Petrochemical and Chemical

 Update

 

June 2004

  

INDUSTRY ANALYSIS

 

1. AMERICAS

 

   U.S.

Expanded Polystyrene Produced Using New Volatile Organic Chemical (VOC) Free Technology
 Polystyrene foam is widely used in a variety of applications, including building insulation, packaging and drinking cups. These different types of foam are all commercially produced from a single starting material – high-density spherical beads of expandable polystyrene (EPS).

The beads are expanded and molded by the end product manufacturers using a blowing agent. Currently, pentane is used, but it is an inflammable, volatile organic compound (VOC) and up to half remains in the EPS after processing and is slowly released to the atmosphere during storage and use.

“Concern is growing throughout Europe and the USA about increasing pentane emissions and legislation to limit it is already planned in Switzerland, Austria and Sweden,” says Wolfgang Teubert, Managing Director of the German partner Teubert Maschinenbau GmbH.

EUREKA project E! 2683 VOC FREE EPS met these concerns by producing a VOC free alternative in the world’s first water-blown expandable polystyrene bead. The partners may take the unusual step of commercially launching in the USA first, taking advantage of stricter legislative controls on VOC release. This results in a better market for VOC free products and processes which is estimated at two hundred kilo tonnes per year.

“The new patented process creates a molecular bond encapsulating starch in a shell of polystyrene. The chemically bonded starch absorbs micro-drops of water, which becomes a safer, more environmentally friendly blowing agent inside the beads,” explains Willem van Liemt, EPS R&D team leader at the Dutch lead partner Nova Chemicals and technical project leader for VOC FREE EPS.

The project achieved a considerable reduction in VOC emissions resulting from polystyrene foam, an improvement in productivity for foam moulders and improved safety during production of the foam. “Increasing VOC emission reduction targets will necessitate the installation of pentane ‘capture and destroy’ systems. These will require significant investment and will reduce the problem but will never solve it completely,” says van Liemt.

While Nova Chemicals developed the new expansion process for VOC free EPS, the German partner Teubert GmbH designed and built the new EPS expansion machine.

“A well chosen external partner allowed us to take a completely new concept and convert this into an actual machine within a much shorter time frame than if we had done it in-house,” says van Liemt.

“The EUREKA program has been vital in facilitating the international collaboration required for this project. It provides a framework for collaboration, and gives the financial support to enable smaller, innovative partners to play a major role in these large projects,” says van Liemt.

 

OxyChem to Reduce Vinyl Chloride Emissions

Occidental Chemical Corp. will pay $150,000 in fines and reduce its emissions of vinyl chloride by 26 tons per year as the result of a settlement reached with the Environmental Protection Agency, it was announced July 15.

 

Additionally, the company has agreed to spend nearly $1 million on projects to upgrade its equipment, which will allow it to reduce its vinyl chloride emissions by 38 percent and cut the volume of wastewater it sends to the Pottstown Wastewater Treatment plant, according to the EPA.

 

"These projects, which go beyond what is required by law, are an important step toward improving public health and environment for the residents of Pottstown and the surrounding communities," said Donald S. Welsh, regional administrator for the EPA’s mid-Atlantic region.

 

In addition to paying the $150,000 fine, OxyChem has pledged to spend additional money to accomplish three major initiatives, said EPA spokesman David Sternberg.

 

First, it will spend a minimum of $850,000 in making changes to the way its plant works through process and equipment upgrades, which is how the expected 38 percent decrease in vinyl chloride emissions will be achieved, said Sternberg.

 

Second, OxyChem has agreed to secure that reduction by agreeing to changes to the permit which allows it to emit air pollution.

 

The new limit, contained in a permit commonly referred to as a "Title V," will reduce themaximum amount of vinyl chloride OxyChem can emit into the air down from the current 75 tons to 48.5 tons per year.

 

The 75 tons limit, rarely reached, made the Lower Pottsgrove plant either the No. 1 or No. 2 emitter of vinyl chloride, a known carcinogen, in the nation. How this reduction would affect that ranking remains unclear, according to EPA officials.

 

Further, OxyChem will retire any pollution credits this reduction would generate, "resulting in an overall air quality improvement in southeastern Pennsylvania," according to an EPA release on the subject. Pollution credits are a method of federal regulation which allows companies that reduce their emissions to sell their unused capacity to other facilities which may be nearing their emission limits.

 

The reduction of the amount of wastewater the OxyChem plant will discharge to Pottstown’s sewage treatment plant was highlighted as the third major initiative.

 

Sam Morris, OxyChem’s plant manager, issued a statement on behalf of the company that called the agreement "fair" and noted that "the settlement agreement announced by EPA reflects the company’s goal of continuous improvement of our operations to protect health, safety and the environment. We believe this is a positive development for the plant and for the community."

 

Morris said the reductions in emissions will not be the result of any kind of reduction in the plant’s capacity.

 

"We don’t anticipate this would have any impact on production and no affect on local jobs," he said.

 

The plant, which employs about 225 people, occupies a small portion of a 250-acre site at the end of Armand Hammer Boulevard. It is surrounded on three sides by the Schuylkill River and was once the site of the former Firestone Tire and Rubber plant.

 

Its main product is poly-vinyl chloride resin, a kind of powder from which a plastic commonly known as PVC is made.

 

It is also home to one of the region’s several "Superfund" sites, areas of pollution considered a high priority for cleanup by the EPA and for which federal money has been set aside.

 

The Alliance for a Clean Environment, which is often at odds with both OxyChem and the government agencies that regulate it and is also involved in investigating the depth of the pollution at the Superfund site, offered praise for the settlement.

 

"ACE expressed our concerns to EPA about synergistic, additive and cumulative health impacts for over three years," said an ACE statement, issued after it was contacted by The Mercury.

 

"EPA’s multi-media inspection acknowledged and supported those concerns," the statement read. "ACE commends EPA for its bold new approach to multi-media investigations."

 

This bold new approach began more than two years ago when specialists at the EPA began to ask themselves some serious questions, said James Kenney, an environmental engineer for the EPA who was part of the inspection team.

 

"From some of our field observations, we began to talk about the ways that chemicals tend to shift and volatilize as they move from one medium, like water or wastewater, to another, like air," said Kenney. "Then we started asking ourselves how current regulations address this from an environmental perspective."

 

The team decided to try a new approach to inspections, focusing on a particular pollutant and guiding inspections to look at every way the pollutant gets into the environment, rather than just focusing on water or smokestack emissions. They decided to begin with vinyl chloride because "it is a known carcinogen and a known problem," said Karen Melvin.

 

Melvin is chief of the Enforcement and Compliance Assistance branch of the EPA’s Office of Environmental Compliance and Environmental Justice and supervised the enforcement effort at the Occidental plant.

 

"Because the undesirable health affects (of vinyl chloride) are so well-known, it made focusing on this industry a little more palatable," Melvin said.

 

That focus is now being felt beyond the Pottstown area.

 

Melvin said this new approach to inspections and enforcement has been "well-received and received a lot of support internally" from the EPA as an agency.

 

Now Kenney, who has become the agency’s resident expert on comprehensive inspections of PVC plants, is traveling around the country showing other EPA offices how it’s done.

 

"Nationwide, there are 22 plants that are major vinyl chloride emitters, and they are owned by nine corporate entities," said Kenney. "We intend to inspect a percentage of them, more than half, in this manner," adding that the EPA has already conducted inspections at seven.

 

"This allows us to have as much of an impact on community health as possible," Melvin said.

 

The settlement at Occidental comes more than 18 months after the first EPA team arrived at the Armand Hammer facility to conduct the new kind of inspection.

 

Initially, the EPA cited the plant for 13 major violations of laws ranging from the Clean Air Act to the Clean Water Act to public notification. The company faced fines of more than $357,000.

 

The negotiations that traditionally precede a formal court action began and wound on for months. In May, the EPA added additional violations of a similar nature to the complaint.

 

But in the end, both Melvin and Kenney praised OxyChem for its cooperation.

 

"Like any enforcement, it’s often difficult when you start off and tell people what they’re doing wrong. But I really have to say that Occidental rose to the environmental challenge," Kenney said.

 

"We proposed to them that we wanted to see a major vinyl chloride reduction and not just a big fine. They came back to us with much more than we expected," he said.

 

The OxyChem statement said the cooperation "demonstrates our willingness to go beyond compliance and to cooperate effectively with regulatory agencies."

 

"OxyChem really stepped up to the plate," said Melvin, "which is what you always want to see in a good corporate citizen. And as a result, you’re going to see a real improvement in the environmental health of the Pottstown area."

 

U.S. Must Ensure Chemical Plants Are Safe

Two freight trains collided on June 28 near San Antonio, killing three people. Only one of the dead was aboard. The others lived about a mile away. Gas killed them - chlorine gas, which leaked from the wreckage and drifted over a residential area. Several other people suffered severely damaged lungs.

 

If gas escaped from a U.S. chemical plant bombed by terrorists - especially one of the 123 plants with more than 1 million people living close by, the death toll could be on the order of the 1984 disaster in Bhopal, India, where a Union Carbide plant leaked poisonous gas into the air, immediately killing 2,000 people and injuring 600,000. Thousands more died later.

 

In Dallas last month, Secretary of Homeland Security Tom Ridge confidently asserted that the U.S. chemical industry is striving to keep its plants and depots secure. The industry "has its own security code and best practices that they market and promote, and we're working with them to see, as we prioritize these facilities, that they implement those procedures," he told the editorial board of The Dallas Morning News.

 

A February report by the General Accounting Office, an arm of Congress said "Ultimately, no federal oversight or third-party verification ensures that voluntary industry assessments are adequate and that security vulnerabilities are addressed.”

 

The laws that require water treatment and nuclear power plants to study and address their vulnerabilities should apply equally to chemical plants.

 

The proposed chemical security bill of Democratic Sen. Jon Corzine of New Jersey is just the vehicle to make that happen. It also would require safer alternatives to chlorine and other dangerous gases, wherever feasible. That legislation is what needs to be rolling down the track.

 

Chemical Plant Told to Close

State health officials ordered Cardinal Chemical Companies on July 1 to shut down to avoid a possible catastrophic contamination of the Congaree River and Columbia's wastewater treatment plant with an exotic chemical.

 

The state department of Health and Environmental Control also advised residents to limit their consumption of fish caught in the river and to avoid drinking or swimming in the river two miles downstream of Columbia's wastewater treatment plant.

 

Cardinal must provide DHEC with a procedure and timetable for the shutdown within 48 hours, according to the emergency order delivered to the company. DHEC employees are on site to ensure that the company complies with the order.

 

The South Beltline Boulevard plant may reopen if it complies, to the satisfaction of state officials, with recommendations of an independent safety audit. The plant employs about 170 people.

 

But the company released a prepared statement, asking that the order be withdrawn. Cardinal lawyers demanded that a hearing be held.

 

The company questions the validity of test results showing toxic tin compounds in the Congaree River.

 

DHEC said an appeal would have to go through the state's circuit court system or before an administrative law judge.

 

"Our order stands," DHEC spokesman Thom Berry said.

 

DHEC's actions are the latest in an investigation that began in February after similar tin compounds caused a massive fish kill in Lexington County and led the county to shut down its sewer plant. The city of Cayce also closed its water plant as a preventative measure.

 

The order comes a week after a consultant for Columbia found tin compounds in the Congaree River. City officials ordered a study of the river after they found traces of tributyltin in Columbia's sewer plant this summer.

 

Tributyltin has been linked to the deaths of dolphins, sea otters and oysters around the world since it was first introduced as a paint additive in the 1970s. In people, it can cause skin rashes or chemical burns and, in extreme doses, can damage internal organs.

 

Cardinal uses compounds from Tin Products, the company blamed for the Lexington County spill. Cardinal president Charles Sanford owns Tin Products.

 

DHEC fined Tin Products a record $4 million, which the company is appealing. Tin Products also is the target of a state criminal investigation.

 

Berry wouldn't say whether the criminal investigation has been extended to include Cardinal.

 

"All I can say about the criminal investigation is that it is ongoing," he said.

 

DHEC's order says Cardinal's relationship with Tin Products indicates that, "like Tin Products, Cardinal may be unable to properly handle toxic chemicals."

 

Cardinal had 72 hours to provide DHEC with the name and qualifications of an independent consultant who will recommend changes that must be implemented.

 

"This is a preventive measure," said DHEC Commissioner Doug Bryant. "A failure of the Columbia wastewater plant would be catastrophic not only for the hundreds of thousands of customers of the city, but for the environment, including the Congaree River and downstream to such treasured resources as the Congaree National Swamp."

 

The Columbia Metro Wastewater Treatment Plant, south of the city, is the largest in the state. It serves about 65,000 residential customers, about 10,000 commercial customers and eight industries.

 

The plant discharges into the Congaree River, which also serves the East Richland Public Service Commission's wastewater treatment plant and Cayce's wastewater treatment plant. If the Congaree River were to become contaminated, it would in effect knock out all three wastewater treatment plants, health officials said.

 

The Congaree Swamp National Monument is just 10 miles downstream of Columbia's wastewater treatment plant. Beyond the swamp are lakes Marion and Moultrie, used by the Lowcountry for drinking water.

 

"We will access the company's response, and when we are satisfied that Cardinal can safely manage their materials and processes on site, operations may resume," Bryant said.

 

Closing a plant is unusual but not unprecedented.

 

Cardinal says it doesn't manufacturer tributyltin, but a spokesman said last week that the material can be produced as other chemicals are being made.

 

Tin compounds made by Cardinal are used in products such as glass bottles, windows for cars and buildings, oven coatings, plastic plumbing, vinyl siding, bedding and upholstery.

 

The company agreed to allow the city to monitor the plant's sewage and install a sewer cutoff valve at the chemical plant at the company's expense.

 

Columbia Mayor Bob Coble said he supports the DHEC decision.

 

"It's a prudent measure," he said.

 

The city's consultant, Glenda Swearingen, found that Cardinal was the source of the tin compounds in the sewer plant. Cardinal is the only known source of the tin compounds in the plant's service area.

 

Tributyltin is considered the most toxic compound found in both Lexington and Richland counties waterways this year.

 

The chemical, developed to kill barnacles on boat hulls more than 30 years ago, has also been linked to the deaths of dolphins, shellfish, snails and other sea life around the world. The amounts of tributyltin found in the Columbia area are among the highest EPA researchers said they have seen.

 

Tributyltin has rarely been discovered in fresh water.

 

Swearingen found no evidence of fish kills in the Congaree River.

 

But one water sample contained 15 times the level found in a sample taken by the EPA at Congaree Creek in Lexington County last spring.

 

Cardinal has had environmental problems in the past. DHEC has fined the company at least $40,000 since 1993 for hazardous waste and air pollution violations, according to agency records.

 

In May 1999, Cardinal sparked complaints from nearby residents after a fire erupted at the plant, forcing the evacuation of homes and businesses near the company.

 

In 1989, 101 people were injured when chemicals leaked from a 4,000-gallon, outdoor tank at Cardinal.

 

Three spills between February 1996 and May 1996 prompted DHEC to shut down NIPA Hardwicke, a chemical company in Elgin. Part of the plant was up and running again within days. The rest of the shutdown processes were back on line about six or seven months later.

 

In 1990, a commercial waste incinerator in Hampton County was closed for about a month after DHEC held up approval of regulations that would have allowed landfill burial of the plant's ash waste. In July and August of this year, DHEC ordered the incinerator closed again, off and on, because of a damaged air pollution monitor.

 

The Suffolk Chemical plant in Chapin was ordered shut down by DHEC in 1985. The plant operated for two more years as it fought the order, then closed permanently and was named a Superfund site.

 

What happened July 1: State regulators ordered the Cardinal Chemical Co. to shut down within 48 hours. They also advised residents to limit their consumption of fish caught in the Congaree River and to avoid contact with river water two miles downstream of Columbia's sewer plant.

 

What's next: The company wants a hearing with regulators.

 

The danger: Tributyltin can cause skin rashes or chemical burns and, in extreme doses, can damage internal organs.

   CANADA

Borden Chemical, Inc Builds New Plant at Edmonton, Alberta Complex

Borden Chemical, Inc. announced it has completed startup of its new formaldehyde plant at its manufacturing complex in Edmonton, Alberta, Canada.

 

In addition, the company announced the start of a new Six Sigma process improvement initiative designed to increase yields and improve throughputs in its network of formaldehyde plants, with a goal of creating "virtual plants" through anticipated capacity improvements.

 

"Our new Edmonton plant, as well as our initiative to create additional capacity through process improvements, reinforces our commitment to be the world leader in formaldehyde production and technology," said Reggie Jenkins, Business Director, Formaldehyde and Derivatives.

 

The new formaldehyde plant in Edmonton adds 200 million pounds of capacity to the site manufacturing complex, bringing annual production capacity to 460 million pounds of 50 percent formaldehyde solution. Formaldehyde made at the facility is used by Borden Chemical to make resins for oriented strandboard and other engineered wood product applications, and also is sold to industrial users in the region. The new $10 million plant uses silver catalyst technology and state of the art process controls and environmental systems. It is the latest addition to the company's Edmonton complex. In 2002, the company expanded the site's resin production to meet growing demand in western Canada. Built in 1957, the Edmonton complex has undergone a number of significant expansions and improvements over the years and now is one of the largest manufacturing operations in Borden Chemical's plant network.

 

The Edmonton plant is one of 17 Borden Chemical facilities in North America producing formaldehyde to serve the wood products sector and industrial markets. Globally, the company has a total network of 25 locations that produce formaldehyde for these markets. Through a joint venture affiliate, it also is constructing a formaldehyde plant in China.

 

Through a Six Sigma initiative focused on increasing formaldehyde yields and throughput, the company believes it can further expand production without building additional facilities in North America. The goal of the initiative is to create 400 millions pounds of additional capacity in the next three years, the equivalent of two "virtual plants," according to Executive Vice President Joseph Bevilaqua. Six Sigma is a widely recognized methodology to drive process improvement by eliminating waste and inefficiency.

 

Bevilaqua said the company's Six Sigma "blackbelts" will lead the initiative, using analytical tools and working in project teams with operations, manufacturing and engineering, and commercial associates. Work will start immediately with a focus on North American operations. Methods that create improvements in the North American plant network will be shared globally throughout Borden Chemical's organization.

 

The company's Six Sigma program includes "voice of the customer" input to ensure critical customer focus and quality aspects are designed into all process enhancements, helping to create competitively advantaged supplier-customer partnerships, Bevilaqua said.

 

Borden Chemical is a leading global producer of formaldehyde with annual production of approximately 5 billion pounds. The company also is North America's leading supplier of resin systems for the forest products industry. Its resins are used to produce a wide range of structural panels, beams, joists and trusses, and other engineered wood products.

 

The company also is a leading global source for industrial resins and adhesives, UV-light curable coatings and other chemical products serving a broad range of markets that include the fiber optics, oilfield, composites, electronics, automotive and foundry industries

 

Sarnia Plants Cited for Violations

The Ontario environment ministry has found violations of provincial requirements at five Sarnia-area petrochemical companies.

 

Terra International (Canada) Inc., Katoen Natie Canada Company, Invista (Canada) Company, Basell Canada Inc., and Air Products Canada Limited must address more than 50 infractions that include deficiencies in spill contingency plans, unapproved emission sources, and lack of proper storage, transportation and disposal of wastes.

 

The problems were uncovered by an environmental SWAT team deployed earlier this year by Environment Minister Leona Dombrowsky after several chemical spills into the St. Clair River.

 

Dombrowsky said July 14 that the violations "could potentially impact the environment," but do not represent "any serious threats to public health."

 

The SWAT team has completed inspections at 16 of 31 companies.

 

In April, orders were issued against three other companies — Nova Chemicals (Canada), SCU Nitrogen Inc., and Cabot Canada Ltd. — regarding 51 infractions.

 

One of the three, Nova, has appealed its order, and the matter will be heard by the Environmental Review Board, said ministry spokesperson John Steele.

 

Among the issues detailed in the order is a requirement to study benzene contamination of groundwater

 

A spokesperson for Nova could not be reached.

 

Of the other two, Steele said SCU Nitrogen has complied with all requirements, and Cabot Canada continues to take action, having met all deadlines set in the order.

 

Wallaceburg resident Bela Trebics, a member of a committee set up by Dombrowsky to assess local hazards and make recommendations on regulatory improvements, said the new orders mirror those issued in April.

 

He said he found the similarity disheartening because he would expect companies awaiting inspection to be pro-active.

 

Trebics expressed surprise at the news that Nova had appealed its order. "I can't see the orders being overturned," he said.

 

Alan Nixon, Terra International's plant manager, said yesterday that his company accepts the 15 conditions cited in the order issued against it and will comply by the ministry's deadline of Oct. 31.

 

None of the identified issues is a serious failure, Nixon said.Terra is also cited for having increased production capacity without obtaining approval. No penalties are attached to provincial orders, Dombrowsky said, although companies may have to make investments in order to comply.

 

Significant violations will be referred to the ministry's investigation and enforcement branch for possible prosecution, she said.

 

Inter Pipeline Fund Pays $715M for 3 Gas Plants

Inter Pipeline Fund is spending $715 million for three natural gas liquids extraction plants in Alberta that will put the company in a strategic position to profit from future pipelines carrying gas down from the Northwest Territories and Alaska.

 

Pipeline giant Williams Energy (NYSE: WMB) of Oklahoma is selling the mid-stream assets to Calgary-based Inter Pipeline (TSX: IPL.UN) as part of a plan to reduce debt and shore up the company's balance sheet.

 

David Fesyk, CEO of Inter Pipeline, said the deal is an ``important step forward" for his income trust that will immediately provide higher distributions to unitholders.

 

"In the longer term, the acquired business is well positioned to benefit from future natural gas developments in the northern frontiers."

 

The July 8 deal includes Williams's 100 per cent interest in the Empress II and Cochrane extraction plant near Calgary, as well as a 50 per cent stake in the Empress V plant near the community of Empress in southern Alberta.

 

Together, the plants represent one of the largest NGL extraction businesses in North America.

 

The extraction plants remove liquids from natural gas that include ethane, propane, butane and pentanes — all of which are used as feedstocks in the petrochemical business to make things like rubber, plastics, solvents and foam or converted into usable fuels.

 

All three of the so-called straddle plants are near convergence points of TransCanada Corp.'s (TSX: TRP) Alberta pipeline system, which connects to the company's mainline taking natural gas all the way to Quebec and the United States.

 

The plants have access to a variety of conventional gas supplies and "are well positioned to benefit from the processing of potential future natural gas supplies delivered from the Mackenzie Delta and Arctic frontier regions," Inter Pipeline said.

 

A consortium of major energy companies led by Toronto-based Imperial Oil (TSX: IMO) are preparing to file for regulatory approval later this summer for a $5-billion pipeline that will flow natural gas from the Mackenzie Delta in the Northwest Territories into TransCanada's existing Alberta system.

 

The energy companies hope the project will be up and running by the end of the decade in order to meet the growing demand for natural gas throughout the continent as conventional supplies wane in Canada and the U.S.

 

There are also renewed efforts to build another pipeline alongside the Alaska highway to access vast resources on that state's North Slope, but estimates currently peg the cost to build such a line at more than $20 billion US.

 

Still, Inter Pipeline expects the extraction plants will also have an immediate boost to cash flow, as the business generated revenue of $646 million for Williams in 2003. A large amount of the liquids removed at the plants are under long contracts to various petrochemical companies including Dow Chemical, BP Canada and Nova Chemical.

 

The deal will be financed by a combination of term credit and proceeds from a bought-deal equity financing of about $250 million.

 

The transaction is part of an ongoing strategy for Williams to sell non-core businesses.

 

"This sale represents the single largest source of funds that we targeted from divestitures this year," Williams CEO Steve Malcolm said in a release. "As we've outlined before, these sales are expected to contribute toward our debt reduction strategy."

 

The sale doesn't mean Williams has withdrawn completely from Alberta. The company said it will retain its olefins business, which extracts natural gas liquids and olefins from the oilsands in northern Alberta.

 

Inter Pipeline is one of Canada's largest petroleum transport companies, with about 5,000 kilometers of pipelines. The company also holds an 85 per cent stake in the Cold Lake Limited Partnership, which includes Canada's largest heavy oil gathering system.

 

In midday trading on the Toronto stock market, Inter Pipeline units were down 26 cents to $7.58.

   BRAZIL

Brazil's Suzano Seeking Partnerships With Petrobras

Suzano Group, a Brazilian pulp and paper and petrochemical group, is seeking partnerships with Petroleo Brasileiro SA to build petrochemical plants, Valor Economico newspaper reported.

 

Suzano is seeking partnerships for projects to build a polypropylene plant in Sao Paulo state and a petrochemical complex on the border with Bolivia, the paper said, citing Armando Guedes Coelho, chief executive of Suzano Petroquimica, the petrochemical arm of Suzano's group. Polypropylene is a resin used to make plastics.

 

Suzano will boost competition against Braskem SA, Latin America's biggest petrochemical company, for those projects with Petrobras, the country's state-controlled oil company, the paper said.

 

   BOLIVIA

 

Gas Riches Fuel a Showdown

Bolivia's history has been shaped in large part by its geography of jungles and high mountains, and in modern times by cocaine. But its future may depend on what lies beneath.

 

A vast bonanza of natural gas has plunged the nation into a political battle that is exposing its fundamental fault lines -- rich and poor, Indian and European, socialist and capitalist, plus old nationalist and anti-"gringo" instincts.

 

It all comes to a head July 18 with a referendum on what to do with the gas.

 

The dispute already has cost former President Gonzalo Sanchez de Lozada his job in a popular revolt nine months ago, sparked by his plans to export the gas in liquefied form through Chile to Mexico and California. Nearly 60 people died.

 

His vice president, Carlos Mesa, took over and promised the referendum. The former TV journalist has won popularity as a blunt-talking political outsider, but whatever the result of the vote, analysts say it's bound to be complicated and hard to implement.

 

The ballot asks Bolivians five questions, among them whether the gas should be exported or nationalized. It also asks whether Bolivia should use the gas as a lever to recover the access to the Pacific Ocean that it lost in its 1879-84 war with Chile, rendering it landlocked.

 

The referendum is unpopular with the Andean Indians in the western highlands as well as with business leaders of European descent in the southern and eastern lowlands. Both groups have threatened to boycott the ballot, though the highest constitutional court has ruled that participation is obligatory.

 

Bolivia is one of the poorest nations in South America and has proportionately one of its highest Indian populations -- about 55 percent of the nation's 8.7 million people.

 

The gas ought to be a huge boost for Bolivia. Lured by privatization of the industry, about 20 foreign companies have invested $3.5 billion in exploration, discovering 55 trillion cubic feet of gas. That's enough by some estimates to cover Bolivia's needs for a thousand years and raise incomes in a nation where two-thirds of the population make less than two dollars a day.

 

Petrobras, the Brazilian giant, is a big investor and is working with Bolivian authorities on plans to build roads, thermoelectrical plants and a petrochemical complex.

 

But labor leader Jaime Solares and highland Indian leader Felipe Quispe want to nationalize the gas fields. Quispe also argues that profit-minded companies won't be eager to pipe gas to remote, impoverished Indians, leaving them dependent on dried dung for fuel.

 

The referendum is casting question marks over the very existence of Bolivia as a unified republic. Quispe envisions unifying Indians in present-day Bolivia, Peru and Chile in a land he calls Kollasuyo, its ancient Inca name.

 

Pro-business groups, deeply dismayed by the uncertainties cast over the gas project, are talking of seceding from the less developed highlands. One proponent, Zvonko Matkovic, a businessman in the economic capital of Santa Cruz, likens Bolivia and its ethnic fractures to his ancestral country, Yugoslavia.

 

All this leads political columnist Ramon Rocha Monroy to suggest Bolivians are "bent on committing collective suicide."

 

But the fact that this first Bolivian referendum in 73 years is being held by some as a sign of democracy taking root in a country long ruled by dictators.

 

"Until now, we have only been called on to elect officials -- now we can make a decision about national policy. That is very positive," said Gabriel Helbing, a factory worker in Santa Cruz.

 

"The downside is that it could all end up in frustration if the government doesn't comply with its promise" to abide by the outcome.

 

2. ASIA

 

   ASIA PACIFIC

 

ExxonMobil Chemical Expands Plasticizer and Oxo Alcohol Plants in Asia Pacific
ExxonMobil Chemical has expanded its world-class plasticizer and oxo alcohol plants in Asia Pacific.

 

In Panyu, South China, capacity at the plasticizer plant has been expanded to 90,000 ton-per-year of di-isononyl phthalate (DINP). Capacity at ExxonMobil Chemical's oxo alcohol plant, located on Jurong Island in Singapore, has increased to 180,000 ton-per-year of iso-nonyl alcohol.

 

Both facilities have benefited from a series of operational improvements that have further increased efficiency and expanded capacity. Jin-Cher Tan, Intermediates commercial manager, Asia Pacific, ExxonMobil Chemical said, "This initiative will provide greater operating efficiencies to help us better meet customers' growing demand for C9 alcohol and plasticizers in the region."

 

ExxonMobil has consistently enhanced its manufacturing scale to respond to customers' needs worldwide. Dwight M. Lyman, Oxo global marketing manager, ExxonMobil Chemical added, "The capacity expansion in Asia Pacific demonstrates ExxonMobil Chemical's strong commitment to supply the largest and fastest growing region for PVC plasticizers."
 

   CHINA
 

Sinopec May Build More Chemical Plants

China Petroleum & Chemical Corp. (386 HK): Asia's largest refiner, known as Sinopec, may build at least two chemical plants in eastern China by 2010 to meet rising demand for plastics from automakers and consumers, the China Petroleum and Chemical Industry Association said on its Web site. Sinopec dropped 7.5 cents, or 2.6 percent, to HK$2.83.

 

   INDIA

 

ONGC to Spend Rs30000cr in New Forays

State-run ONGC would spend about Rs 30,000 crore on its foray into petrochemical and power, wch includes setting up two petrochemical complexes and two power plants in southern India.

 

"We propose to spend about Rs 30,000 crore on our ventures in petrochemicals and power and also plan to enter shipping," said ONGC chairman and managing director Subir Raha.

 

He said the company would spend about Rs 4,000-5,000 crore each on the two petrochemical complexes it was planning and the remainder on power plants.

The public sector oil exploration major would set up a 1,445 MW power plant in Mangalore, which would be commissioned in 26 months, and a 1,100 MW plant in Ennore.

 

It would add 300 MW surplus power by integrating oil platforms on the western offshore, which have electricity generation capacity, and 250 MW in Tripura and its 300 MW from its oilfields C22 for which vendor selection was being done.

 

It has already invited from vendors expressions of interest for the 300 MW surplus capacity from its offshore platforms.

 

ONGC was developing new fields, he said, adding the company would double its capacity at the mini-refinery at Tatipaka and set up a new mini-refinery at Ankleshwar.

 

Raha said ONGC was also in talks with international suppliers of liquefied natural gas for buying fuel for its upcoming 10 MMTPA LNG terminal at Mangalore.

On Sagar Samruddhi, the deep water drilling campaign of ONGC, Raha said it was imperative for the company to go for deep water drilling and out of the four wells drilled, oil was found in one well.

 

ONGC had discovered six billion tonnes of oil in India in the last 50 years and would discover six billion tonnes in the next 20 years, he said adding that two-thirds of it would come from deep water drilling.

 

The company's offshore assets have been insured for $12 billion and the premium has come down to $24 million in the last year from 51 million two years following the upgrade of ONGC's risk by international reinsures.

 

It is setting up a plant to extract ethane propane from LNG at Dahej with an investment of about Rs 1,000 crore which is scheduled to commence production in 2006.

 

ONGC had made six new discoveries - east Lakhibari in Assam, Degam in Cambay, Sonamuri in Tripura, Sitarampuram in Krishna Godavari Onland, G-4 in KG offshore and NMT in western offshore.

 

GAIL to Invest Rs 10,723 cr to Hike Petrochem Capacity

The GAIL India Ltd will invest Rs 10,723 crore for increasing its petrochemical production capacity and will add three more projects.

 

The GAIL has recently signed a memorandum of co-operation (MoC) with the Kerala State Industrial Development Corporation (KSIDC) for putting up a naphtha-based petrochemical complex in Kasargod district near Kochi, the GAIL chairman, Mr Prashanto Banerjee said July 15.

 

The Rs 7000 crore integrated grass root naphtha-based petrochemical complex will produce 800,000 TA of ethylene and 400 KTA of propylene, he said.

 

The company has also prepared a pre-feasibility report for the Assam gas cracker, which will have an estimated project cost of Rs 2,500 crore to produce 160,000 TPA of ethylene and a downstream unit of 160,000 TPA of LLDPE/HDPE.

 

The GAIL has also signed an MoU with Haldia Petrochemicals Ltd for setting up a joint venture styrene butadiene rubber (SBR) plant with a capacity of 100 KTA.

 

The investment for this plant is estimated to be approximately Rs 500 crore.

 

The GAIL also plans to lay a national gas grid to create a green quadrilateral of clean energy corridors, facilitating high pressure and high volume inter state movement of gas from the present and new supply locations to multiple markets.

 

The proposed grid involves about 6500 km of a large-size pipeline, connecting all the four regions in the country at an estimated cost of Rs 23,000 crore.

 

A subsequent phase of the proposed grid will be more trunk pipelines and spur lines to support development of distribution networks in the states.

 

The grid will include 610 km of the Dahej-Vijaipur pipeline, which has already been completed, and 400 km of the Dahej-Uran pipeline, at present under implementation, Mr Banerjee said.

 

Other projects for which detailed feasibility report has been prepared include the 1,060-km Kakinanda-Uran pipeline, the 1,040-km Kakinada-Haldia pipeline, the 850-km Jagdishpur-Haldia pipeline, the 1100-km Dabhol-Bangalore-Chennai pipeline, the 850-km Kakinada-Chennai pipeline, the 1475-km Kochi-Kayamkulam-Bangalore pipeline and the 560-km Vijaipur-Kota Mathania pipeline.

 

The company has commissioned studies for constructing a 100-km-long network of pipelines between Porbandar and Jamnagar and a 140-km network between Okha and Jamnagar, at an estimated cost of Rs 675 crore.

 

It is also considering LNG opportunities in Ennore and Kayamkulam. In addition, GAIL is active in cross border gas imports in view of renewed interest in transnational gas pipelines from east (Iran gas) and west (Bangladesh/Myanmar).

 

As far as imports are concerned, the GAIL is considering LNG opportunities in Ennore and Kayamkulam and the work for DFR in this regard is currently underway.

 

The GAIL is participating in cross border gas imports, both from the east, from iran, and the west, from Bangladesh and Myanmar.

 

The company in collaboration with Royal Dutch Shell is setting up a Rs 800 crore coal gassification project in Eastern India with 2,000 tonne per day capacity.

 

According to the agreement, Shell will be the technology provider and advisor in this project and will not pick up any equity.

 

GAIL in Pact with Mitsui for a HDPE Unit Plans investment of 647 crore

GAIL (India) Limited has signed a technology agreement with Mitsui Chemicals Inc., Japan, for setting up a new, dedicated high density poly-ethylene (HDPE) plant with a capacity of 1,00,000 TPA at its petrochemical complex at Pata in District Auriaya, Uttar Pradesh. The project with an estimated cost of Rs 647 crore, is scheduled for completion by April 2006.

 

The agreement provides the license to GAIL to set up the HDPE plant based on Mitsui's CX technology. The plant shall also have the capability to produce MDPE and PE-100 grades. GAIL already operates a HDPE plant of 1,00,000 TPA capacity based on Mitsui's technology at its petrochemical complex at Pata. With this addition, the company's present polymer capacity of 310,000 TPA will increase to 410,000 TPA with the new plant being set up. GAIL has recently completed the de-bottlenecking of its LLDPE/HDPE (swing) plant at a cost of Rs 76 crore to increase its polymer capacity to 310,000 TPA from the earlier 260,000 TPA.

 

GAIL has also proposed an investment of Rs 10,723 crore for enhancing its petrochemical production capacity and adding three more projects in different parts of the country. GAIL recently signed an MoC with the Kerala State Industrial Corporation (KSIDC) for putting up a Naphtha based petrochemical complex in Kasargod district near Kochi. The Rs 7000 crore integrated grass root naphtha based petrochemical complex will produce 800 KTA of ethylene and 400 KTA of propylene. GAIL has also prepared a pre-feasibility report for the Assam Gas Cracker, which will have an estimated project cost of Rs 2500 crore to produce 160,000 TPA of ethylene and a downstream unit of 160,000 TPA of LLDPE/HDPE. GAIL has already signed an MoU with Haldia Petrochemicals Ltd for setting up a joint venture styrene butadiene rubber (SBR) plant with a capacity of 100 KTA. The investment for this plant is estimated to be approximately Rs 500 crore.

 

GAIL (India) Limited, primarily a natural gas company, is focused on all aspects of the gas value chain including exploration, production, transmission, extraction, processing, distribution and marketing of natural gas and its related processes, products and services. Some of the additional projects underway are:

 

National Gas Grid: GAIL has conceptualized a National Gas Grid (NGG) to create a green quadrilateral of clean energy corridors that which will facilitate high pressure and high volume inter state movement of gas from the present and new supply locations to multiple markets. The NGG involves about 6500 km of a large-size pipeline, connecting all the four regions in the country at an estimated cost of Rs 23,000 crore. A subsequent phase will be more trunk pipelines and spur lines to support development of distribution networks in the states. The NGG will include 610 km of the Dahej-Vijaipur pipeline, which has already been completed, and 400 km of the Dahej-Uran pipeline, which is presently under implementation. In addition, the other pipelines for which a DFR has been prepared are 1060 km of the Kakinanda-Uran pipeline, 1040 km of Kakinada- Haldia, 850 km of Jagdishpur-Haldia, 1100 km of Dabhol-Bangalore-Chennai, 850 km of Kakinada-Chennai, 1475 km of Kochi-Kayamkulam-Bangalore and 560 km of Vijaipur- Kota Mathania .

 

LPG Pipelines: GAIL (India) Limited already owns and operates the largest LPG pipeline in the world. At present, studies are underway to construct a 100 km long network of pipelines between Porbandar and Jamnagar as well as a 140 km network between Okha and Jamnagar. The estimated cost of these projects is calculated to be about Rs 675 crore.

 

GAIL is considering LNG opportunities in Ennore as well as in Kayamkulam. The work for DFR is this regard is under progress. In addition to this GAIL is active in cross border gas imports in view of renewed interest in transnational gas pipelines from East (Iran gas) and West (Bangladesh / Myanmar).

 

New technologies: The company is working to convert coal reserves into synthesis gas or 'syngas' (CO+H2) by using the coal gasification process for the first time in India. In collaboration with Royal Dutch Shell, GAIL has plans to set up a Rs 800 crore coal gasification project in eastern India with a capacity of 2000 tonnes per day. According to the agreement, Shell will be the technology provider and advisor in this project and not pick up any equity.

 

GAIL is also studying new technology initiatives such as transport of CNG by ship, in-situ lignite gasification and hydrogen fuel cell technology. GAIL had earlier demonstrated its commitment to using the best available technology by choosing the longitudinally submerged arc welded (LSAW) technology over other options. It has been accepted that in the transmission of high pressure gas, there are specific disadvantages of helically submerged arc welded (HSAW) pipes when compared to LSAW pipes. Since the time its first pipeline was commissioned in 1986, GAIL has been procuring LSAW pipes through an international competitive bidding route while periodically reconfirming the superiority of LSAW over HSAW pipes under Indian conditions.

 

The cost of projects has been a major thrust area in the conception and implementation of projects in GAIL. As affirmed by Engineers India Limited (EIL), consultants for the DVPL project, the net impact of using HSAW in place of LSAW pipes would have led to a higher capital outlay of Rs 34.07 crore, translating into an increase of Rs 7 per MSCM in transmission tariff. Tractebel Engineering, Belgium, have also estimated that the project cost for the upcoming Dahej-Uran pipeline (DUPL) project will be higher by Rs 139 crore in case of HSAW pipes being chosen over LSAW.

 

No other gas pipeline company in the country, namely, GSPL, Gujarat Gas Company Limited, Assam Gas Company Limited and ONGC (limited to their offshore gas pipelines) use HSAW pipes in their high pressure gas trunk lines.

 

HPCL to Get Equity Stake in IOC Panipat Refinery

Hindustan Petroleum Corporation Ltd (HPCL) will get an equity stake in Indian Oil Corporation's 6-million-tonne Panipat refinery. The deal is part of a collaboration agreement signed by the two companies, which includes joint participation in exploration and production, refining, petrochemical projects and consultancy services.

 

A senior IOC official said the agreement has a "unique structure" comparable with the equity oil contracts where HPCL will invest capital and share refinery products while Indian Oil will operate the refinery. Details of the agreement are being worked out. The agreement does not extend to other IOC refinery projects, he said.

 

The two companies will also explore exploration and production opportunities in India and abroad. "The idea is to mitigate risks through pooling of resources and sharing of infrastructure," he said.

 

Both companies informed the stock exchanges about the agreement. The stock exchange notice described the memorandum of understanding as a "joint collaboration in various areas of mutual interests".

 

MRPL Penex-Plus Technology to Meet India's National Auto Fuel Policy Emissions Standards
UOP has announced that MRPL plans to add a Penex-Plus(TM) unit with a DIH column to its naphtha complex in Mangalore, Karnataka, India, to produce premium, high-octane isomerate for ultra-clean gasoline that will meet the emission standards set by India's National Auto Fuel Policy.

 

The basic engineering work for the 13,200 BPD isomerate project started in February 2004. UOP designed MRPL's hydrocracker-based refinery, and has continued to provide technical support services since the refinery started up in 1996.

 

Mangalore Refinery and Petrochemicals Ltd. (MRPL), a subsidiary of Oil and Natural Gas Commission (ONGC), is an important supplier of high quality fuel products in India. MRPL's Mangalore Refinery has a current design capacity of about 9.7 million tons per annum of crude. The refinery is presently operating at an annualized capacity of 11.15 million tons. ONGC, an oil exploration and production company, recently acquired a large stake in MRPL. The entry of ONGC into the downstream business of refining and marketing of petroleum products marks the creation of the first integrated oil company in India.

 

UOP LLC, headquartered in Des Plaines, Ill., U.S.A., is a leading international supplier and licensor of process technology, catalysts, adsorbents, process plants, and consulting services to the petroleum refining, petrochemical, and gas processing industries.

India Naphtha Flows Trigger Oversupply
Strong world petrochemical demand will be unable to avert a looming glut of naphtha in Asia and Europe over coming months as new supply pours out of India, analysts and traders have said.

Global economic growth, and especially growth in China, has bolstered worldwide demand for plastics and led to strong margins for the petrochemical industry. Petrochemical demand is typically good news for naphtha, the oil product most used as a building block to make the world’s plastics.

Even so, a naphtha surplus is building as exports rise from the Mideast Gulf, Europe, and especially India where domestic users are switching to cheaper natural gas to make fertiliser and run power plants. With Asian and European petrochemical facilities already working flat out, naphtha sellers are likely to struggle to find buyers that can take the surplus barrels.

“Margins are great, but there’s a finite amount of capacity out there, all of which is running at full. The naphtha market is balanced to long despite good margins,” said Poten & Partners Asia oil analyst Jim Weinrauch.

Refiners have maximized crude runs in the U.S., Europe and Asia to take advantage of strong margins for gasoline and distillates. The increased refinery runs have resulted in increased naphtha output, but this has not been matched by the demand growth seen for other light oil products, analysts said.

“Globally, naphtha is not as tight as other products,” said Lawrence Eagles, refining analyst at the International Energy Agency.

India exported as much as 300,000 tonnes of naphtha for July, about double the volume sold on a monthly basis in 2003, and traders say exports could stay at a monthly 200,000 to 250,000 tonnes through the end of the year.

Indian supply has reduced the Asian naphtha deficit by nine percent to 66,600 tonnes (600,000 barrels) per day in 2004 from around 73,300 last year, said oil analyst Linda Giesecke at the U.S.-based energy research company ESAI. Asia consumes about 311,000 tpd and produces about 244,000, she said.

The majority of the shortfall is supplied from the Gulf, the Red Sea, Russia and - when arbitrage economics allow it - from the Mediterranean. The Indian supply rise has led traders to speculate whether India’s growing exports will reduce or even close the west-east arbitrage from the Mediterranean to Asia this year.

The arbitrage window tends to swing open in the third quarter when China’s autumn agricultural season raises demand for the plastic film used to protect crops and as the country gears up for Christmas orders from the west. The arbitrage was last open at the start of the year when as much as 800,000 tonnes of naphtha moved east.

Arbitrage in reverse: Increased supply from India recently pushed naphtha prices in Tokyo below naphtha prices in Europe. That led to a reversal in the typical flow of naphtha, with at least one 80,000 tonne naphtha cargo from the Saudi Arabia port of Rabigh being fixed for export to northwest Europe instead of Asia for second-half July delivery.

Another cargo that would typically have gone to Asia was shipped from Saudi Arabia to the U.S., traders said. If Asian prices stay weak, then Europe or the U.S. will have to continue to mop up the surplus, they said. The naphtha oversupply is likely to ease next year when new naphtha crackers come onstream in China and the Middle East, and this could to the resumption of normal arbitrage flows.

“Petrochemical demand is good, but petrochemical buyers are comfortable with naphtha supplies, and look even more comfortable going into August,” said a Mediterranean trader.

   MALAYSIA

 

KNM units get orders worth RM62m

KNM Group Bhd said its units, KNM Process Systems Sdn Bhd (KNMPS) and KNM Special Equipment (Changshu) Co Ltd (KNMSPEC) have recently secured new orders worth some RM62.1mil for oil, gas and petrochemical projects in China, Australia and Canada.

 

It said KNMPS secured orders to supply columns for the Otway gas plant in Australia; towers, heat exchangers and drums for the Integrated Isocyanates Project in Shanghai, China; and gasification syngas effluent coolers for the Long Lake Upgrader Project in Canada.

 

KNMSPEC won the contract to supply deaerators and stainless steel drums for the Integrated Isocyanates Project in Shanghai and carbon steel towers for the CSPC Nanhai LOP Project in Nanhai. 

 

KNMPS is a process equipment manufacturer, while KNMSPEC designs, manufactures, assembles and maintains process equipment, pressure vessels, heat exchangers, and skid mounted assemblies – AFX-Asia.

 

Oilcorp Seeks Build-Own-Operate Projects

Oilcorp Bhd is in talks with several parties to undertake the construction of more downstream oil and gas-related projects on a build-own-operate basis to generate recurring income.

 

The first such project could be a chemical plant in the Middle East involving a RM100 million investment, its managing director Sunny Ng Huat Tian said.

 

Negotiations for the project could be concluded by year-end, Ng told reporters after a groundbreaking ceremony for a cogeneration/district cooling annex plant in Putrajaya on July 13.

 

He said the mode of financing for the project would be determined soon. The proposed plant would use natural gas as its main raw material to produce certain chemicals, he said.

 

Oilcorp provides engineering, procurement, construction and commissioning (EPCC) services to the oil and gas, petrochemical, power generation and semiconductor industries.

 

Ng said the group’s order book currently stood at RM280 million, of which about 50% would be implemented this year and the rest in 2005.

 

He also said Oilcorp was negotiating and bidding for "several million ringgit" of jobs locally and overseas. "We expect to secure RM100 million of them by year-end, he said.

 

On its integrated fabrication yard in Pulau Indah, Ng said it would be completed within two months. The group would then start to bid for oil and gas offshore construction and fabrication projects, he said.

 

The construction of the cogeneration/district cooling annex plant in Putrajaya is being undertaken by a joint venture company of Oilcorp and PT Technic (M) Sdn Bhd.

 

Oilcorp unit Oil-Line Engineering & Associates Sdn Bhd owns 49% of the JV, which was awarded the RM53.8 million contract by Petroliam Nasional Bhd subsidiary Gas District Cooling (Putrajaya) Sdn Bhd.

 

BP to Seal LTAT Deal Soon

British oil giant BP Plc’s sale of its entire 70% stake in Malaysian unit BP Malaysia Sdn Bhd to Lembaga Tabung Angkatan Tentera (LTAT) is expected to be concluded very soon, says BP Malaysia chief executive Datuk Peter M Wentworth.

 

“The discussions are ongoing and should conclude very soon,” he told Financial Daily on July 19. He declined to elaborate.

 

Wentworth said it had been agreed that the armed forces fund would have the right to use the BP brand for 12 months after the completion of the deal.

 

“After that it’s their choice on the brand,” he said, adding that a separate discussion would be held between both parties if LTAT decided to use the BP brand, with some “recognition” to be given to BP.

 

BP agreed in March to divest its 70% stake to LTAT in line with its global strategy of concentrating on markets and segments where it can build a significant presence.

 

LTAT will have 100% ownership of BP Malaysia’s fuels business comprising 240 service stations, a fuel terminal and two joint venture automated LPG bottling plants.

 

It had been reported that the estimated value of the 70% stake was over RM500 million. Both parties have not revealed the transaction price of the deal.

 

Speaking to reporters after the launch of BP/CETDEM’s environmental workshop in Kuala Lumpur July 20, Wentworth said BP would continue its ties with LTAT in the lubricant business via their joint venture entity Aspac Lubricant (M) Sdn Bhd.

 

He said BP had to date spent about RM5 billion on its Malaysian petrochemicals, lubricants and solar power businesses, and it would continue to expand its operations.

 

BP has also taken a major stake in the petrochemical industry with investments in three joint-venture operations in Kerteh, Terengganu and a wholly owned manufacturing plant in Kuantan, Pahang.

 

Wentworth said BP would work closely with Petroliam Nasional Berhad (Petronas) on business opportunities after establishing two joint ventures with the national oil company.

 

BP is also involved in upstream partnership with Petronas through the development of the CTOC project in the Malaysian/Thailand joint development area.

 

Going forward, Wentworth said growth of BP operations in Malaysia would be in tandem with growth in gross domestic product (GDP) and also dependent on Petronas’ feedstock.

 

   THAILAND

 

PTT to Invest Billions in Three New Plants

PTT Plc will invest between Bt36 billion and Bt39 billion in the construction of three natural-gas separation plants to boost raw material production for the petrochemical industry.

 

The new plants, which will bring the number of plants run by the oil-and-gas company to eight, will be capable of separating 500 million cubic feet a day.

 

PTT president Prasert Bunsumpun said the plan was to build the plants one by one, although the construction timetable would ultimately be pegged to demand in the petrochemical industry.

 

“This investment is in line with PTT’s policy to separate all natural gas fed into the third pipeline [which runs along the Gulf of Thailand] to increase additional value,” he said.

 

“By-products from the separation will then be supplied to petrochemical plants.”

 

The third pipeline is capable of handling 1,700 million cubic feet of natural gas daily.

 

Prasert said that at present the volume of gas fed into the first and second pipelines in the gulf totalled 2,700 million cubic feet but only 1,100 million cubic feet went to separation plants.

 

That resulted in missed opportunities to make additional revenue from the remaining gas, which went to power plants.

 

Construction of the plants is in line with the country’s third-phase investment master plan, laid down for the petrochemical industry.

 

Drawn up by the Petroleum Institute of Thailand, the plan will be implemented from this year to 2018.

 

A seminar will take place on July 30 where participants will consider the master plan, before forwarding it to the Cabinet.

 

A detailed implementation plan will then follow.

 

The master plan aims mainly to produce raw materials for the petrochemical industry.

 

“That is the incentive – to build more gas-separation plants,” Prasert said.

 

“As the market is to expand, it is worthwhile to put more money into such construction.”

 

Petrochem Units May be Sold to PTT

Bangkok Bank is ready to divest all its petrochemical interests to PTT Plc.

 

Pichit Nithivasin, executive chairman of HMC Polymers Co, a petrochemical unit of the Bank, said the petrochemical industry should be entrusted to three major groups – Siam Cement, Thai Petrochemical Industry (TPI) and PTT.

 

“Thailand is not a country that can afford having too many producers competing against each other in petrochemicals. It is necessary that the strongest producers merge to leave the least possible number of players to be able to compete with foreign manufacturers,” he said.

 

Bangkok Bank is in talks with PTT, the state-run petroleum and gas giant, about taking all or some of its petrochemical businesses. Finance Minister Somkid Jatusrip-itak said recently PTT should acquire a stake in TPI, which is undergoing debt restructuring.

 

Bangkok Bank and the Hua Kee Group, which is owned by the Nithivasin family, together hold shares in two plastics producers and a petrochemical manufacturer.

 

HMC Polymers produces 450,000 tonnes of propylene a year, while Bangkok Polyethylene churns out 200,000 tonnes of high-density polyethylene a year. Bangkok Synthetics’ annual output consists of 55,000 tonnes of methyl tertiary butyl ether (MTBE), 35,000 tonnes of butene-1 and 140,000 tonnes of butadiene.

 

   VIETNAM

 

Efforts to Speed up Construction of Dung Quat Industrial Zone

The Dung Quat Industrial Zone will be home to many industrial projects, of which, the refinery is seen as the largest. The zone has recently licensed 37 projects with a total registered capital of 11,400 billion VND. Twelve of them have been operational and 11 are under construction.

 

In the first six months of this year, a total of 9 projects, capitalized at 1,548 billion VND have been licensed into the zone. It is estimated that up to 20 projects, totally valued at 2,500-3,000 billion VND will be granted licenses for the whole 2004. These projects mostly focus on ship building, laminated steel and black coal production, petrochemical plant construction and dock building.

 

3. EUROPE / AFRICA / MIDDLE EAST

 

UNITED KINGDOM

 

Grangemouth Petrochemical Plant Expansion, United Kingdom

BP in Grangemouth, Scotland is expanding its petrochemicals facilities. The expansion involves increases to the plant capacity to produce ethanol, ethylene and polyethylene.

 

Ethanol production is being increased by 100,000t/yr, which along with the existing ethanol plant raises the site's ethanol capacity to around 300,000 t/yr. The facility is on schedule to be commissioned towards the end of the first quarter 2002. The ethylene cracker was commissioned in November 2001, and was expanded by 270,000t/yr to 720,000t/yr. This was the second expansion since the plant began in 1993. It came into production in 1999, in order to coincide with the availability of new feedstocks from the Central Graben Area of the North Sea. The Kinneil Terminal was expanded in 1993 to accommodate this. The total ethylene production of the plant will be one million tonnes per year.

 

This production is extremely pure, reaching 99.5% levels of purity. The production purity is maintained through advanced control systems, which allow a measure of problem prediction (and hence pre-emptive solutions). The overall control is through Honeywell TDC3000 systems. Before the latest stage of expansion, the KG ethylene facility included 13,000 field instruments, 445 junction boxes, 90 Marshalling Cabinets, 34 TDC 3000 Process and 565km of cabling connecting them all together. The firm has also developed a number of in-house measures to improve this control.

 

The suppliers in such a project are numerous. They include: Stone & Webster, Mitsui Babcock Energy Services, Kvaerner, Luddon, William Hare, Watson Norrie and SSL. BP built a new polyethylene plant, Innovene 4, which was commissioned in the second half of 2000 with capacity of 300,000t/yr. The polyethylene plant uses ethylene from BP's other plants at the same site. Indeed, the need to feed BP's polyethylene plant is one of the reasons for the ethylene plant's two expansions in the past decade.

 

The plant has also seen the construction of a new combined heat and power plant (CHP) built by IVO of Finland and Mitsubishi of Japan. It generates 230t/hr of steam and 130 MW of power, mainly for on-site needs. The new CHP plant was commissioned in April 2001.

 

The Grangemouth plant has various chemical processes involving cracking, quenching, compression and separation. Steam cracking requires very high temperatures, and it is a huge gain if the heat can be recovered for use elsewhere in the project. Similarly, steam derived from the quenching process is used to power steam turbines, which are used to power the plant compressors. BP is also extending its present Grangemouth to Teeside ethylene pipeline to its petrochemical facility in Hull, also undergoing expansion. This is a distance of 151km.

 

BP UK Strategy

 

In 1990, BP began streamlining its European petrochemical operations in order to focus its operations better. Hull and Grangemouth have emerged as the key UK sites for petrochemical operations as part of BP's long-term priorities. Hull has also had an extensive expansion. A new vinyl acetate monomer plant and a ethyl acetate plant have been added. In Grangemouth's case this is a natural result of its proximity to the refinery. The Grangemouth facility has benefited from more than £1 billion of investment since 1990. In 1998, BP announced a £500 million ($790 million) expansion package. From summer 2000 the plant has taken advantage of new liquid gas feedstocks coming from the central Graben area of the North Sea. The Grangemouth facility will see an additional ethanol plant, an ethylene plant and a polyethylene plant. Although the plants are being expanded, 1999 did see some redundancies at both of them. Nevertheless, these sites are the focus of future BP operations in the UK.

 

The new plant expansions should help BP in the UK increase mid-cycle earnings by cutting production and logistics costs. Many of the plant's products, such as ethylene, are reused in other chemical processes to produce other derivatives. The main exceptions are the methane used to fuel the plant's furnaces and the polypropylene, which is sold to fabric manufacturers.

 

Foster Wheeler Awarded Alliance Contract by Shell

Foster Wheeler Ltd. (OTCBB:FWLRF) announced July 13 that its subsidiary Foster Wheeler Energy Limited has been awarded a new Alliance contract by Shell UK Oil Products Limited for the provision of basic design, engineering, procurement and construction management services at Shell’s Stanlow manufacturing complex, UK. The contract will run for a minimum period of three years with options to extend for up to a further four years. The booking values will be recorded as individual work orders are received.

 

Foster Wheeler has been Shell’s Alliance partner at Stanlow for the past seven years. During this time it has developed and established an excellent working relationship with the Shell team and has carried out most of the assignments on a fully integrated basis.

 

The company has undertaken over 900,000 hours on 500 separate pieces of work for Shell at Stanlow during this period, ranging in value from a few hundred dollars for discrete specialist services to projects in excess of 36 million for the engineering, procurement and construction management of a new process unit with connections to the existing plant.

 

The contract was won against strong competition and its award demonstrates Foster Wheeler’s commitment to set new standards in its support of Shell. Foster Wheeler and Shell will look to raise to new levels of excellence the quality, timeliness and cost-effectiveness of the services provided under the Alliance.

 

“We are pleased to continue our Alliance relationship with Shell, which shows our ability to deliver successful results for large and small projects alike“, said Keith Batchelor, project sponsor and director, engineering operations, Foster Wheeler Energy Limited. “We are aiming for even higher performance standards and plan to build on the collective strengths of our two organizations and the successes which our integrated team has achieved to date.”

 

Foster Wheeler Ltd. is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, upstream oil and gas, LNG and gas-to-liquids, petrochemicals, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, New Jersey, USA.

 

   POLAND

 

Poland’s Chemical Companies Turning Their Back on Fertilizers

Following the recent downturn of the market, chemical sector companies are diversifying from lucrative fertilizer production.

 

In line with the trend, the Police Chemical Plant yesterday presented its new business plan which aims at clarifying and improving the company's future. The management calculates that they need to invest zł.1 billion over the next nine years. However, the most significant projects will be completed within the next three to four years. These include increasing the production of titanium white, a substance used in the paint and varnish industry, and moving into the manufacture of methanol. In order to carry out these investments, the company is seeking support from its future investor, Ciech. "Zł.150 million will be raised through privatization. We will need loans and we will issue bonds. Ciech could guarantee the funds borrowed," said Andrzej Kurowski, Police president.

 

 

   NIGERIA

 

Chinese to Invest in Nigeria Petrochemical Project

Federal Government's quest for Direct Foreign Investment (FDI) into the nation's economy might have scored a major hit, as a group of Chinese businessmen are planning to set up projects worth about $7 billion in Nigeria.

                                 

Emerging details of the trade visit by the China Export and Credit Insurance Corporation, otherwise known as Sinosure, to the country, revealed that the Chinese investment would be in the area of power generation, crude oil and exploration, coal processing, setting up of an export refinery and a petrochemical plant as well as in agriculture.

 

Checks revealed that the Federal Government has set up a 15-member steering committee to work out modalities for seeing the proposed projects through.

 

The committee is headed by Special Adviser to the President on Manufacturing and Private Sector, Alhaji Abdulkadir Ahmed. Other members are drawn from both the public and private sectors and they include the Special Adviser to the President on Petroleum, Dr. Edmund Daukoru, and four other ministers.

 

Sinosure, the export credit agency of China, was during the visit to Nigeria led by its Executive Vice President, Dr. Liang Zhidong. The delegation met with President Olusegun Obasanjo at the State House, Abuja the first weekend in July.

 

It was gathered that the Chinese investors would specifically be pumping $1.5 billion into the development of a Nigerian continental shelf oil bloc, OPL 229. The bloc is jointly owned by two indigenous oil firms, Emerald Energy Resources Limited and Amni International Petroleum.

 

The plan also includes the setting up of an export refinery with a processing capacity of about 180,000 barrels per day (bpd), and the construction of a petrochemical plant by a company known as SinoLink Hydrocarbon Technologies.

 

Officials said the oil exploration and refinery projects formed a key strategy for China to meet its rising energy demand.

 

"As Chinese Export and Credit Agency, Sinosure is firmly committed to guarantee the financial funding required for the total development of the OPL 229," said an official, who added that "the plan is to produce the crude in Nigeria, refine it in the country and ship directly to China to meet the upsurge in fuel demand."

 

The first well in OPL 229 is billed to be drilled in November this year, while production is expected to commence late next year.

 

It was gathered that the Chinese investors were already holding talks on the proposed projects with Emerald Energy, Diamond Bank and Africa Resources Development Company Limited (ARDCO).

 

Obasanjo had told the Sinosure delegation that Nigeria placed high premium on its relations with China, and that given its size and commitment to technological advancement, economic ties with China would be of mutual benefit to both countries.

 

LIBYA

 

Libyan Delegation in Seoul Seeking Partners
A delegation of Libyan business and government representatives came to South Korea to seek investors for a number of multibillion-dollar petrochemical and telecommunications projects, a local trade agency said.

Since the United States eased economic sanctions against the African country in April, the Libyan government has been appealing for foreign investment to revive its economy, which had been sidelined from the global economy.

The US-imposed sanctions, which date back to 1986, left much of Libya's energy industry underdeveloped.

Libya is known to have 36 billion barrels in oil reserves, about 3% of the world's total.

"South Korea is one of the leading countries in the petrochemical sector," said Nuri Rameadan Al Jerd, head of Libya's state-owned General Company for Chemical Industry. "We hope many South Korean firms can take part in a US$3 billion [3.5 trillion won] petrochemical plant development project being pursued by the Libyan government."

The plant is just one of the energy development and telecommunications projects that Libya is pushing for, which are worth an estimated $45 billion (52.1 trillion won), according to Korea Trade-Investment Promotion Agency (KOTRA).

Many South Korean companies, including state-run Korea Electric Power Corp and Samsung Corp, have showed a high level of interest in the projects, KOTRA said.

Also in the delegation are Rajab Shiglabu, head of the Libya Foreign Investment Board, and Mohamed Al Sagier, vice president of the General Company for Electricity of Libya.

 

“We hope to commence operation within the first quarter of next year,” Halim said adding that potential customers would be Petronas as well as multinational petrochemical, oil and gas companies.

 

SAKAPHEN managing director Claus G. Baron von Fersen said the market size for the coating business in Malaysia was estimated at between 10 million euros and 20 million euros annually.

 

      MIDDLE EAST

 

Process Technology Focus at Chemtex and Corrosion 2004

Chemtex and Corrosion 2004, the Middle East's only international show for the chemical, petrochemical, chemical process technology, corrosion control and management industries, will have a major focus on chemical process technology targeted at the region's rapidly expanding petrochemical industry.

 

Organiser, International Expo-Consults (IEC) says the exhibitor profile of the event, that will take place in Dubai in September, reflects the growing importance of the region's petrochemical sector in the global market.

 

'Studies suggest 2003 and 2004 saw strong regional growth of between 10 and 15%, with the next peak in the petrochemical cycle arriving in 2005/6,' said Mohammed Falaknaz, Vice President, IEC.

 

'In the longer term plans have been drawn up for more than 14,800 million tonnes per year of new capacity, to be built by 2010, with Iran accounting for more than one-third of the extra volume.

 

A major factor in the development of the Middle East petrochemical industry is the low-cost of feedstock. The price of ethane in Saudi Arabia is set at 75 US cents per million Btu (British Thermal Units), which translates to an ethylene production cost of US $100 to US $110 per metric ton. By contrast, making naptha-based ethylene in Asia costs five to six times as much.

 

'The Middle East is probably the most important influence on the global petrochemical industry today. The region is home to about 10% of global ethylene capacity,' said Falaknaz. 'Saudi Arabia alone plans to increase its petrochemicals capacity to 48 million metric tons by 2010 and Iran has set a production goal of 30 million metric tons by 2005.

 

'Meanwhile, the UAE, Kuwait, Qatar, Oman and Egypt have either completed major petrochemical projects or are planning them.

 

'The region's unparalleled production cost advantage, and the willingness of its governments to diversify their oil-based economies, have fostered expotential growth presenting a profitable place to invest.

 

With a visitor footprint taking in the entire Middle East and North Africa, the Sub Continent and CIS, Chemtex and Corrosion 2004 will be held at the Dubai International Exhibition Centre (DIEC) from September 14-16.

 

IRAN

 

Petrochemical Industry, Backbone of Iranian Economy 

President Mohammad Khatami said a developed petrochemical industry gives a strong backing to the Iranian economy.

 

Addressing local officials attending a special ceremony held on the occasion of launching of five major petrochemical projects in Mahshahr, Khuzestan Prov, he said petrochemical products comprise four percent of the country's industrial exports.

 

Praising the efforts made by Oil Ministry personnel to develop petrochemical industries, President Khatami expressed hope that based on planning within the next ten years the value of Iran's petrochemical products would equal that of its exported oil.

 

As to the government policy regarding creating job opportunities, he said petrochemical industries are the most important industries in this respect. At present, raw materials for 11,000 industrial units are being provided by petrochemical products, he added.

 

He further stressed that although Khuzestan had been almost destroyed during the eight-year Iraqi imposed war, the province has now been changed into a center of country's progress and development, thanks to the efforts made by the local people and provincial officials.

 

Khatami also appreciated efforts made by Oil Minister Bijan Namdar Zanganeh and Managing Director of National Petrochemical Industries Company Mohammad Reza Nematzadeh.

 

He further awarded plaques of honor to 19 executive managers of several petrochemical projects in Khuzestan province.

 

Prior to the president's speech, Zanganeh briefed the audience on the performance of his ministry regarding petrochemical projects and said dlrs six billion worth of direct investments have been made in the area of petrochemicals in Khuzestan province in the past six years.

Fanavaran petrochemical facility which has been producing carbon monoxide and acetic acid since 2001 was put into operation ahead of schedule at a cost of dlrs 134 million plus rls 470 billion.

The MTBE plant, however, is to become operational with an installed capacity of 500,000 tons of MTBE a year. Some rls 352 billion plus dlrs 142 million were spent on the project.

Fajr petrochemical project is the first utility project to be put into operation. It was built at a cost of rls 1,190 billion plus dlrs 310 million.

The dock, the construction of which began in 2000, has an annual capacity of loading and unloading 2.5 million tons of liquid products and was built at a cost of rls 150 billion plus dlrs 3.5 million.

 

Mitsui and Iran Sign Ilam HDPE Plant Contract

Japan's Mitsui Engineering & Shipbuilding Co., Ltd. (MES) and Mitsui Chemicals, Inc. (MCI), assisted by Mitsui & Co., Ltd. (MBK), jointly entered into a contract worth roughly 25 billion yen with Iran's National Petrochemical Company (NPC) on July 12, for construction of a high density polyethylene (HDPE) manufacturing plant. HDPE is a plastic used for producing packaging materials, pipes and household articles.

 

The HDPE plant with a design capacity of 300,000 ton/yr, will be constructed under a technology license from MCI for its proprietary HDPE production process, in Ilam, Ilam State in western Iran, for Ilam Petrochemical Company (IPC) -- one of NPC's subsidiaries. Construction is scheduled to begin in April 2005, with completion expected in December 2007.

 

Representing NPC's first-time contract award on a full turnkey basis, the HDPE plant project this time received bids from many influential overseas competitors from Europe and Korea. The Mitsui partners successfully clinched the order this time based on the high regard for the outstanding technological capability of MCI with a large number of technology licensing achievements around the world, and MES's numerous achievements in polyolefin plant construction as well as its excellent engineering design, procurement and management capability demonstrated in plant construction projects.

 

As a result of the latest successful bidding, the number of HDPE plant order won by MES will total 25 units including this time. For MCI, this will be the 41st licensed plant using its HDPE technology, with the cumulative licensed capacity reaching 4.5 million ton/yr, which all together contributes to further strengthening MCI's presence in the polyolefins field.

 

In the prosecution of the project this time, MCI will be responsible for supplying the HDPE process technology, MES for the basic and detailed engineering, procurement of equipment and supervision of plant construction, respectively. MES and one of Iran's leading engineering company Energy Industries Engineering & Design Co. (EIED) will form a consortium which will be entrusted with equipment procurement within Iran and executing the actual construction work.

 

Moreover, the project will be funded by export credit from Japan Bank for International Cooperation under favorable terms and conditions, and export insurance is expected to be underwritten by the Japanese government's Nippon Export and Investment Insurance.

 

Currently, construction of a large number of manufacturing plants in the petrochemicals field including HDPE are being planned in Iran. Given such a situation, MES intends to take advantage of the contract award this time in actively pursuing plant orders from Iran from now on.

 

With its proprietary polyethylene and polypropylene manufacturing technologies being highly regarded worldwide for their extremely high standards, MCI intends to actively develop licensing opportunities for those technologies from now on with the entire world in sight.

 

   OMAN

 

65-Million-Dollar Loan Agreement for Petrochemical Projects in Sur

Oman has signed a 25 million rial (65 million dollar) loan agreement with the Japan Bank for International Cooperation to finance the construction of a road in the eastern Sur region.

 

The loan is repayable over 13 years with a three-year grace period, the state news agency ONA reported.

 

The 90-kilometre (56-mile) road will serve Oman's 2.5 billion dollar liquefied natural gas (LNG) plant and other petrochemical projects in Sur.

 

The loan will finance 45 percent of the 56.2-million-rial (146 million dollar) cost of building the road.

 

The Abu Dhabi Development Fund has allocated 45 percent for the project's cost while the remaining 10 percent is to be funded by the Omani government, ONA said.

 

   QATAR

 

Qatar Petroleum and Exxonmobil Chemical Sign Statement of Intent for Ethane Cracker, Derivatives Complex

Qatar Petroleum and ExxonMobil Chemical Company, an affiliate of Exxon Mobil Corporation (NYSE:XOM), announced June 24 that they have signed a Statement of Intent (SOI) to conduct a feasibility study for a world-scale, ethane-based cracker and ethylene derivatives complex in Ras Laffan Industrial City, Qatar. The SOI was signed by H.E. Abdullah bin Hamad Al-Attiyah, Qatar’s second deputy premier, minister of energy and industry and chairman of Qatar Petroleum, and by Mr. Daniel S. Sanders, president, ExxonMobil Chemical Company.

 

The Qatar Petroleum and ExxonMobil joint study will define the technical and commercial aspects of a world-class petrochemical growth platform in Qatar. The complex will utilize ethane feedstock from new gas development projects in Qatar’s North Field and supply competitively advantaged products to Asia and Europe.

 

“The signing of today’s agreement supports Qatar’s diversification plan and demonstrates further the government’s continued implementation of its strategy to integrate upstream and downstream development and to expand its industrial base,“ said H.E. Abdullah bin Hamad Al-Attiyah. “Our success to date has mainly resulted from the vision and wise leadership of HH the Emir of Qatar and the continued dedication and commitment from Qatar Petroleum and ExxonMobil.”

 

“ExxonMobil is pleased to play a significant role in supporting Qatar’s diversification strategy,“ said Mr. Sanders. “We believe the proposed project will serve as a platform for future growth to assist the State of Qatar in its goal of becoming a leader among petrochemical producers in the region. We look forward to working with Qatar Petroleum to develop plans for a world-class petrochemical project at Ras Laffan, building on our unique capabilities and successful upstream partnership.”

 

Exxon Mobil Corporation, through its subsidiaries, has had a presence in Qatar since 1935. Qatar Petroleum and ExxonMobil are currently working together to diversify the use of the North Field gas into new areas in addition to LNG, including the supply of pipeline gas to domestic and regional customers, Gas-to-Liquids (GTL) and other projects.

 

   SAUDI ARABIA

 

Sumitomo Chemicals to Develop Petrochemical Plant in Saudi Arabia

The Saudi Arabian Oil Company (Saudi Aramco) and Sumitomo Chemical Co., Ltd. (Sumitomo) in May 2004 signed a comprehensive Memorandum of Understanding related to the planned development of a large, integrated refining and petrochemical complex in the Red Sea town of Rabigh (“Rabigh Project” or “Project”).

 

Once implemented, the proposed Rabigh Project would be one of the largest integrated refining and petrochemical projects ever to be built at one time. A total of 2.2 million tons of olefins, along with large volumes of gasoline and other refined products, would be produced. The cost for the direct Project investment is currently estimated to be U.S.$4.3 billion; however, this estimate is subject to change based on the results of a Joint Feasibility Study that will be undertaken by Saudi Aramco and Sumitomo. In addition, this project is expected to create third-party investment opportunities in the private sector for utilities and other related infrastructure.

 

For the companies, the Project represents an opportunity for the world’s largest producer of hydrocarbons to partner with an outstanding, world-class petrochemical producer to achieve economies of scale unsurpassed by any other project previously undertaken. For the Kingdom of Saudi Arabia, it presents an opportunity for increased industrialization and a platform for broad downstream conversion industry development in the Kingdom. This Project represents a concrete example of the Kingdom’s strategy of attracting foreign investment to expand its economy and provide increased job opportunities for Saudi nationals. It is also consistent with the objective of creating opportunities for private local investment in service and other related industries.
 

Sumitomo has identified petrochemicals, particularly polyolefins, as one of its core businesses, and it considers securing a stable supply of feedstock that is competitively priced as necessary for strengthening its medium- and long-term competitiveness. This Project is closely in accord with that strategy and constitutes an important step forward in enhancing the global competitiveness of the company’s petrochemical operations. Although Sumitomo has been operating a large-scale complex in a petroleum-refining center, Singapore, since 1984, this Project is the company’s first attempt to establish a foothold in an oil and gas-producing country, thereby assuring the basic feedstock supply for the Project. The Project will, therefore, open a new stage in Sumitomo’s worldwide business strategy.