Egypt’s Downstream Operations and Opportunities: Sidpec growth strategy built on product quality, export experience

Jan. 28, 2008
Turning crude oil and natural gas components into basic and intermediate petrochemicals adds significant value to petroleum reserves.

Turning crude oil and natural gas components into basic and intermediate petrochemicals adds significant value to petroleum reserves. The country that produces these products from its raw materials best serves its economy and its citizens’ long term interests.

With significant natural petroleum resources to serve as feedstock, growing domestic product demand and expanding export market opportunities, Egypt has a promising future in petrochemical manufacturing.

Considered the first integral step towards realizing this bright future was the formation of Sidi Kerir Petrochemicals Co. (Sidpec) as an Egyptian joint stock company in November 1997. Privatization of the company in 2005 through a successful initial public offering positioned Sidpec for continued growth.

The company supplies all the domestic demand for polyethylene raw material with a polymer portfolio that includes linear low density polyethylene (LLDPE) and high density polyethylene (HDPE).

Throughout its operations, the company applies the latest available technology and state-of-the-art process design to meet Egyptian environmental regulations and requirements.

Ethylene plant overview.
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As it marks its tenth anniversary this year, Sidpec can count significant accomplishments, as it contributed significantly to the economy of Egypt. For example, this year Sidpec became the first company to win the National Award for Excellence in Exportation. Sidpec has exported its products to more than 60 countries around the world and has distributors in more than 25 of the world’s largest markets.

Control room.
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In the years ahead, the company hopes to double its capacity, as well as produce new products.

Polyethylene bagging lines.
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It all will be done with a focus on benefiting the Egyptian economy, as well as the environment, both in Egypt and wherever Sidpec’s products are sold. The company’s products are well known all over Europe because they are environmentally friendly.

Expansion strategy

In many ways, natural gas will be a leading driver of Egypt’s energy sector for the foreseeable future. Two of the most important contributions will be natural gas exports and natural gas used as raw material for the petrochemical industry.

Converting natural gas to methanol and then to ethylene and propylene will provide feedstock for petrochemical manufacturing. Natural gas for export will continue to come from new discoveries being made in the deep water of the Mediterranean and elsewhere.

Sidpec’s strategy is to split these discoveries into three categories. One will serve the local domestic market, the second is for export and the third will be for future generations. By applying this strategy, it can be good steward of this very valuable natural gas resource.

As commodity prices and environmental concerns increase, LNG is enjoying renewed interest around the world. And Egypt is prepared to participate in this growing market with liquefaction facilities.

Besides natural resources, Egypt offers another key to growth: Political and financial stability and a long history of attracting foreign investors.

Though tensions in the wider region of the Middle East continue to concern international companies, Egypt still offers stability, and systems and programs that are sustainable.

Adding value to Egypt’s locally available feedstock represents an important potential revenue stream and employment platform. And Sidpec’s success is important in developing Egypt’s petrochemical industry.

As the first company to produce ethylene to provide raw material for polyethylene and many other products. The first step had been taken towards Egypt’s petrochemical future.

Attention to safety and the environment, and the continuous development of staff expertise, are critical elements of Sidpec’s longterm strategy.

Sidpec’s plants are running according to plan, without mishap and with attention to the environment. And one of the most important assets is the relatively young, but knowledgeable staff.

Sidpec ethylene and polyethylene plant. The company supplies all the domestic demand for polyethylene raw material.
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About 90% of the company’s employees are below the age of 40. In providing the support and training they need, many are sent abroad to gain new and broader experience.

Customers and shareholders

Following the spirit of its vision “to be a leader in providing innovative, value added and highest quality petrochemical products worldwide while creating superior shareholder value” has made Sidpec quality internationally respected.

The company’s products couldn’t be distributed to more than 62 countries if those products were not of good quality. Customer satisfaction has been the main goal. And with continuity, products will be improved.

One measure of Sidpec quality is that its polyethylene grades (high and linear low density) fully meet the requirements of EC Directive 2002/72/EC and UK statutory instrument 1376 (1998), as amended, for use with all classes of foodstuff. Sidpec’s Egyptene polymer is used to produce film for shopping and grocery bags, heavy duty film and agricultural film.

Sidpec also produces blow-molded containers; injection-molded pallets, boxes, pails, toys and house wares; and roto-molded tanks and other items.

New capacity and markets

Sidpec shareholders have indicated their satisfaction with the company’s performance by encouraging it to expand its capacity and initiate new projects. They accept the studies that the company present to them and are willing to finance expansion.

A new polyethylene project was announced by Sidpec in mid 2006 to produce plastic pipe that will be part of the effort to make natural gas available to all homes in Egypt.

One of Sidpec’s objectives is to leverage the image of quality that has made its products available in scores of countries around the world to further penetrate the international markets.

First and foremost, the aim is to maintain a good relationship with the customers all over the world. In addition, Sidpec would like to penetrate new markets such as Africa and Latin America. The company already has support in America.

To maintain its relationships, the company takes the feedback it gets from customers and foreign distributors about packaging and other issues very seriously.

HSE and training

Sidpec’s focus on safety, on the health of its workers and of citizens both at home and abroad—and on reducing the company’s environmental footprint—is guided by a carefully thought out, detailed program.

The effort has paid off in many ways, including a significant reduction in accident rate. The company had no lost time incidents in 2003 and 2004; only one in 2005.

Sidpec’s industry is a clean industry, following all the standards—both international and Egyptian—related to air, and liquid and solid waste. And trying to reverse any negative impact that has occurred.

In November 2003, Sidpec became the first petrochemical company in Egypt to be certified as meeting the requirements of both the ISO14001 and OHSAS 18001 standards.

All employees have access to policies and procedures of a hazard commutation program, respiratory protection, hearing protection, safe work practices, emergency action plans and work permits.

Sidpec’s training and development department is committed to the development of each employee. And management has placed a strong emphasis on implementation of new managerial systems. These initiatives include several important programs.

A training center established in 2001 helps the company carry out these and other activities:

  • New employee training;
  • Training and seminars in ISO, management, safety and occupational health for related companies;
  • Joint meetings with related companies on environment protection and anti-pollution initiatives;
  • Training courses prepared by the company’s professional instructors, and by international companies for specific training needs.

The training department also organizes summer training for Egyptian university students in science, engineering, commerce and other disciplines.