Decision soon on whether US$500m SMPO plant will be sited in Singapore
Ronnie Lim, Business Times 29 May 08;
(SINGAPORE) Shell Chemicals is considering Singapore as a possible site for a significant new styrene monomer/propylene oxide (SMPO) plant investment - expected to cost at least US$500 million. This comes even as it is building a US$3 billion-plus petrochemical complex here from which the plant can get its feedstock.
This was disclosed by Iain Lo, its vice-president, ventures & developments for the Asia Pacific/Middle East, in an interview with BT yesterday.
Mr Lo, speaking on the sidelines of the Asia Petrochemical Industry Conference (APIC) here, said that a 'decision is expected soon' on the SMPO project, with the Republic - one of Shell's main manufacturing hubs - competing with other sites in the Middle East and Asia for the investment.
A plus for Singapore will be the availability of feedstock like ethylene, propylene and benzene from Shell's new US$3 billion petrochemical cracker which will start up in late 2009/early 2010, he said. Another advantage is that Singapore is already the site of a Shell SMPO facility through its Ellba joint venture.
Mr Lo declined to give project details at this stage but he indicated that, to be economic, the new SMPO investment should ideally be as large as the world-scale US$500 million Ellba Eastern joint venture of Shell and Germany's BASF.
Ellba on Jurong Island is currently the largest SMPO plant in Asia producing the chemical intermediates used to make final products like polystyrene containers and rubber soles. It produces 250,000 tonnes of PO and 550,000 tonnes of SM annually.
Mr Lo was elaborating on Shell Chemicals' executive vice-president Ben van Beurden's remarks yesterday that it was considering significant new manufacturing investments - including another SMPO plant - to meet the needs of customers in Asia Pacific. Shell has already added four such SMPO plants in the last decade.
The new projects will build on new multi-billion- dollar petrochemical crackers it is currently establishing in Singapore and Nanhai, China.
By 2010, around 30 per cent of Shell's chemical manufacturing assets will be located in Asia Pacific and the Middle East, and focused primarily on supplying the burgeoning Asia Pacific market, Mr van Beurden said.
In Singapore, Shell is currently building its new Shell Eastern Petrochemicals Complex (SEPC), comprising an 800,000 tonnes per annum (tpa) ethylene cracker, a 750,000 tpa monoethylene glycol downstream plant and a new 155,000 tpa butadiene plant.
And if not the mega new SMPO investment, SEPC is set to secure more downstream investors at least.
'We are talking to a number of companies, both international and Asian players, some big and others smaller, on using the remaining cracker feedstock available,' Mr Lo said. There will be further announcements, although the final number of additional downstream plants at SEPC will depend on their size, he added.
What makes Singapore attractive to downstream investors is security of feedstock supply because of the number of petrochemical players here, Mr Lo stressed, saying that this comes from the 'critical mass' of having four crackers here come 2010, with the Republic looking to add another two in the future.
Apart from SEPC, ExxonMobil is building its second petrochemical complex here - this time a US$5 billion-plus, 1 million tpa project, adding to its earlier 900,000 tpa cracker. Petrochemical Corporation of Singapore (PCS) - in which Shell has a half share with a Japanese consortium - operates a 1.4 million tpa cracker.
While the new SEPC, which is integrated with Shell's Bukom refinery, will undoubtedly be 'far more efficient' than that of PCS, Mr Lo said that Shell is 'quite happy' with its PCS investment.
'Our view of PCS is that it is an extremely well-run asset which has been very profitable over the last four years. As far as stand-alone liquid crackers are concerned, it is one of the best around.' But he conceded that PCS will face challenges, especially in the current industry down-cycle.
Despite upcoming new, more cost-efficient gas- fuelled crackers in the Middle East, Mr Lo said that one advantage of PCS is that it is well integrated with a dedicated customer base and does not need to compete in the spot market.
