Philippines’ JG Summit keen to invest in downstream operations

25 August 2011 14:48  [Source: ICIS news]

SINGAPORE (ICIS)--JG Summit Petrochemical is looking to invest further downstream of its naphtha cracker, which is currently under construction in Batangas, the Philippines, a company executive said on Thursday.

The cracker – the Philippines’ first - is expected to produce 320,000 tonnes/year of ethylene and 190,000 tonnes/year of propylene, due for start-up in June 2013, with commercial production slated in early 2014.

“We’re studying our options now. We are taking a look at the other streams that we can develop,” said Patrick Go, executive vice president for commercial operations at JG Summit Petrochemical.

“Maybe at least one to two steps down from naphtha. We are taking a look at crude C4s, then maybe extracting butadiene and raffinate 1,” he said.

The potential for further downstream operations would explain the company’s choice to build a naphtha-based cracker.

“It [naphtha] is expensive compared to ethane. But ethane has its disadvantages in that you only produce ethylene,” Go said.

“With naphtha, you have other streams. There is value to be derived in other streams if you are looking at the output of the whole cracker and the potential for integrating downstream, it is not that bad,” the JG Summit Petrochemical executive added.

It took JG Summit Petrochemical more than a decade to start construction of the naphtha cracker as financing had been delayed by a series of financial crises in different parts of the world, beginning with the Asian financial crisis in the late 1990s, Go said.

This time, its parent firm and Philippine conglomerate JG Summit Holdings is picking up the whole tab for the $700m (€483m) project.

The cracker will supply the feedstock to the company’s 210,000 tonne/year polyethylene (PE) plant and 190,000 tonne/year polypropylene plant in Batangas. The plants have been running at low rates since operations started in 1998-1999 because of lack of feedstock, he said.

“Right now, we have to find a way to operate at minimal loss over the next two years until the cracker starts up. The biggest challenge is to build this cracker on time and on budget,” Go said.

“The cracker is a big project for us already so we have to get this on the ground and running first before we push for the other projects,” he added.

Asked whether the company is considering doing acquisitions or making investments abroad, Go said: “If we don’t have control I don’t think we’ll be interested.”

($1 = €0.69)

By: Pearl Bantillo
+65 6780 4359

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