Thai SCG to run Vietnam petrochemical complex on US ethane

SINGAPORE (ICIS)–Thai conglomerate Siam Cement Group (SCG) plans to use ethane imported from the US as feedstock for its Long Son Petrochemical (LSP) complex in Vietnam to boost the project’s long-term competitiveness.

• Storage, supporting facilities for ethane to be built on site
• Ethane targeted as major feedstock for LSP cracker; C2 market “turbulence” expected
• LSP commercial operations start October

SCG is in talks with a contractor for the new ethane storage project, with construction of the facilities expected to take about three years to complete, the company said in roadshow presentation on 16 September.

“The site is equipped with a central utility system, ready for the installation of ethane gas storage tanks and pipelines,” the company said in a separate statement on 16 September.

SCG has yet to finalize the capital expenditure for the project, and the prospective US ethane supplier for LSP was not disclosed.

The $5.4bn LSP project in Ba Ria-Vung Tao province is Vietnam’s first integrated petrochemical complex and is 100%-owned by Thai conglomerate SCG.

The mixed-feed cracker at the site currently uses propane and naphtha feedstocks imported from Qatar under a long-term supply deal.

The cracker can produce 950,000 tonnes/year of ethylene; 400,000 tonnes/year of propylene; and 100,000 tonnes/year of butadiene (BD).

SCG said that LSP is already operating flexible gas cracker which can use a variety of feedstocks, including ethane, propane, and naphtha.

Ethane imported from the US is currently cheaper by $200-400/tonne than existing feedstock, SCG said, noting that the average price of ethane has been around 40% lower than that of naphtha and propane over the past three years.

The feedstock derived from shale gas also provides greater price stability as it is linked to US natural gas prices, unlike naphtha, which is influenced by oil price fluctuations.

FEEDSTOCK DIVERSIFICATION
The enhancement to LSP’s feedstock flexibility is part of SCG’s efforts to bolster its chemicals business in the face of global oversupply, low demand and oil price volatility, SCG said.

For ethylene (C2), the company expects “future turbulence” in the market, especially in 2027-2028 amid a wave of new global cracker additions, especially in China.

Global ethylene supply is projected by SCG to grow at a slower average rate of around 3-4% in 2025-2030, compared with 5% in 2019-2024.

China will comprise around 53% of new ethylene supply additions in 2025-2030, it noted.

SCG expects an “extended chemicals trough with low margin” in 2025-2030 amid continued naphtha price volatility.

“The current global situation and the future outlook over the next 2-5 years will be marked by increased volatility,” SCG CEO and president Thammasak Sethaudom said on 16 September.

“All SCG businesses are moving forward with strategies that align with these dynamics while also reducing carbon dioxide emissions…to ensure long-term competitiveness.”

LSP COMMERCIAL OPERATIONS START OCTOBER
The LSP complex has completed performance test runs in September and is on track to start commercial operations next month, according to SCG.

Its utilization rate following start-up will be “determined by global demand dynamics”, it said.

LSP’s downstream plants include a 500,000 tonne/year high density polyethylene (HDPE) unit; a linear low density PE (LLDPE) unit of the same capacity; and a 400,000 tonne/year polypropylene (PP) unit.

The cracker had an outage in February due to a technical issue and resumed normal operations in August.

It had declared a force majeure in February due to issues at the cracker that also shut its downstream PE and PP units.

Credit ratings agency Fitch Ratings in a note on 17 September said that it expects LSP to ramp up its utilization rate to 70-80% in 2025, “supported by its cost competitiveness versus imports and the flexibility to use both propane and naphtha as feedstock”.

Imports currently fulfil nearly all of Vietnam’s petrochemical requirements.

Focus article by Nurluqman Suratman

Thumbnail photo: Aerial view of SCG’s Long Son Petrochemical Complex in Vietnam (Source: SCG)