24 August 1998 00:00 [Source: ACN]
Bechtel has won the the contract to build Exxon's 450 000 tonne/year PE project in Singapore, pushing forward the cracker project. Exxon has declined to specify the value and details of the contract.
Exxon earlier awarded Mitsui Engineering and Shipbuilding a Yen10bn (US$68.7m) contract for its 275 000 tonne/year unit PP unit. Construction on Jurong Island is slated to start in January 1999 (ACN 3 Aug, p43).
However, industry observers are not too surprised by the PE contract award. One observer thinks the cracker has a 50:50 chance of going ahead but may eventually be dropped if it is found to be not viable.
Furthermore, the Exxon board has yet to make a decision on the 800 000 tonne/year investment. Even if is to be built, it may not start up on time, as was the case with Formosa's No6 cracker project in Mailiao, Taiwan, an analyst said.
Piling work for the complex on Jurong Island is underway. Chiyoda and Kellogg are building the complex and Brown & Root is providing construction management.
Mobil has also yet to decide whether it will build a cracker in Singapore. Its decision is expected later this year.
Singapore's Economic Development Board (EDB) has declined to comment whether it is evaluating Mobil's request to upgrade the incentive package for the cracker on Jurong Island. EDB is still considering a 25-30% stake in the cracker project.
However, a source said that the EDB is unlikely to grant additional investment incentives on account of the current weak petrochemical demand.
'Investors planning projects in Singapore are responsible for the viability of their investments. EDB incentives will not be treated like subsidies,' an EDB source said, adding that EDB has to be equitable and follow the stipulated government policies.
But some industry players think Mobil is right to delay its commitment, especially when it is involves such a huge investment. But despite the weak demand and the economic downturn of the region, players targeting the Asian market for the long term are still coming to Singapore, the EDB source said.
To anticipate this future demand, work is expected to commence shortly on the final reclamation phase - Phase 3b - of Jurong Island, and be completed by 2003. The entire reclamation will triple the area of Jurong Island to about 2800 ha.
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