SCG updates investment in Long Son Petrochemicals, Vietnam with an aim for sustainable development in ASEAN

Stocks and Financial Services Press Releases Friday July 14, 2017 10:31
Bangkok--14 Jul--SCG

Vina SCG Chemicals Co., Ltd. (VSCG), wholly-owned subsidiary by SCG, has approved to proceed with the investment of the Long Son Petrochemicals Company Limited (LSP). LSP will issue the Letter of Award to key contractors on July 14, 2017 and the final contract signing is expected to be in the second half of 2017. The estimated four and a half year construction of the complex is managed under the consolidated turnkey lump sum project format, with commercial operation expected by the first half of 2022.

The total project cost of LSP is approximately US$5.4 billion or 188 billion Baht, and financing will be with a combination of foreign denominated debt and equity at 60:40. The annual CAPEX will be distributed across the project period. SCG's indirect stake in LSP is 71% (via Vina SCG Chemicals Co., Ltd. 53% and Thai Plastic and Chemicals Public Company Limited 18%), while Vietnam Oil and Gas Group (PetroVietnam) holds 29%.

LSP is positioned as Vietnam's first petrochemicals complex. The project possesses competitive aspects ranging from integration, economies of scale, and flexible feedstock. Non-petrochemical supporting infrastructure such as a deep sea port and other facilities are also included at approximately 30% of the total investment cost.

At the heart of the project is a one million ton ethylene cracker with flexible gas and naphtha feed to yield in total olefins capacity of up to 1.6 million tons per year depending on the feedstock mix. The technology of LSP will be comprised of proven processes from leading world class licensors. The feedstock will consist of locally sourced ethane, and imported propane and naphtha, on secured contracts and at competitive market prices. This will facilitate the highly flexible cracker that is able to utilize gas up to 80% for cost optimization. Furthermore, the downstream polyolefins operations will be of similar scale to the cracker, consisting of High Density Polyethylene (HDPE), Linear Low Density Polyethylene (LLDPE) and Polypropylene (PP) plants.

LSP is located just 100 km from Ho Chi Minh City, the main market and economic heartland of Vietnam. In 2016, Vietnam imported approximately 2.3 million tons of polyolefins products with expectation in continuous growth in the future. The project is strategically committed to SCG's vison in pursuit of becoming the region's sustainable business leader to enhance the quality of life for all.

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