S'pore's chemical ambition checked by its neighbors
S'pore's chemical ambition checked by its neighbors
SINGAPORE (Reuter): Singapore is forging ahead with its plan to develop a major petrochemical production hub to service Southeast Asia, but intense competition from neighbours is slowing its growth, industry analysts said yesterday.
Last week, Singapore claimed a prized catch when Exxon Chemical Co said it would go ahead with plans to build a US$2.0 billion ethylene plant at Pulau Ayer Chawan -- home to its 230,000-barrel-per-day (bpd) refinery.
But Exxon's decision raised questions over a similar project planned for Singapore by Mobil Corp as several other such plants are planned to start production in Southeast Asia in 2001.
"Some of those plants have a domestic market, they have a freight advantage," said consultant Andrew Spiers of Chem Systems East Asia.
Thailand is geared up to starting four plants, Malaysia two and Indonesia two -- many in conjuction with leading multinationals.
"We still feel there is room for Mobil...we have not given up on Mobil," Philip Yeo, chairman of Singapore's Economic Development Board (EDB) told a news conference on Friday to mark Exxon's investment.
EDB is courting Mobil aggressively to make sure the company does not abandon plan to build a S$1.5 billion (US$1.04 billion) plant to 800,000 tons per year of ethylene, the basic chemical used in making plastics.
Yeo said EDB had offered Mobil an incentive package similar to that given to Exxon, including a tax holiday, investment allowances and soft loans.
"Clearly it (incentives) is significant," said Warwick Bisley, managing director of Exxon's new venture when asked to comment on his company's choice of Singapore.
Exxon said its plant, designed to produce 800,000 tons of ethylene a year, was the biggest it has built anywhere in the world. The complex, including three downstream units, is scheduled to start up in 2000.
"There is intense competition for the investment dollar within the region and from developed countries," the EDB said earlier.
EDB is also counting on its strategy of developing an integrated site for petrochemical production to attract more companies.
Singapore is spending S$7.0 billion to join seven small islands, including Pulau Ayer Chawan, into one large island by 2015.
It says the site offers the benefits of large-scale production, good infrastructure and readily available feedstock as well as proximity to customers.
The hub is already home to two ethylene plants operated by the Petrochemical Corp of Singapore and a 280,000-bpd refinery by Singapore Refining Co.
It also has committments from some of the world's leading chemical companies such as Dupont, Eastman Chemical Co, Hoechst AG, Chevron Chemical and Alusuisse-Lonza Holding AG to build derivative plants.
But analysts say fresh investments are likely to come from derivative plants -- using ethylene to make other plastics -- rather than large scale ethylene plants similar to that announced by Exxon.