FocusThai SCG expands SE Asia petrochemical presence via Vietnam

10 February 2012 06:42  [Source: ICIS news]

By Nurluqman Suratman

SINGAPORE (ICIS)--Siam Cement Group (SCG), the biggest conglomerate in Thailand, just formalised its participation in building Vietnam’s first petrochemical complex as part of a long-term strategy to grow its presence in southeast Asia, analysts said on Friday.

The company announced on 9 February that it has signed a joint venture agreement with partners, including Qatar Petroleum, on the $4.5bn (€3.38bn) project at Long Son Island in Vietnam, reaffirming its commitment that was first announced in November 2009.

Investment details on this project in southern Vietnam are expected to be finalised next year.

The project to be built in the province of Ba Ria – Vung Tau in Long Son Island will have a 1.4m tonne/year cracker, and downstream facilities, including a 400,000 tonne/year high-density polyethylene (HDPE) unit, a 450,000 tonne/year polypropylene (PP) plant and a 400,000 tonne/year linear low-density PE (LLDPE) plant.

SCG’s long-term feedstock agreement with Qatar to supply the cracker at Long Son with propane and naphtha feedstock, alongside an agreement with PetroVietnam to supply ethane, will provide better economies of scale and paves the way for the production of specialty products in the long run, analysts said.

“Vietnam’s first integrated petrochemicals complex will be the spring board into value added and downstream industries for the country, thus solidifying its competitiveness and capturing the ASEAN growth for Vietnam,” SCG said in a statement.

The signing of the joint venture agreement between SCG and partners on the project came a few months after its successful acquisition of a 30% stake at Indonesia’s integrated petrochemical player and sole cracker operator, Chandra Asri Petrochemical.

The Thai firm was also reported to be eyeing another Indonesian firm Sulfindo Adiusaha, which produces caustic soda, polyvinyl chloride and ethylene dichloride.

In the Vietnam project, SCG will initially take a 28%, while its 45.6%-owned affiliate Thai Plastics and Chemical (TPC) will have an 18% interest. Its other partners include PetroVietnam and Vietnam National Chemical Corp (Vinachem).

“This investment [in Vietnam] is in line with SCG's strategy to sustain its long-term earnings growth by investing in the ASEAN [Association of Southeast Asian Nations] market,” said Nat Panassutrakorn, an analyst with Bangkok-based brokerage KGI Securities.

“While most output from Long Son will be for the Vietnamese market we see potential for SCG to export a good portion to high-growth markets overseas, especially the automotive industry,” he said.

SCG will also be able to better compete with PTT in the regional market with the new production base in Vietnam, analysts said.

($1 = €0.75)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Nurluqman Suratman

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