Chemical slowdown? Not on Jurong Island

Jonathan Kwok The Straits Times AsiaOne 12 Mar 14;

SINGAPORE - The global commodity chemical industry may be in a down cycle, but new plants and investments are expected to continue at a healthy pace at Singapore's Jurong Island.

Decisions to proceed with these projects were made earlier, and in any case, the industry's long-term prospects remain positive, experts say.

Five plants were opened on the island last year alone, and the Singapore Economic Development Board (EDB) expects a similar count for this year.

"We capitalised opportunities in the past years, so we will still have new plants opening," said Mr Eugene Leong, director for energy and chemicals at the EDB, which is responsible for attracting foreign firms to invest here.

Jurong Island, which houses part of Singapore's $99 billionper- year chemical sector, has been in the spotlight recently with several large-scale facility openings.

In January, energy major Exxon- Mobil opened an expansion of its vast chemical plant on Jurong Island.

Experts estimate the expansion cost US$5 billion (S$6.3 billion). And last month, the country's first liquefied natural gas (LNG) terminal was officially opened on Jurong Island.

The terminal means that Singapore can take in LNG imports from all over the world, in addition to the natural gas coming via pipes from Malaysia and Indonesia.

Both LNG and piped natural gas are used to generate electricity.

Mr Leong expects a similar number of plant openings overall this year, as compared to last year.

Five plants opened on Jurong Island last year, with two more plant ground-breakings.

The Tembusu Multi Utilities Complex was launched by Tuas Power to provide energy and water as well as treat industrial waste. And new facilities from Germany's Lanxess, China's Sinopec and Japanese firms Denka and Asahi Kasei were also added last year.

Japanese company Mitsui Chemicals and oil major Shell also broke ground last year for building new plants.

Still, the chemical downturn - due to a slowdown in demand from markets like China, coupled with increased supply as new plants open worldwide - will inevitably lead to more caution when companies evaluate new projects.

"We are fortunate that over the next five to 10 years, the industry is in a good position, so that has softened the impact of the downturn," said Mr Leong. He noted that demand from Asia is expected to increase.

Mr Leong expects the chemical sector to encounter better times by 2015 or 2016. Singapore has long been a base for many oil majors such as Shell and Mobil (now known as Exxon- Mobil), both of which started refineries here in the 1960s.

The oil industry is closely linked to petrochemicals.

Refineries also produce the feedstock for chemicals - and many chemicals are eventually used to make consumer products, such as shampoo, cosmetics and plastics.

Through merging seven offshore islands, Jurong Island was created to house an integrated refining and petrochemical hub. The reclamation was completed in 2009 and the island today houses about $42 billion in investments.

Now, the Government is emphasising the Jurong Island 2.0 initiative.

The plan is to raise environmental sustainability and ensure that firms' energy, feedstock, water and transport needs are all met, said Mr Dennis Tan, director of the biomedical and chemicals cluster at JTC Corporation, the statutory board that develops and manages industrial estates.

"An example of a project arising from Jurong Island 2.0 is the formation of an inter-agency centre to look at safety and risk management issues," he said.

Utilities plants such as Tuas Power's Tembusu facility will also supply to the Jurong Island companies and reduce the costs of the firms. The industry has given the thumbs up.

"Jurong Island 2.0 anticipates the changing needs of our industry and ExxonMobil will continue to look for new opportunities to increase the efficiency and competitiveness of our operations," said an ExxonMobil spokesman.

And Mr Lee Tzu Yang, chairman of Shell companies in Singapore, last year underlined his company's commitment to Singapore, when it broke ground for new petrochemical units on Jurong Island.