons
•
China is the world’s largest producer of MTO and in 2015, MTO accounted for almost 18% of the country’s merchant methanol demand
•
MTO/MTP is poised to drive methanol demand, but affordability in current global crude oil environment remains key
___________________________________ (1) Source: Argus JJ&A
2035
14
Industry Overview
Exponential Growth Expected From Fuel Applications & MTO/MTP • Chinese gasoline blending will continue to grow with its expanding population and automobile demand
Fuel Applications and Gasoline Blending
‒
Europe currently allows blending of up to 3% methanol in gasoline. Countries such as Australia, Israel, Ecuador, Mexico, Egypt, and Oman are actively exploring methanol as a blend component in gasoline.
‒
MTBE use has been growing constantly and has reached 20 mm t/yr, mostly from Asia which is not subject to ethanol blending programs
‒
Many countries are also advancing the use of biodiesel, which requires blending approx. 10% methanol
• Methanol’s attractive features as transportation fuel – easy blending, high octane, improved combustion– is encouraging new potential demand uses ‒
Use of methanol as a marine fuel is a large potential new market. Stenna Line has converted one of its ferry’s to methanol fuel and Methanex has on order six new dual-fueled methanol transport ships
• Beginning in 2011, China redefined the methanol industry with its implementation of methanol consumption for olefin production ‒
China’s MTO/MTP Expansion
Historically, olefins were produced from naphtha, but coal to methanol to olefins provided an economic alternative
• Chinese MTO/MTP will significantly increase forecasted global methanol demand in the near term ‒
‒
Argus expects China to add 3.75 mm t/yr of MTO capacity from 2016 to 2019. By 2020, MTO use will consume 67 mm t/yr of methanol. Because 1 ton of olefins requires 3 tons of methanol, China’s capacity growth equates to over 10 mm t/yr of merchant methanol demand
___________________________________ Source: Argus JJ&A
mn t
World Methanol Demand Growth (Year over Year)
10 9 8 7 6 5 4 3 2 1 0
2016
2017 Core - GDP
2018 Fuel
2019
2020
MTO/MTP
15
Industry Overview
Attractive U.S. Methanol Market •
In 2015, the U.S. imported approximately 3.7 million metric tons of methanol to meet its supply deficit (57% of consumption)
•
The U.S. sources a majority of its imports from Trinidad, which is currently facing a natural gas supply deficit –
•
Structural shortages in natural gas reserves have led to government rationing
U.S. methanol demand is expected to increase at a CAGR of 6.3% between 2015 and 2020, driven by GDP US Methanol Supply & Demand ’000t
Exports
Imports
Production
20,000 15,000 10,000 5,000 0 -5,000 -10,000
2009
2013
2017
2021
2025
The majority of U.S. methanol demand is currently supplied by imports ___________________________________ Source: Argus JJ&A
16
Industry Overview
China Cost Curve Setting Industry Floor China Cost Curve •
Cost curve remains steep at the high end with Chinese producers using coal or expensive natural gas as feedstock
•
As the global marginal producer, China’s cost curve sets a price floor for methanol market –
•
___________________________________ Source: Argus JJ&A
In current lower energy price environment, the price floor is ~$200/metric ton
China’s natural gas-based cost structure was reduced in Q4 2015; however, the cost curve is not expected to see significant change in 2016
17
Industry Overview
Attractive U.S. Ammonia Markets • In 2015, the U.S. imported 5.1 million metric tons of ammonia – Represents 31% of total consumption • Ammonia must be imported to the U.S. as approximately 20 ammonia plants were closed between 1999 and 2007, including OCIP’s Beaumont facility – These plants had total annual capacity of more than 8.0 million metric tons • The U.S. is expected to remain a net importer for ammonia for the foreseeable future as the majority of new capacity announced has already been cancelled Three-Year Average U.S. Ammonia Use by End Market (1) Direct Application as Fertilizer
Fertilizer Feedstock
21.9% 50%
Industrial Feedstock
28.1%
A significant portion of current and future U.S. ammonia demand is expected to be supplied by imports ___________________________________ Source: CRU (formerly Commodities Research Unit). (1) Based on 2010-2012.
18
Industry Overview
Ammonia Prices Remain Strong Along with Crop Prices •
Historically, there has been a meaningful correlation between nitrogen fertilizer prices and crop prices – High crop prices incentivize farmers to increase fertilizer application in order to maximize crop yields, thereby increasing fertilizer demand and resulting in higher ammonia prices
•
Marginal producers in Eastern Europe (particularly the Ukraine), effectively set the price floor, with each region applying its own premium based on a number of factors such as local supply/demand dynamics, transportation, logistics and government policies U.S. Fertilizer-Crop Price Relationship (1) (US$ / St)
(US$ / Bushel)
1,200
12
1,000
10
800
8
600
6
400
4
200
2
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Ammonia Mid Cornbelt ___________________________________ (1) Source: Bloomberg
Wheat Kansas City Cash
0
Corn Chicago Cash
19
Industry Overview
Declining Trinidad Natural Gas Reserves: Supportive of OCI Partners LP Story •
Overview •
Trinidad faces fundamental gas deficit issues as increased natural gas production has not been matched by new reserves, leading to a fall in reserve life to 8.2 years in 2015 Natural gas production has fallen since 2012 as existing reserves have been depleted
(BCM)
(R/P Ratio)
50
25.0
40
20.0
30
15.0
20
10.0
10
5.0
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Production
Impact on Nitrogen Fertilizer Production
Appropriation of Natural Gas
0.0
Reserve Life
•
Ammonia capacity utilization rates in Trinidad have been consistently declining since 2011 as gas supply issues limited production
•
The nitrogen industry in Trinidad was established when there was a gas cost-based competitive advantage over the U.S.; however, as U.S. gas costs have fallen, this advantage has eroded
•
From 2012 to 2015, gas allocation to the production of ammonia dropped by 9%, and allocation to methanol dropped by 4%.
•
Fertilizer exports to the U.S. are expected to continue to fall, creating a more favorable environment for domestic production
___________________________________ Source: BP, Trinidad Ministry of Energy
20
Industry Overview
We Expect Our U.S. Natural Gas Advantage to Continue for the Foreseeable Future • The emergence of a U.S. “shale gas advantage” has led to an increase in natural gas supply Increased US natural gas production…
• Production from shale formations increasing to ~50% of total annual natural gas production by 2040 as compared with 34% in 2011 • According to the Energy Information Association (the “EIA”) forecasts, increases in the supply of U.S. natural gas are tracking to exceed increases in U.S. natural gas demand by 2019, leading to approximately 5.8 Tcf of net exports by 2040 • This abundance of U.S. natural gas has resulted in attractive domestic natural gas prices, often substantially below natural gas prices in other global markets, such as Europe, Japan and Northeast Asia
…has lead to lower prices
• Having a low cost feedstock for the majority of our methanol and ammonia production gives us a significant competitive advantage • The EIA expects U.S. Henry Hub natural gas prices to remain low for the foreseeable future; natural gas forward for 2015 is under US$ 3.00 MMBtu Total U.S. Natural Gas Production and Consumption, 1990 – 2040 (1)
(Trillion Cubic Feet)
40 30 20 10 0 -10
2000
2005
2010
2015 Production
___________________________________ (1) Source: EIA, Annual Energy Outlook 2014.
2020 Consumption
2025
2030
2035
2040
Net Imports
21
Sponsor Overview
Sponsor Overview
Overview of Our Sponsor – OCI N.V. •
OCI N.V. is a global natural gas-based fertilizer and industrial chemicals producers with production facilities in the Netherlands, USA, Egypt, and Algeria
•
As of September 2015, the Sawiris family collectively owns 54% of the outstanding shares
•
Currently employs approximately 3,000 people worldwide
•
OCI N.V. is traded on the NYSE Euronext Amsterdam (OCI:NA) •
Approximately € 2.9 billion market capitalization as of November 2016
23
Sponsor Overview
Overview of Our Sponsor – OCI N.V. Leading global natural gas-based fertilizer & chemicals producer ‒ Production facilities in The Netherlands, USA, Egypt and Algeria complemented by global distribution network ‒ Top 5 five global nitrogen-based fertilizer producer - sellable capacity of c.7.7 mtpa at end-2014 with competitive blended natural gas cost advantage over peers
Natural gas monetization focus following demerger of Construction business as of 9 March 2015 Summary Overview
‒ Pure play fertilizer & chemicals company offering distinct investment propositions
Growth initiatives 2014 - 2016 ‒ 2015: additional volumes from Sorfert Algeria, debottlenecking OCI Beaumont and Iowa Fertilizer Co start-up ‒ On track to increase sellable capacity by 60% to c.12 mtpa by end-2016 ‒ On June 12, 2015, OCI NV acquired BioMCN, a methanol and bio-methanol producer in the Netherlands with two methanol plants, of which one is operational (440 ktpa) and one mothballed (430 ktpa)
Trading on Euronext Amsterdam since 25 January 2013 (NYSE Euronext: OCI) ‒ AEX Index constituent since March 2014
24
Sponsor Overview OCI Fertilizer Highlights •
With the addition of Iowa Fertilizer Company (IFCo), total design saleable capacity for nitrogen-based fertilizers will increase to 8.7 million metric tons (10.4 million tons including merchant ammonium sulphate) by 2016
•
OCI Fertilizer operates five production assets located in North Africa (Egypt, Algeria), Europe (the Netherlands) and the U.S., with production capacity of nearly 7.0 million mtpa of nitrogen‐based fertilizer - This capacity is expected to increase to 8.6 mtpa in 2016 with the addition of IFCo and OCI Beaumont’s post-expansion capacity
Egyptian Fertilizers Co.
•
Fertilizers produced include ammonia, urea, calcium ammonium nitrate (CAN), urea ammonium nitrate (UAN) and other intermediary products; the business also sells ammonium sulphate (AS) out of the Netherlands and Belgium
Egypt Basic Industries Co
•
OCIP also produces methanol at OCI Beaumont with a capacity of 0.75 mtpa expanding to 0.9 mtpa
OCI Nitrogen
•
OCI Fertilizer’s downstream product portfolio includes: - Melamine production
Sorfert
- AS distribution •
North African facilities with attractive production costs
•
Global in-house distribution network with a presence in Europe and strategic joint ventures in Brazil and the U.S.
OCI Beaumont
Iowa Fertilizer
25
Appendix
Appendix
Board of Directors
Nassef Sawiris Michael Bennett
OCI GP LLC
Background
Director
Served as CEO and director of OCI N.V. and Orascom Construction Industries (“OCI SAE”) since its incorporation in 1998
Chairman
Significant experience in the nitrogen industry, including serving as CEO of Terra Industries from 2001 to 2010 Served as vice president and general manager of OCIB from September 2011 to June 2013
Frank Bakker
Director, President & CEO
Renso Zwiers
Director
Served as COO of OCI Fertilizer since January 2013 and has served as CEO of OCI Nitrogen since May 2010
Francis Meyer
Director
Served as Executive VP of Terra Industries from 2007 until April 2008 and as Senior VP and CFO from 1995 until 2007
Dod Fraser
Director
Served as President of Sackett Partners Inc. since its formation in 2000 upon retiring from a 27-year career in Investment Banking
Fady Kiama
CFO & Vice President
Served as corporate planning director and group controller of OCI SAE from 2001 until May 2013
Director
Senior lecturer in finance at the MIT Sloan School of Management.
Nathaniel Gregory
27
Appendix
Partnership Overview Methanol
Ammonia
•
Methanol is a liquid petrochemical utilized in a variety of industrial and energy-related applications
•
Ammonia constitutes the base feedstock for nearly all of the world‘s nitrogen chemical production
•
The primary use of methanol is to make other chemicals
•
Over 95% of global ammonia output is used as a feedstock to produce other chemical forms of nitrogen, such as:
-
•
•
~30% of global methanol demand is converted to formaldehyde, which is used in various industrial applications
-
Fertilizers
-
Blasting/mining compounds
-
Fibers and plastics
Outside of the U.S., methanol is used as a fuel in several capacities:
-
NOx emission reducing agents
-
Direct fuel for automobile engines
-
Direct application to soil for agricultural purposes
-
Gasoline blended fuel
-
Octane booster in reformulated gasoline
Methanol is also used in the lumber industry, in paper and plastic products, and various other paint and textile applications
•
Ammonia is widely used in industrial applications, particularly in the Texas Gulf Coast market
Essential Building Blocks for Numerous End-Use Products
28
Appendix
Product Process Overview
• Ammonia production unit is a 264,990 metric ton per year unit with a Haldor Topsøe-designed ammonia synthesis loop that processes hydrogen produced by the methanol production process as the feedstock to produce ammonia
Natural Gas
Methanol Process Flow
Natural Gas
Heat from Natural Gas Combustion Desulphurization Reactor
Steam Reformer Unit
Syngas Heat Recovery
Syngas Compression
Methanol Synthesis Reactors
Steam Steam is also used to drive the compressors
Cooling Recycle
• Methanol production unit is a 730,000 metric ton per year unit that is comprised of Foster Wheelerdesigned twin steam methane reformers for synthesis gas production, two Lurgi-designed parallel low pressure, water-cooled reactors and four distillation columns
Methanol Separation Ammonia Process Flow Optional H2N2
Liquid Syngas Compression
H2
PSA Hydrogen Recovery
Purge Gas
Recycle NH3 Synthesis
Cooling
Methanol Distillation Pure Methanol
Ammonia Separation
Methanol Storage
Liquid Pure Ammonia Ammonia Storage
Barge / Pipeline
29
Appendix
Site Facility Pictures
30
Appendix
The U.S. Natural Gas Outlook Low U.S. natural gas prices contribute to the competitive position of U.S. methanol and ammonia producers relative to foreign producers •
Natural gas forwards project low Henry Hub Spot prices through 2028 –
Below $4.00 per MMBtu until 2026
–
Below $4.50 per MMBtu through 2028 Annual Average Henry Hub Spot Natural Gas Prices, 2001 – 2028 (1)
($/MMBtu)
$10.0 $8.0 $6.0 $4.0 $2.0 $0.0 2001
2004
2007
2010
2013
Historical Henry Hub Spot Price ___________________________________ (1) Source: Bloomberg
2016
2019
2022
2025
2028
Projected Henry Hub Spot Price
31
Appendix
OCIP Realized Methanol Pricing History ($/metric ton)
650
550
450
350
250
150
2012
2013 Methanex Contract
2014
2015
Southern Chemical Contract
Argus Contract
2016 OCIP Realized Price
32
Appendix
US Methanol Imports
___________________________________ (1) Source: Argus JJ&A
33
Appendix
Gulf Methanol Capacity
___________________________________ (1) Source: Argus JJ&A
34
Appendix
New Methanol Capacity Start Year
Methanol Facility (1)
Location
Production Capacity (MTPA)
Technology/EPC
2015
Methanex – Geismar I
Geismar, LA
1,000,000
Jacobs Engineering
2015
Celanese – Fairway LLC
Clear Lake, TX
1,300,000
WorleyParsons
2015
Pampa Fuels LLC
Pampa, TX
65,000
ExxonMobil/Proman Group
2016
Methanex – Geismar II
Geismar, LA
1,000,000
Jacobs Engineering
2017
OCI – Natgasoline
Beaumont, TX
1,650,000
Lurgi/OEC
2019
Yuhuang Chemical
St. James Parish, LA
1,800,000
Lurgi/Amec Foster Wheeler
2019
G2X - Big Lake Fuels
Lake Charles, LA
1,400,000
Johnson Matthey/Proman Group
___________________________________ (1) Source: Argus JJ&A
Status
1/24/15 Produced first methanol from Geismar 1 10/16/15 Started production 6/1/15 Fully operational and completed first shipment of methanol 12/29/15 Successfully produced first methanol Construction began in November 2014 8/18/15 Yuhuang secures St. James site for methanol plant 1/15/16 G2X hosted ground breaking ceremony for construction
35
Appendix
New Ammonia Capacity Start Year Ammonia Facility (1)
Location
Production Sellable/Usable Technology/EPC Capacity (STPA)* Capacity (STPA) (1)
Permitting
Status
2015
Koch
Enid, OK
+350,000
-
KBR
•
8/16/14 Began construction in mid-September; project will be implemented over three years
2016
PotashCorp
Lima, OH
+110,000
-
KBR
•
Expected start up in 2016
2016
OCI
Wever, IA
850,000
100,000
KBR/OEC
•
On schedule to complete by 2016
2016
CF Industries
Donaldsonville, LA
1,275,000
185,000
ThyssenKrupp Uhde
•
Urea production began in November 2015
2016
CF Industries
Port Neal, IA
850,000
80,000
ThyssenKrupp Uhde
•
On track for 2016 startup
2016
Dyno-Cornerstone
Waggaman, LA
850,000
850,000
KBR
•
8/05/13 Cornerstone breaks ground on project
2016
LSB Industries
El Dorado, AR
375,000
375,000
Leidos/SAIC (for Nitric Acid)
•
Nitric acid plant expected start up in early 2016
2016
Agrium
Borger, TX
+160,000
-
KBR
•
8/7/15 Urea project will be completed at end of 2016; cancelled ammonia expansion
2017
Dakota Gasification
Beulah, ND
-
-
IHI E&C
•
1/28/14 Urea plant scheduled for completion in early 2017
-
Koch (Invista)
Victoria, TX
400,000
400,000
1/31/14 Invista has put project on hold
-
Northern Plains
Grand Forks, ND
850,000
100,000
5/02/15 Announces product list of UAN, urea, DEF, AN, ATS, and anhydrous ammonia; no construction progress to date
-
Ohio Valley Resources
Rockport, IN
850,000
350,000
-
MFC (Fatima)
IN
850,000
50,000
•
-
CHS
Spiritwood, ND
850,000
-
•
KBR/SEI
•
12/19/13 Signed MOU with TEQSA for development, and selected Sinopec (SEI) for FEED & EPC; no construction progress to date 6/24/14 Signed MOU with Maire Tecnimont; no construction progress to date 9/05/14 CHS approved final plans for construction of fertilizer plant; no construction progress to date
* Production capacity with “+” indicates additional capacity expansion on existing facility
___________________________________ (1) Source: Blue Johnson (2014).
36
Appendix
Methanol and Ammonia Plant Closures Year of Closure
Methanol Facility
Location
Production Capacity (MTPA)
Year of Closure
Ammonia Facility
Location
Production Capacity (MTPA)
1998
Georgia Gulf
Plaquemine, LA
480,000
1999
Potash Corp.
Clinton, IA
281,000
1999
Methanex
Fortier, LA
570,000
1999
Potash Corp.
La Platte, NE
231,000
1999
Ashland
Plaquemine, LA
450,000
1999
Solutia
Lulling, LA
551,000
2000
Sterling
Texas City, TX
450,000
2000
Borden Chemicals & Plastics
Geismar, LA
468,000
2000
Borden Chemicals & Plastics
Geismar, LA
990,000
2000
Diamond Shamrock
Dumas, TX
83,000
2001
Delaware City
Delaware City, DE
200,000
2001
Agrium
Kennewick, WA
237,000
2001
Enron
Pasadena, TX
375,000
2001
Cytec
Fortier, LA
485,000
2003
Air Products
Pace, FL
120,000
2001
DuPont
Beaumont, TX
540,000
2003
El Paso
Cheyenne, WY
180,000
2001
Farmland
Lawrence, KS
518,000
2004
Lyondell
Channelview, TX
770,000
2001
Vanguard
Pollock, LA
568,000
2004
Celanese
Clear Lake, TX
600,000
2003
Koch
Sterlington, LA
2005
Beaumont Methanol *
Beaumont, TX
730,000
2003
Simplot
Pocatello, ID
116,000
2005
Celanese
Bishop, TX
500,000
2003
Terra
Yazoo City, MS
193,000
2004
Air Products
Pace, FL
110,000
2004
Potash Corp.
Memphis, TN
452,000
2004
Terra
Blytheville, AR
496,000
2005
Agrium
Kenai, AK
694,000
2005
Diamond Shamrock
Dumas, TX
88,000
2005
Terra*
Beaumont, TX
264,990
2007
Agrium
Kenai, AK
777,000
___________________________________ * Represents current OCI Beaumont facility.
1,213,000
37
Safe Harbor Provision Unless the context otherwise requires, references in this presentation to “our partnership,” “we,” “our,” “us” and similar terms, when used in a historical context, refer to the business and operations of OCI Beaumont LLC, a Texas limited liability company (“OCIB”) that OCI USA Inc. will contribute to OCI Partners LP in connection with this offering. When used in the present tense or future tense, those terms and “OCI Partners LP” and “OCIP” refer to OCI Partners LP, a Delaware limited partnership, and its subsidiaries, including OCIB. References to “our general partner” refer to OCI GP LLC, a Delaware limited liability company and a wholly owned subsidiary of OCI USA Inc. References to “OCI” refer to OCI N.V., a Dutch public limited liability company, and its consolidated subsidiaries other than us, our subsidiaries and our general partner. References to “OCI USA” refer to OCI USA Inc., a Delaware corporation, which is an indirect wholly owned subsidiary of OCI. References to “OCI Fertilizer” refer to OCI Fertilizer International B.V., a Dutch private limited liability company, which is an indirect wholly owned subsidiary of OCI. This presentation may contain forward‐looking statements that are based upon current expectations and involve a number of risks and uncertainties. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words “will,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Statements concerning our current estimates, expectations and projections about our future results, performance, prospects and opportunities and other statements, concerns, or matters that are not historical facts are "forward‐looking statements," as that term is defined under United States securities laws. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. Investors are cautioned that the following important factors, among others, may affect these forward‐looking statements. These factors include but are not limited to: risks and uncertainties with the respect to the quantities and costs of natural gas, the costs to acquire feedstocks and the price of the refined products we ultimately sell; management's ability to execute its strategy; our competitive position and the effects of competition; the projected growth of the industry in which we operate; changes in the scope, costs, and/or timing of capital projects; general economic and business conditions, particularly levels of spending relating to demand for methanol and ammonia; our ability to operate as an MLP; changes in the regulatory and/or environmental landscape; potential conflicts of interest between OCI USA and other unitholders; and other risks contained in our registration statement (including a prospectus) filed with the United States Securities and Exchange Commission (the “SEC”). Forward‐looking statements should not be read as a guarantee of future performance or results and will not be accurate indications of the times at or by which such performance or results will be achieved. Forward‐looking information is based on information available at the time and/or management's good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. OCI Partners LP undertakes no obligation to update or revise any such forward‐looking statements. The Partnership has filed a registration statement (including a prospectus) with the SEC for the offering to which this presentation relates. Before you invest, you should read the prospectus in that registration statement and other documents the Partnership has filed with the SEC for more complete information about the partnership and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the Partnership, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by emailing BofA Merrill Lynch at [email protected] or by calling either Barclays at (888) 603-5847 or Citigroup at (800) 831-9146. OCI Partners LP’s registration statement has not yet become effective and OCI Partners LP’s common units representing limited partnership interests may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. The offering of the common units representing limited partner interests is being made by means of the prospectus only, copies of which may be obtained from the underwriters as noted above. This presentation is not, and under no circumstances is to be construed to be, a prospectus, offering memorandum, advertisement and is not an offer to sell securities. The SEC and state securities regulators have not reviewed or determined if this presentation is truthful or complete. Non-GAAP Financial Measures Disclosure Today’s presentation includes certain non-GAAP financial measures as defined under Regulation G of the Securities Exchange Act of 1934, as amended. A reconciliation of those measures to the most directly comparable GAAP measures is available in the appendix to this presentation.
2
Partnership Overview
Partnership Overview Organizational Structure
OCI N.V. (NYSE Euronext Amsterdam: OCI:NA) 100% indirect ownership interest OCI USA Inc. 69,497,590 common units
OCI GP LLC (our general partner)
80% limited partner interest (1)
Non-economic general partner interest
Public Unitholders 17,500,000 common units
20% limited partner interest OCI Partners LP (NYSE: OCIP) 100% ownership interest
OCI Beaumont LLC
New Shares Issued Common Units (mm) Share Price ($) Total Capital ($)
New Capital Injection
Capital Structure
3,502,218 17.132
OCI NV units (mm) Public Unitholders units (mm)
69,497,590 17,500,000
79.88% 20.12%
60,000,000
Total Shares Outstanding
86,997,590
100%
___________________________________ (1) No excess distribution coverage and GP has non-economic interest and no incentive distribution rights
4
Partnership Overview Asset History of OCI Beaumont DuPont builds 600 Ktpa methanol plant, largest in the world at the time
Start-up of the ammonia plant built by Foster Wheeler with a Haldor Topsoe process design
1967
Ammonia production at the facility begins in December
2011
2000
Key Milestones
Debottlenecking process completed in 1Q 2015
2015
2011
2004 1997
1980s Modernization of The methanol unit using Lurgi GmbH’s Low Pressure Methanol technology
Plant Capacity (‘000 tpa)
OCI N.V. acquires minority stake securing 100% ownership of the plant
Terra shutsDown methanol production
Terra adds a 250 mtpa ammonia synthesis loop to The methanol plant
2011 OCI N.V. and its partner acquire the plant from Eastman Chemical
995
850
850
250
250
600
600
600
730
1967
1997
2003
4Q 2012
600
Methanol
Ammonia
265
Total Capacity
2012 Methanol production at the facility begins in July
1,244 331 913 1Q 2015 (Post-Debottleneck)
5
Partnership Overview OCI Partners Summary •
OCI’s facility near Beaumont, TX (“OCI Beaumont”) is an integrated methanol and ammonia facility strategically located on the Texas Gulf Coast
•
OCI N.V. acquired the Beaumont plant from Eastman Chemical Company in May 2011. Previously the Beaumont plant was owned by Terra Industries and DuPont, and was shut down from 2004 until OCI’s acquisition in 2011
•
Following a comprehensive upgrade, methanol and ammonia production commenced in July 2012 and December 2011, respectively
•
Partnership has completed all work related to debottlenecking project in 1Q 2015, with ammonia and methanol lines restarted in 2Q
•
–
Increased methanol production capacity by 25% to 912,500 mtpa
–
Increased ammonia production capacity by 25% to 331,000 mtpa
Partnership recently implemented a state-of-the-art methanol and ammonia truck loading facility on-site and expects to sell 80,000 mtpa via the new facility
Facility Overview Capacity Product
Methanol Ammonia
Pre – Debottlenecking Capacity
Key Information
Production During Full Year 2014
Current Production Capacity postDebottlenecking Project
Product Storage Capacity
Ownership
•
100%
Natural Gas Supply
•
Volumes contractually secured and pricing based on spot market
Distribution
•
Direct sales to customers by truck, pipeline, and barges
Metric Tons/Day
Metric Tons/ Year (1)
Metric Tons
Metric Tons/ Day
Metric Tons/ Year (1)
Metric Tons
2,000
730,000
617,031
2,500
912,500
42,000 (two tanks)
331,000
33,000 (two tanks)
726
264,990
259,214
___________________________________ (1) Assumes facility operates for a full year.
907
6
Partnership Overview
Superior Site with Strong Customer Relationships Methanol Customers
Selected Methanol Customers
Terms Lucite
Methanex Exxon Mobil
Arkema
Methanol Truck Terminal Barges Methanol Pipelines
Contract Life:
2-5 Years / Renewable
Pricing:
Jim Jordan Minus
Payment Terms: 25-30 Days
Delivery (2015) Truck 6% 49%
45% Barge
Pipeline
Key Customers:
Natural Gas Pipelines
Ammonia Customers Terms
Houston Pipe Line Lucite
Methanol Storage Kinder Morgan
Ammonia Pipeline
DuPont
Monthly
Pricing:
Tampa CFR Minus
Payment Terms: 30 Days
Ammonia DCP Midstream OCI Beaumont
Contract Life:
Delivery (2015) Pipeline
Truck
6% 11%
83% Barge
Key Customers:
Ammonia Storage Barges
Florida Gas Transmission
Gas Suppliers Suppliers
Hydrogen Pipeline Nitrogen Pipeline Ammonia Truck Terminal Air Products
Delivery (LTM) Pipeline
Air Liquide
100%
7
Partnership Overview
Debottlenecking Project Drives Distribution Growth Overview
Processes
The Partnership delayed the planned debottlenecking to January 2015 due to the holiday season to ensure all preturnaround construction activities are complete.
•
Install a selective catalytic reduction unit
•
Install an additional flare
•
Modify the convection section and heat exchangers
•
Construction completed in 1Q 2015.
•
•
Total cost was US$ 384 million for project; US$ 97.5 million for debottlenecking, US$ 124.4 million to improving reliability and US$ 162.1 million for ensuring environmental compliance
Increase the capacity of the synthesis gas compressor and the refrigeration compressor on the ammonia production unit
•
Replace and refurbish equipment that caused downtime
•
Both methanol and ammonia production lines have been running at or above design capacity since April 23, 2015
•
Capacity Increase Previous Capacity Product
Metric Metric Tons/Day Tons/Year
Benefits
Current Capacity Metric Metric % Tons/Day Tons/Year Increase
Methanol
2,000
730,000
2,500
912,500
25%
Ammonia
726
264,990
907
331,000
25%
•
Expands existing capacity
•
Expected to maximize operational availability
•
Increases efficiency of plant
•
Increases margins; current headcount will be maintained
8
Partnership Overview
Financial Overview and 3Q 2016 Results Summary Three Months Ended September 30 2016 2015 66,076 103,683 48,250 52,109 15,253 15,547 3,447 5,193
US$ thousand Revenues Cost of Goods Sold Depreciation Expense Selling, General and Administrative Expenses Income (loss) from Operations (before interest expense, other income (expense) and income tax expense) Interest Expense Interest Expense - Related Party Gain (loss) on disposition of fixed assets Other Income (Expense) Income (loss) from Operations (before tax expense) Income Tax Expense Net Income (loss) Total Debt Net Debt
Change -36% -7% -2% -34%
Nine Months Ended September 30 2016 2015 192,295 220,996 132,843 121,788 46,144 34,279 16,348 15,165
Change -13% 9% 35% 8%
(874)
30,834
-103%
(3,040)
49,764
-106%
10,104 143
7,278 51
39% 180%
28,869 245
11,569 152
150% 61%
(4)
11
-136%
(451)
16
-2919%
(16) (11,141) 556 (11,697)
(20) 23,496 353 23,143
-20% -147% 58% -151%
(5) (32,610) 589 (33,199)
100 38,159 646 37,513
-105% -185% -9% -188%
30-Sep-16 458,790 447,595
31-Dec-15 450,193 436,955
2% 2%
Sales Volumes 000 Metric Tons
9M 2016
Q3 2016
Q2 2016
Q1 2016
9M 2015
Q3 2015
Q2 2015
Q1 2015
Ammonia
247.9
81.3
69.9
96.7
157.9
73.3
49.1
35.5
Methanol
621.8
219.6
183.3
218.9
433.5
221.6
158.9
53.0
*Net Debt is defined as Total Debt minus Cash and Cash Equivalents *Total Debt is the outstanding principal portion of our Term Loan B Credit facility and Revolving Credit Facility less the unamortized portion of the Deferred Financing Cost and Original Issue Discount associated with these facilities
9
Partnership Overview
OCI Partners LP Long-Term Strategy • Maximize utilization rates of the debottlenecked plants
• Leverage sponsor’s technical know-how, expertise and track-record in identifying value-accretive projects and new investment opportunities
• Evaluate potential downstream projects for both methanol and ammonia to diversify product portfolio
• Maximize and maintain distributions to OCIP unitholders of 100% of cash available for distribution
• Maintain strong customer relationships near Beaumont, TX
10
Partnership Overview Investment Highlights
Producer of essential, global products: methanol and ammonia WA
Strong cash flow generation and OR significant step-up in projected ID revenue and EBITDA from debottlenecking project NV
UT
CA
Key barriers to entry include high capital requirements,AZ lengthy permitting process and proximity to customers / suppliers
MT
ME VT Supported byNH a technically
ND
WY
MN
SD
IL KS
NM TX
WV KY TN
AR MS LA
NJ
OH
IN
MO OK
strong sponsor, with an MA NY exceptional entrepreneurial CT track-record PA
MI
IA
NE CO
WI
AL
DC VA NC
Global low-cost producer due to SC U.S. natural gas advantage
GA
FL
Advantageous access to feedstock, customers and infrastructure
US methanol and ammonia markets suffer from an import deficit, which is expected to continue through at least 2018
11
Industry Overview
Industry Overview
Robust and Growing Global Methanol Market •
Methanol, also known as methyl alcohol or wood alcohol is the simplest of all alcohols
•
With its diversity of applications – from paints and plastics, furniture and carpeting, car parts and windshield wash fluid – methanol is one of the world’s most widely used industrial chemicals – Global demand in 2014 was roughly 72 million tons with 51% attributed to GDP-linked consumer and industrial products, while 37% is from fuel/energy related uses, and 12% is from methanol to olefins (“MTO”) / methanol to propylene (“MTP”) – Historical demand has been robust and is forecasted to remain so in the long term with China at the forefront China Leading Forecasted Industry Growth
2014 Global Methanol Demand by Derivative mn t/%
Merchant MTO/MTP 5%
mn t
All Other 14%
Formaldehyde 27%
250
Captive MTO/MTP 7%
N/E Asia
CAGR = 6.2%
S/E Asia/India
200 Acetic Acid 9%
Dimethyl Ether 9% Fuel Applications 12% Blues = GDP-core - 51% Purples = Fuel/Energy - 37% Grays = Methanol to olefins = 12%
China
300
Methyl Methacrylate 1% Biodiesel 5%
MTBE & TAME 11%
Note: Total demand = 72 million
___________________________________ Source: Argus JJ&A
ME/Africa
150
EU/Russia
100
South America
50 0
North America 2015
2020
2025
2030
2035
13
Industry Overview
Chinese MTO Changing Global Methanol Demand World Demand Growth (2000 - 2035E) (1) mn t 300
CAGR = 6.2%
250 200 150
CAGR = 6.3%
100 50 0
2000
2005
2010
2015 Core - GDP
Fuel
2020 MTO/MTP
CTO/CTP
2025
2030
(Coal to Olefins / Coal to Propylene)
•
Excluding CTO/CTP, 2015 methanol demand is estimated to be 78 million tons
•
China is the world’s largest producer of MTO and in 2015, MTO accounted for almost 18% of the country’s merchant methanol demand
•
MTO/MTP is poised to drive methanol demand, but affordability in current global crude oil environment remains key
___________________________________ (1) Source: Argus JJ&A
2035
14
Industry Overview
Exponential Growth Expected From Fuel Applications & MTO/MTP • Chinese gasoline blending will continue to grow with its expanding population and automobile demand
Fuel Applications and Gasoline Blending
‒
Europe currently allows blending of up to 3% methanol in gasoline. Countries such as Australia, Israel, Ecuador, Mexico, Egypt, and Oman are actively exploring methanol as a blend component in gasoline.
‒
MTBE use has been growing constantly and has reached 20 mm t/yr, mostly from Asia which is not subject to ethanol blending programs
‒
Many countries are also advancing the use of biodiesel, which requires blending approx. 10% methanol
• Methanol’s attractive features as transportation fuel – easy blending, high octane, improved combustion– is encouraging new potential demand uses ‒
Use of methanol as a marine fuel is a large potential new market. Stenna Line has converted one of its ferry’s to methanol fuel and Methanex has on order six new dual-fueled methanol transport ships
• Beginning in 2011, China redefined the methanol industry with its implementation of methanol consumption for olefin production ‒
China’s MTO/MTP Expansion
Historically, olefins were produced from naphtha, but coal to methanol to olefins provided an economic alternative
• Chinese MTO/MTP will significantly increase forecasted global methanol demand in the near term ‒
‒
Argus expects China to add 3.75 mm t/yr of MTO capacity from 2016 to 2019. By 2020, MTO use will consume 67 mm t/yr of methanol. Because 1 ton of olefins requires 3 tons of methanol, China’s capacity growth equates to over 10 mm t/yr of merchant methanol demand
___________________________________ Source: Argus JJ&A
mn t
World Methanol Demand Growth (Year over Year)
10 9 8 7 6 5 4 3 2 1 0
2016
2017 Core - GDP
2018 Fuel
2019
2020
MTO/MTP
15
Industry Overview
Attractive U.S. Methanol Market •
In 2015, the U.S. imported approximately 3.7 million metric tons of methanol to meet its supply deficit (57% of consumption)
•
The U.S. sources a majority of its imports from Trinidad, which is currently facing a natural gas supply deficit –
•
Structural shortages in natural gas reserves have led to government rationing
U.S. methanol demand is expected to increase at a CAGR of 6.3% between 2015 and 2020, driven by GDP US Methanol Supply & Demand ’000t
Exports
Imports
Production
20,000 15,000 10,000 5,000 0 -5,000 -10,000
2009
2013
2017
2021
2025
The majority of U.S. methanol demand is currently supplied by imports ___________________________________ Source: Argus JJ&A
16
Industry Overview
China Cost Curve Setting Industry Floor China Cost Curve •
Cost curve remains steep at the high end with Chinese producers using coal or expensive natural gas as feedstock
•
As the global marginal producer, China’s cost curve sets a price floor for methanol market –
•
___________________________________ Source: Argus JJ&A
In current lower energy price environment, the price floor is ~$200/metric ton
China’s natural gas-based cost structure was reduced in Q4 2015; however, the cost curve is not expected to see significant change in 2016
17
Industry Overview
Attractive U.S. Ammonia Markets • In 2015, the U.S. imported 5.1 million metric tons of ammonia – Represents 31% of total consumption • Ammonia must be imported to the U.S. as approximately 20 ammonia plants were closed between 1999 and 2007, including OCIP’s Beaumont facility – These plants had total annual capacity of more than 8.0 million metric tons • The U.S. is expected to remain a net importer for ammonia for the foreseeable future as the majority of new capacity announced has already been cancelled Three-Year Average U.S. Ammonia Use by End Market (1) Direct Application as Fertilizer
Fertilizer Feedstock
21.9% 50%
Industrial Feedstock
28.1%
A significant portion of current and future U.S. ammonia demand is expected to be supplied by imports ___________________________________ Source: CRU (formerly Commodities Research Unit). (1) Based on 2010-2012.
18
Industry Overview
Ammonia Prices Remain Strong Along with Crop Prices •
Historically, there has been a meaningful correlation between nitrogen fertilizer prices and crop prices – High crop prices incentivize farmers to increase fertilizer application in order to maximize crop yields, thereby increasing fertilizer demand and resulting in higher ammonia prices
•
Marginal producers in Eastern Europe (particularly the Ukraine), effectively set the price floor, with each region applying its own premium based on a number of factors such as local supply/demand dynamics, transportation, logistics and government policies U.S. Fertilizer-Crop Price Relationship (1) (US$ / St)
(US$ / Bushel)
1,200
12
1,000
10
800
8
600
6
400
4
200
2
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Ammonia Mid Cornbelt ___________________________________ (1) Source: Bloomberg
Wheat Kansas City Cash
0
Corn Chicago Cash
19
Industry Overview
Declining Trinidad Natural Gas Reserves: Supportive of OCI Partners LP Story •
Overview •
Trinidad faces fundamental gas deficit issues as increased natural gas production has not been matched by new reserves, leading to a fall in reserve life to 8.2 years in 2015 Natural gas production has fallen since 2012 as existing reserves have been depleted
(BCM)
(R/P Ratio)
50
25.0
40
20.0
30
15.0
20
10.0
10
5.0
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Production
Impact on Nitrogen Fertilizer Production
Appropriation of Natural Gas
0.0
Reserve Life
•
Ammonia capacity utilization rates in Trinidad have been consistently declining since 2011 as gas supply issues limited production
•
The nitrogen industry in Trinidad was established when there was a gas cost-based competitive advantage over the U.S.; however, as U.S. gas costs have fallen, this advantage has eroded
•
From 2012 to 2015, gas allocation to the production of ammonia dropped by 9%, and allocation to methanol dropped by 4%.
•
Fertilizer exports to the U.S. are expected to continue to fall, creating a more favorable environment for domestic production
___________________________________ Source: BP, Trinidad Ministry of Energy
20
Industry Overview
We Expect Our U.S. Natural Gas Advantage to Continue for the Foreseeable Future • The emergence of a U.S. “shale gas advantage” has led to an increase in natural gas supply Increased US natural gas production…
• Production from shale formations increasing to ~50% of total annual natural gas production by 2040 as compared with 34% in 2011 • According to the Energy Information Association (the “EIA”) forecasts, increases in the supply of U.S. natural gas are tracking to exceed increases in U.S. natural gas demand by 2019, leading to approximately 5.8 Tcf of net exports by 2040 • This abundance of U.S. natural gas has resulted in attractive domestic natural gas prices, often substantially below natural gas prices in other global markets, such as Europe, Japan and Northeast Asia
…has lead to lower prices
• Having a low cost feedstock for the majority of our methanol and ammonia production gives us a significant competitive advantage • The EIA expects U.S. Henry Hub natural gas prices to remain low for the foreseeable future; natural gas forward for 2015 is under US$ 3.00 MMBtu Total U.S. Natural Gas Production and Consumption, 1990 – 2040 (1)
(Trillion Cubic Feet)
40 30 20 10 0 -10
2000
2005
2010
2015 Production
___________________________________ (1) Source: EIA, Annual Energy Outlook 2014.
2020 Consumption
2025
2030
2035
2040
Net Imports
21
Sponsor Overview
Sponsor Overview
Overview of Our Sponsor – OCI N.V. •
OCI N.V. is a global natural gas-based fertilizer and industrial chemicals producers with production facilities in the Netherlands, USA, Egypt, and Algeria
•
As of September 2015, the Sawiris family collectively owns 54% of the outstanding shares
•
Currently employs approximately 3,000 people worldwide
•
OCI N.V. is traded on the NYSE Euronext Amsterdam (OCI:NA) •
Approximately € 2.9 billion market capitalization as of November 2016
23
Sponsor Overview
Overview of Our Sponsor – OCI N.V. Leading global natural gas-based fertilizer & chemicals producer ‒ Production facilities in The Netherlands, USA, Egypt and Algeria complemented by global distribution network ‒ Top 5 five global nitrogen-based fertilizer producer - sellable capacity of c.7.7 mtpa at end-2014 with competitive blended natural gas cost advantage over peers
Natural gas monetization focus following demerger of Construction business as of 9 March 2015 Summary Overview
‒ Pure play fertilizer & chemicals company offering distinct investment propositions
Growth initiatives 2014 - 2016 ‒ 2015: additional volumes from Sorfert Algeria, debottlenecking OCI Beaumont and Iowa Fertilizer Co start-up ‒ On track to increase sellable capacity by 60% to c.12 mtpa by end-2016 ‒ On June 12, 2015, OCI NV acquired BioMCN, a methanol and bio-methanol producer in the Netherlands with two methanol plants, of which one is operational (440 ktpa) and one mothballed (430 ktpa)
Trading on Euronext Amsterdam since 25 January 2013 (NYSE Euronext: OCI) ‒ AEX Index constituent since March 2014
24
Sponsor Overview OCI Fertilizer Highlights •
With the addition of Iowa Fertilizer Company (IFCo), total design saleable capacity for nitrogen-based fertilizers will increase to 8.7 million metric tons (10.4 million tons including merchant ammonium sulphate) by 2016
•
OCI Fertilizer operates five production assets located in North Africa (Egypt, Algeria), Europe (the Netherlands) and the U.S., with production capacity of nearly 7.0 million mtpa of nitrogen‐based fertilizer - This capacity is expected to increase to 8.6 mtpa in 2016 with the addition of IFCo and OCI Beaumont’s post-expansion capacity
Egyptian Fertilizers Co.
•
Fertilizers produced include ammonia, urea, calcium ammonium nitrate (CAN), urea ammonium nitrate (UAN) and other intermediary products; the business also sells ammonium sulphate (AS) out of the Netherlands and Belgium
Egypt Basic Industries Co
•
OCIP also produces methanol at OCI Beaumont with a capacity of 0.75 mtpa expanding to 0.9 mtpa
OCI Nitrogen
•
OCI Fertilizer’s downstream product portfolio includes: - Melamine production
Sorfert
- AS distribution •
North African facilities with attractive production costs
•
Global in-house distribution network with a presence in Europe and strategic joint ventures in Brazil and the U.S.
OCI Beaumont
Iowa Fertilizer
25
Appendix
Appendix
Board of Directors
Nassef Sawiris Michael Bennett
OCI GP LLC
Background
Director
Served as CEO and director of OCI N.V. and Orascom Construction Industries (“OCI SAE”) since its incorporation in 1998
Chairman
Significant experience in the nitrogen industry, including serving as CEO of Terra Industries from 2001 to 2010 Served as vice president and general manager of OCIB from September 2011 to June 2013
Frank Bakker
Director, President & CEO
Renso Zwiers
Director
Served as COO of OCI Fertilizer since January 2013 and has served as CEO of OCI Nitrogen since May 2010
Francis Meyer
Director
Served as Executive VP of Terra Industries from 2007 until April 2008 and as Senior VP and CFO from 1995 until 2007
Dod Fraser
Director
Served as President of Sackett Partners Inc. since its formation in 2000 upon retiring from a 27-year career in Investment Banking
Fady Kiama
CFO & Vice President
Served as corporate planning director and group controller of OCI SAE from 2001 until May 2013
Director
Senior lecturer in finance at the MIT Sloan School of Management.
Nathaniel Gregory
27
Appendix
Partnership Overview Methanol
Ammonia
•
Methanol is a liquid petrochemical utilized in a variety of industrial and energy-related applications
•
Ammonia constitutes the base feedstock for nearly all of the world‘s nitrogen chemical production
•
The primary use of methanol is to make other chemicals
•
Over 95% of global ammonia output is used as a feedstock to produce other chemical forms of nitrogen, such as:
-
•
•
~30% of global methanol demand is converted to formaldehyde, which is used in various industrial applications
-
Fertilizers
-
Blasting/mining compounds
-
Fibers and plastics
Outside of the U.S., methanol is used as a fuel in several capacities:
-
NOx emission reducing agents
-
Direct fuel for automobile engines
-
Direct application to soil for agricultural purposes
-
Gasoline blended fuel
-
Octane booster in reformulated gasoline
Methanol is also used in the lumber industry, in paper and plastic products, and various other paint and textile applications
•
Ammonia is widely used in industrial applications, particularly in the Texas Gulf Coast market
Essential Building Blocks for Numerous End-Use Products
28
Appendix
Product Process Overview
• Ammonia production unit is a 264,990 metric ton per year unit with a Haldor Topsøe-designed ammonia synthesis loop that processes hydrogen produced by the methanol production process as the feedstock to produce ammonia
Natural Gas
Methanol Process Flow
Natural Gas
Heat from Natural Gas Combustion Desulphurization Reactor
Steam Reformer Unit
Syngas Heat Recovery
Syngas Compression
Methanol Synthesis Reactors
Steam Steam is also used to drive the compressors
Cooling Recycle
• Methanol production unit is a 730,000 metric ton per year unit that is comprised of Foster Wheelerdesigned twin steam methane reformers for synthesis gas production, two Lurgi-designed parallel low pressure, water-cooled reactors and four distillation columns
Methanol Separation Ammonia Process Flow Optional H2N2
Liquid Syngas Compression
H2
PSA Hydrogen Recovery
Purge Gas
Recycle NH3 Synthesis
Cooling
Methanol Distillation Pure Methanol
Ammonia Separation
Methanol Storage
Liquid Pure Ammonia Ammonia Storage
Barge / Pipeline
29
Appendix
Site Facility Pictures
30
Appendix
The U.S. Natural Gas Outlook Low U.S. natural gas prices contribute to the competitive position of U.S. methanol and ammonia producers relative to foreign producers •
Natural gas forwards project low Henry Hub Spot prices through 2028 –
Below $4.00 per MMBtu until 2026
–
Below $4.50 per MMBtu through 2028 Annual Average Henry Hub Spot Natural Gas Prices, 2001 – 2028 (1)
($/MMBtu)
$10.0 $8.0 $6.0 $4.0 $2.0 $0.0 2001
2004
2007
2010
2013
Historical Henry Hub Spot Price ___________________________________ (1) Source: Bloomberg
2016
2019
2022
2025
2028
Projected Henry Hub Spot Price
31
Appendix
OCIP Realized Methanol Pricing History ($/metric ton)
650
550
450
350
250
150
2012
2013 Methanex Contract
2014
2015
Southern Chemical Contract
Argus Contract
2016 OCIP Realized Price
32
Appendix
US Methanol Imports
___________________________________ (1) Source: Argus JJ&A
33
Appendix
Gulf Methanol Capacity
___________________________________ (1) Source: Argus JJ&A
34
Appendix
New Methanol Capacity Start Year
Methanol Facility (1)
Location
Production Capacity (MTPA)
Technology/EPC
2015
Methanex – Geismar I
Geismar, LA
1,000,000
Jacobs Engineering
2015
Celanese – Fairway LLC
Clear Lake, TX
1,300,000
WorleyParsons
2015
Pampa Fuels LLC
Pampa, TX
65,000
ExxonMobil/Proman Group
2016
Methanex – Geismar II
Geismar, LA
1,000,000
Jacobs Engineering
2017
OCI – Natgasoline
Beaumont, TX
1,650,000
Lurgi/OEC
2019
Yuhuang Chemical
St. James Parish, LA
1,800,000
Lurgi/Amec Foster Wheeler
2019
G2X - Big Lake Fuels
Lake Charles, LA
1,400,000
Johnson Matthey/Proman Group
___________________________________ (1) Source: Argus JJ&A
Status
1/24/15 Produced first methanol from Geismar 1 10/16/15 Started production 6/1/15 Fully operational and completed first shipment of methanol 12/29/15 Successfully produced first methanol Construction began in November 2014 8/18/15 Yuhuang secures St. James site for methanol plant 1/15/16 G2X hosted ground breaking ceremony for construction
35
Appendix
New Ammonia Capacity Start Year Ammonia Facility (1)
Location
Production Sellable/Usable Technology/EPC Capacity (STPA)* Capacity (STPA) (1)
Permitting
Status
2015
Koch
Enid, OK
+350,000
-
KBR
•
8/16/14 Began construction in mid-September; project will be implemented over three years
2016
PotashCorp
Lima, OH
+110,000
-
KBR
•
Expected start up in 2016
2016
OCI
Wever, IA
850,000
100,000
KBR/OEC
•
On schedule to complete by 2016
2016
CF Industries
Donaldsonville, LA
1,275,000
185,000
ThyssenKrupp Uhde
•
Urea production began in November 2015
2016
CF Industries
Port Neal, IA
850,000
80,000
ThyssenKrupp Uhde
•
On track for 2016 startup
2016
Dyno-Cornerstone
Waggaman, LA
850,000
850,000
KBR
•
8/05/13 Cornerstone breaks ground on project
2016
LSB Industries
El Dorado, AR
375,000
375,000
Leidos/SAIC (for Nitric Acid)
•
Nitric acid plant expected start up in early 2016
2016
Agrium
Borger, TX
+160,000
-
KBR
•
8/7/15 Urea project will be completed at end of 2016; cancelled ammonia expansion
2017
Dakota Gasification
Beulah, ND
-
-
IHI E&C
•
1/28/14 Urea plant scheduled for completion in early 2017
-
Koch (Invista)
Victoria, TX
400,000
400,000
1/31/14 Invista has put project on hold
-
Northern Plains
Grand Forks, ND
850,000
100,000
5/02/15 Announces product list of UAN, urea, DEF, AN, ATS, and anhydrous ammonia; no construction progress to date
-
Ohio Valley Resources
Rockport, IN
850,000
350,000
-
MFC (Fatima)
IN
850,000
50,000
•
-
CHS
Spiritwood, ND
850,000
-
•
KBR/SEI
•
12/19/13 Signed MOU with TEQSA for development, and selected Sinopec (SEI) for FEED & EPC; no construction progress to date 6/24/14 Signed MOU with Maire Tecnimont; no construction progress to date 9/05/14 CHS approved final plans for construction of fertilizer plant; no construction progress to date
* Production capacity with “+” indicates additional capacity expansion on existing facility
___________________________________ (1) Source: Blue Johnson (2014).
36
Appendix
Methanol and Ammonia Plant Closures Year of Closure
Methanol Facility
Location
Production Capacity (MTPA)
Year of Closure
Ammonia Facility
Location
Production Capacity (MTPA)
1998
Georgia Gulf
Plaquemine, LA
480,000
1999
Potash Corp.
Clinton, IA
281,000
1999
Methanex
Fortier, LA
570,000
1999
Potash Corp.
La Platte, NE
231,000
1999
Ashland
Plaquemine, LA
450,000
1999
Solutia
Lulling, LA
551,000
2000
Sterling
Texas City, TX
450,000
2000
Borden Chemicals & Plastics
Geismar, LA
468,000
2000
Borden Chemicals & Plastics
Geismar, LA
990,000
2000
Diamond Shamrock
Dumas, TX
83,000
2001
Delaware City
Delaware City, DE
200,000
2001
Agrium
Kennewick, WA
237,000
2001
Enron
Pasadena, TX
375,000
2001
Cytec
Fortier, LA
485,000
2003
Air Products
Pace, FL
120,000
2001
DuPont
Beaumont, TX
540,000
2003
El Paso
Cheyenne, WY
180,000
2001
Farmland
Lawrence, KS
518,000
2004
Lyondell
Channelview, TX
770,000
2001
Vanguard
Pollock, LA
568,000
2004
Celanese
Clear Lake, TX
600,000
2003
Koch
Sterlington, LA
2005
Beaumont Methanol *
Beaumont, TX
730,000
2003
Simplot
Pocatello, ID
116,000
2005
Celanese
Bishop, TX
500,000
2003
Terra
Yazoo City, MS
193,000
2004
Air Products
Pace, FL
110,000
2004
Potash Corp.
Memphis, TN
452,000
2004
Terra
Blytheville, AR
496,000
2005
Agrium
Kenai, AK
694,000
2005
Diamond Shamrock
Dumas, TX
88,000
2005
Terra*
Beaumont, TX
264,990
2007
Agrium
Kenai, AK
777,000
___________________________________ * Represents current OCI Beaumont facility.
1,213,000
37
