UpdateThailand's IVL mulls building US shale gas-based cracker

02 March 2012 11:11  [Source: ICIS news]

(adds analyst comments, background)

By Nurluqman Suratman

SINGAPORE (ICIS)--Thailand-listed polyester maker Indorama Ventures Ltd (IVL) is aiming to build a world-scale cracker in the US that will use shale gas as feedstock, a company spokesperson said on Friday.

“We just did a pre-feasibility study with a partner. We will do a year-long feasibility study and decide whether to go ahead [with the cracker project],” the spokesperson said, without elaborating.

This project would constitute an upstream expansion for IVL, after its acquisition of US-based ethylene oxide/ethylene glycol maker Old World in early February.

The $795m (€596m) acquisition of Clear Lake, Texas-based Old World is expected to be completed in the first quarter of the year.

Old World is the largest single EO/EG production facility in the US, with a crude EO production capacity of 435,000 tonnes/year.

The facility also produces 204,000 tonnes/year of purified EO and 358,000 tonnes of monoethyelene glycol (MEG).

IVL’s pipeline of projects in which it plans to invest $4-5bn over the next years, could include the US shale gas-based cracker, said Naphat Chantaraserekul, a Bangkok-based analyst at brokerage DBS Vickers Securities.

“[IVL’s] Management believes that they can capitalise on cheap shale gas and establish upstream to downstream value chain for polyester,” Chantaraserekul said.

IVL plans to commence work on the cracker in 2015 and complete the project in 2017, he added.

The Thai firm has plans to raise its combined global production capacity for purified terephthalic acid (PTA), polyethylene terephthalate (PET) and fibres to at least 10m tonnes/year by 2014, from about 5.5m tonnes/year currently.

Taking into account the company’s recent acquisitions and expansions, IVL’s overall production capacity, excluding capacity in associated firms, will rise by 23% to 6.5m tonnes in 2012, Chantaraserekul said.

In Indonesia, IVL bought a 50% stake in PTA maker Polyprima, which has a 465,000 tonne/year capacity at Cilegon in West Java.

The company is looking at further expansions in Indonesia, India and the Middle East, said Chantaraserekul of DBS Vickers.

($1 = €0.75)

By: Nurluqman Suratman

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