SINGAPORE (ICIS)--ExxonMobil’s potential acquisition of beleaguered Jurong Aromatic Corporation (JAC) in Singapore will strengthen its position in the global paraxylene (PX) market.
An ExxonMobil spokesperson said on Wednesday the company is currently negotiating with restructuring firm Borrelli Walsh to acquire JAC’s assets on Jurong Island in Singapore.
“While progress is being made, no agreement has been reached yet,” the spokesperson said.
ExxonMobil currently has PX plants in Asia, Europe and North America.
“If ExxonMobil successfully acquires JAC, it will be one of the de facto leading PX producers in Asia, given its large scale of refining operations in the world,” a trader based in southeast Asia said.
It is one of the key PX producers in Asia, running units in Singapore, Thailand and China.
Its Singapore PX facilities on Jurong Island have a combined capacity of 1m tonne/year, while its unit in Sri Racha, Thailand, has a capacity of 500,000 tonne/year.
It also has a share in Fujian Refining and Petrochemical (FREP), which is a joint venture with Sinopec and Saudi Aramco. The refinery has an 800,000 tonne/year PX unit.
If it successfully acquires JAC and takes its 800,000 tonne/year PX unit under its wing, ExxonMobil would have a total capacity of 3.1m tonne/year in Asia Pacific.
Only South Korea’s SK Global Chemical (SKGC), Japan’s JX Nippon Oil & Energy and India’s Reliance Industries (RIL) match this.
SKGC currently has a PX capacity of 3.15m tonne/year, including joint venture Ulsan Aromatics, while RIL has a total PX capacity of 4.3m tonne/year after starting up its new 2.25m tonne/year PX unit in Jamnagar late last year.
JX Nippon Oil & Energy would have a total PX capacity of 3.1m tonne/year once it completes its ongoing merger with TonenGeneral.
Market sources said that a successful acquisition by ExxonMobil of JAC would likely mean an end to current contracts between various parties and that new contracts would have to be drawn up with end-users in Asia from early as H2-2017.
ExxonMobil’s PX volumes are sold on a contract and spot basis to key downstream end-users in the downstream purified terephthalic acid (PTA) market.
Cargoes from its plants in Asia Pacific are typically fixed to land at major Chinese and southeast Asian PTA plants.
The company also has PX units in Europe and US. It runs a 600,000 tonne/year PX unit in Baytown, Texas and a 300,000 tonne/year PX unit in Beaumont, Texas.
It also runs a 700,000 tonne/year PX unit in Botlek, the Netherlands.
PX cargoes from its US and Europe plant regularly land in Asia amid an open arbitrage window, where major Chinese PTA plants have docks large enough to accommodate larger sized MR vessels carrying deep-sea cargoes.
This is especially so when key consumer market China runs PTA units at high rates to feed polyester demand or when PTA units in Europe reduce feedstock requirements on force majeures (FM) or face technical problems.
Picture: ExxonMobil's Singapore Chemical Plant at Jurong Island (Source: ExxonMobil website)
Focus article by Paul Lim