Shell opens largest petrochem plant

Vincent Lingga, The Jakarta Post, Singapore | Wed, 05/05/2010 11:06 AM

Royal Dutch Shell opened its largest-ever multi-billion dollar petrochemical complex on Bukom and Jurong islands Tuesday in a stronger bid to strengthen its leading position in the expanding Asian market.

The multi-billion dollar Shell Eastern Petrochemicals Complex (SEPC) consists of an ethylene cracker and butadiene extraction unit on Bukom island, and a mono-ethylene glycol (MEG) plant and a butadiene plant on neighboring Jurong island.

The complex is capable of manufacturing 800,000 tons of ethylene, 750,000 tons of MEG, 155,000 tons of butadiene, 450,000 tons of propylene and 230,000 tons of benzene a year.

MEG is a raw material for polyester fibers for clothing and furnishing, safety equipment, film, anti-freeze coolants and many other consumer products.

“The demand for petrochemicals, the basic building blocks for manufacturing many consumer goods, in Asia is soaring,” noted Shell chief executive officer Peter Voser at the inauguration ceremony which was also attended by Singapore Prime Minister Lee Hsien Loong.

Shell enjoyed a 60 percent increase in underlying post-tax profits to US$4.9 billion in the first quarter of this year.

SEPC, Shell’s largest fully-integrated refinery and petrochemicals hub, is the second major petrochemical complex completed by Shell in the past five years after the CNOOC-Shell petrochemical joint venture in Guangdong, China.

Shell’s investments in Singapore and China reinforce the Shell strategy to build chemicals production to meet the needs of Asia and Pacific countries which account for around 70 percent of global MEG consumption, SEPC Deputy Venture Director Pieter Eijsberg said.

Voser described SEPC as a model example of Shell’s strategy to integrate its refining and petrochemicals assets to maximize economies of scale and efficiency benefits in terms of feedstocks, operations and logistics.

He reaffirmed the strategy of the giant oil company to derive more than one half of its upstream production from natural gas by 2012 because natural gas plants produce only half as much CO2 compared to coal-fired power plants.

Shell’s largest and flagship gas projects under construction are two LNG plant projects worth $21 billion in Qatar, one of which will come on stream next year.

“Asia is both gas rich and gas-hungry, and Southeast Asia is an important exporter of LNG to the rest of the world with Malaysia and Indonesia being the world’s second and third LNG suppliers after Qatar,” Voser said.

In late March, Shell joined with PetroChina Co. in a $3.2 billion acquisition of Arrow Energy Ltd., a deal which will give them access to Arrow Energy’s huge holdings of coal-seam gas reserves, or coal-bed methane, in Australia.

As much as 40 percent of Shell’s capital spending in the next few years has been earmarked for the Asia Pacific region and this programs seems to fit perfectly well within Shell’s strategy to become a gas company that increasingly focuses on Southeast Asia.