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  Channel NewsAsia 27 Jul 06
Shell confirms plan to build multi-billion cracker plant on Bukom
By Jeana Wong, Channel NewsAsia

SINGAPORE : Energy giant Shell has confirmed that it is going ahead with plans to build a new world-scale ethylene cracker on Singapore's Bukom Island.

No financial details were given but Shell says the project will cost several billion dollars, and it involves building a brand new Mono-Ethylene Glycol (MEG) plant. Shell has also announced changes and additions to its existing refinery on Bukom.

Shell is expanding its petrochemical operations in Singapore to capture a ready, growing demand in regional markets. Its new chemical cracker plant, when completed by 2010, will supply cracker products to its existing and potential joint venture plants, as well as its Jurong Island customers via undersea pipelines.

With a capacity of 800,000 tonnes a year, the cracker plant will nearly double Singapore's capacity to process ethylene.

A steam cracker is a petrochemical plant that turns naphtha and light hydrocarbons into ethylene, propylene, and other chemical raw materials. Shell says it will also modify its Bukom refinery to work with the new cracker and MEG plant so as to optimise naptha use and operational benefits.

It says the project will provide for a profitable downstream business for the Group as it aims to grow its chemicals investments in Asia and the Middle East.

Analysts say Shell has a surplus of naptha from its existing Singapore operations and it's betting on increasing global demand, especially from China. They say the oil giant will likely export its cracker products to China as the country continues to make everything for the world, including computer casings, car parts, plastic toys and chairs.

However, they say companies worldwide are building cracker plants in China, India and countries in the Middle East, and it remains a question whether there would be an oversupply of ethylene plants.

Construction on the ethylene cracker is due to begin later this year. It is expected to be fully operational by as early as 2009.

Earlier this year, Shell's competitor Exxon Mobil awarded engineering design contracts for a similar cracker plant on Jurong Island. - CNA /ls
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