SET-listed Siam Cement Group (SCC) is making big progress on its much-awaited petrochemical complex in Vietnam, expecting construction to begin this year and commercial operations by 2022, according to the company's statement to the stock exchange.
The company has approved its wholly owned subsidiary, Vina SCG Chemicals Co Ltd (VSCG), to proceed with investment in Long Son Petrochemicals Co Ltd (LSP). The final contract signing is expected to take place in the second half of the year, when construction is expected to start.
"The estimated four-and-a-half-year construction of the complex is managed under the consolidated turnkey lump-sum project format, with commercial operations expected by the first half of 2022," the statement said.
The total project cost of LSP is about US$5.4 billion (188 billion baht), and financing will be through a combination of foreign denominated debt and equity at 60:40.
The cost is about 20% higher than the previous estimation of $4.5 billion, largely due to rising construction costs.
LSP is being positioned as Vietnam's first petrochemical complex. The project will possess competitive aspects such as integration, economies of scale and feedstock flexibility.
The project includes a plan to develop non-petrochemical supporting infrastructure such as a deep-sea port and other facilities, which will account for 30% of total investment cost.
A major target of this project is the development of a 1-million-tonne ethylene cracker with a flexible gas and naphtha feed, allowing for olefin capacity of up to 1.6 million tonnes a year.
The project's olefins cracker will be equipped to maximise feedstock utilisation and optimise costs. It will be fully integrated for downstream polyolefin capacities of a similar scale.
LSP is located just 100 kilometres from Ho Chi Minh City.
SCG's indirect stake in LSP is 71%. Of the total, it holds a stake of 53% through Vina SCG Chemicals Co Ltd and of 18% through Thai Plastic and Chemicals Public Co, while Vietnam Oil and Gas Group (PetroVietnam) holds the remaining 29%.
SCG planned the petrochemical complex in Vietnam several years ago, but the project was delayed for about two years as collapsing global oil prices forced the previous partner, Qatar International Petroleum Marketing Co Ltd, to withdraw from the project in 2015.
SCG posted a net profit of 17.4 billion baht in the first quarter of this year, up from 13.5 billion baht in the same period of last year.
SCC shares closed yesterday on the Stock Exchange of Thailand at 510 baht, up six baht, in trade worth 673 million baht.