Saudi Aramco is considering an investment of $600 million in a naphtha cracker project in the Philippines, according to the Organization of Petroleum Exporting Countries News Agency (OPECNA) last month.
The company already holds a 40% stake in Petron Corp., the Philippines' national refinery corporation.
Aramco outbid other international groups, including Malaysian state oil corporation Petronas, a few years ago to buy the stake in Petron in a market that, the agency said, could prove a stepping stone into China.
The new naphtha cracker Saudi Aramco would help the Philippines develop its downstream petrochemical sector, part of the country's industrialization program.
Japanese and other foreign investors, said the agency, have urged the government and the Philippines national oil company to work out a flexible term for investment in the project, which has been facing delays for the past 3 years due to economic recession.
Petron's Chairman Jose A. Syjuco has indicated that Petron's participation in the cracker would be based on Aramco's assistance in ensuring crude oil supply.
It would also pull in the expertise of the Saudi Basic Industries Corp. (SABIC). SABIC is estimated to be using natural gas at a price of $0.25/MMbtu for producing fertilizers.
OPECNA reported that Aramco would be making a strong bid for a lead role in the naphtha cracker.
It could be the last petrochemical feedstock plant to be built in the Asia Pacific region for several years as a result of a petrochemical feedstock oversupply in northern Asia, the revamping of the Chinese petrochemical industry, and the pending World Trade Organization (WTO) move to cut global trade barriers.
The Philippines wants to build its petrochemical sector, which in 2003 will face trade pressure under the free-trade agreement of the Association of Southeast Asian Nations, said the agency.
Japan, South Korea, Taiwan, Singapore, and Malaysia will likely flood the southeast Asian petrochemical markets. Petron would use the naphtha cracker to produce polyethylene and polypropylene, feedstocks for plastics.