Petrochem investments growing in Singapore

08-Feb-05

Petrochemical crackers in Singapore's Jurong Island have announced multi-million dollar interim investments for production expansion. This capacity increase will go towards satiating the strong demand in Asia, especially from China, until the planned new billion dollar crackers come on-stream around 2009. Despite the current global installed capacity of 100 million tpa, projections indicate demand growth of 3 - 4 million tons of ethylene annually, necessitating need for three new world-scale crackers of one million tons each per year. Last month, ExxonMobil had announced million dollar expansion plans to boost output of its ethylene cracker by 75,000 tons to 900,000 tpa by end of 2006. The latest expansion is by Petrochemical Corporation of Singapore (PCS) - a 50:50 venture between Shell and a Sumitomo Chemicals-led Japanese consortium. The JV plans to invest more than US$50 million to boost its propylene output by 30% (230,000 tons) to over 850,000 tpa, by 3Q 2006. The Polyolefin Company, a downstream plant at the PCS complex, will also invest US$15 million to increase its polypropylene output by 200,000 tpa. The economic growth in Asia Pacific, including China and India, has been robust. The long-term trend is widely expected to continue, affecting demand for petrochemicals. The current petrochem upturn, which started in 2003, is expected to last through 2005 and 2006, and could stretch to 2007. Within the next one and a half years, major decisions regarding petrochem investments in Singapore are expected: Shell will decide whether to go ahead with its planned US$1 billion cracker , while ExxonMobil is expected to decide by mid 2005 whether to build another cracker here. Currently, ExxonMobil has a US$2 billion cracker in Singapore - its single largest investment worldwide. PCS is currently discussing with Shell, (a shareholder) how to participate and help optimise operations of Shell's planned new cracker on Pulau Bukom. While a new downstream plant for monoethylene glycol will account for about half the Shell cracker's ethylene, the rest of its downstream customers will be on Jurong Island.By 2007, the market will be more balanced as new Middle East projects will help ease the tightness in the market.