The Singapore government may invest in a US$1 billion chemical plant in Singapore with Royal Dutch/Shell Group, Europe's second-largest oil producer. The Singapore government will be replacing Japan's Sumitomo Chemical Co., as the company preferred to give priority to a US$ 4.3 billion venture in Saudi Arabia. Construction of the plant is scheduled to start in 2006 and commercial operations in 2009. The plant to be built on Pulau Bukom, southwest of Singapore, and will double Shell's ethylene capacity in Singapore to 2.1 million tpa.
Singapore is Asia's biggest oil-trading centre with more than US$100 billion in trade a year. To maintain it's lead position, Singapore wants refiners to expand production of higher priced products. For this, the government is reclaiming land on several islands off the southwest to develop a petrochemical hub. Eastman Chemical Co., Exxon Mobil Corp. and Mitsui Chemicals Inc. have set up factories on the island, producing petrochemicals and plastics. Singapore expects output of ethylene in the country to rise to 3 million tpa by 2010 from the current 1.8 million tons.
Ethylene prices in Northeast Asia, currently at US$1,060 per ton levels, rose to almost US$1,300 per ton in Sept, the highest level since 1992. As prices rise, Shell and rivals BP and BASF are boosting ethylene output amid soaring demand for plastics in China and other Asian countries.