ExxonMobil Chemical inherits Exxon's Asian expansion plan

Dec. 20, 1999
ExxonMobil Chemical, a division of the new oil giant ExxonMobil Corp. (see story, p. 26), is in the final stages of an ill-timed Asian petrochemical expansion plan implemented by predecessor Exxon Chemical.

ExxonMobil Chemical, a division of the new oil giant ExxonMobil Corp. (see story, p. 26), is in the final stages of an ill-timed Asian petrochemical expansion plan implemented by predecessor Exxon Chemical.

Exxon Chemical's strategy was to become the leading player in Asian petrochemicals. The plan was launched not long before a severe economic crisis hit the region in late 1997.

Now, the plants are beginning to come on stream just as the region is beginning to emerge from an extended period of economic contraction.

By the end of 2000, the new ExxonMobil will have finished four petrochemical projects in Asia and one the Middle East. These include: a $2 billion chemical complex in Singapore, a $400 million aromatics complex in Thailand, and a $1 billion joint-venture polyethylene plant in Saudi Arabia. The timing of the Asian start-ups will likely prove to be inauspicious, unless Asia's economies begin to grow significantly in the near-term.

Meanwhile, ExxonMobil Chemical announced it has reached an agreement in principle to buy out its partners in Singapore Aromatics Co. Pte. (SAC). BP Amoco Chemical Singapore Holding Co. and China American Singapore Co. Pte. Ltd. have agreed to sell their respective 40% and 10% stakes in the 350,000 tonne/year paraxylene plant to ExxonMobil. The decision comes just as SAC revealed plans to idle the plant until market conditions in the region improve.

"A firm shutdown duration has not been established," said ExxonMobil Chemical. "During the shutdown period, care will be taken to preserve assets for the time when conditions are right for a restart."

Start-ups

Exxon Chemical recently brought on stream a 350,000 tonne/year paraxylene plant in Sri Racha on the eastern coast of Thailand (OGJ, Nov. 1, 1999, p. 44). And Exxon Chemical's giant Singapore petrochemical complex will be commissioned in phases next year, with the last units coming on line in the last quarter of 2000. The Singapore complex includes an 800,000 tonne/year steam cracker that will produce ethylene, propylene, and other products for several downstream chemical units.

Exxon Chemical also has two projects under construction in China, both of which are due to come on stream next year. One is a wholly owned plasticizer plant south of Canton. The other involves an alliance with state firm Sinopec to build a resins plant south of Shanghai.

In Saudi Arabia, Exxon Chemical and its co-venturer-state-owned Saudi Basic Industries Corp.-are investing $1 billion to build a grassroot steam cracker, debottleneck a linear low-density polyethylene plant, and construct a new low-density polyethylene plant. The Saudi project, a 50-50 joint venture, is due to start up early next year. The plant will have capacity to produce 700,000 tonnes/year of ethylene and 200,000 tonnes/year of propylene.

"After we finish all these projects and see how well we operate them, then we look for opportunities for new investment," said Stan Tebbe, president of Exxon Chemical Asia-Pacific.

The company remains upbeat about the long-term growth potential of Asian petrochemical demand.