• 
• 

Published on April 12, 2008

The Siam Cement Group (SCG) will start pumping US$3.5 billion to $4 billion (Bt111 billion to 126 billion) into Vietnam's first world-scale petrochemical complex in a few months after receiving an investment licence from the government there.

"The project's location is next to Vietnam's third oil refinery, which will supply some feedstock to the plants. We are confident our project will be successful thanks to the rising demand for chemical products in Vietnam," president and CEO Kan Trakulhoon said yesterday.

SCG subsidiaries Vina SCG Chemicals and Thai Plastic and Chemicals will hold 71 per cent in the project, while Vietnamese partners the Vietnam Oil and Gas Group and Vietnam National Chemical will take the rest.

KGI Securities said Vietnam's chemical consumption is accelerating along with its economic expansion. In 2006, consumption of polyolefin products was 800,000 tonnes. Polymer demand is forecast to increase 10 per cent annually to 1.8 million tonnes in 2013.

Tisco Securities said the earnings of Siam Cement (SCC), the group's holding company, would be pressured this year by rising energy costs, flat demand, the strong baht and lower petrochemical spreads in the second half of this year. But it anticipates a pick-up in earnings next year and in 2010, due to several new investment projects.

Since Vietnam has no chemical complex, it must import about 20 per cent of its needs from Thailand and most of the rest from Taiwan.

Tisco expects SCC to post a quarter-on-quarter rise in first-quarter earnings, with all businesses reporting better results, due to higher product spreads and margins. But for the whole year, net profit will plunge 21.7 per cent to Bt23.77 billion.

KGI believes SCC's long-term dividend pay-outs will be sustained unless it embarks on huge projects.

The complex in Vietnam will contain a naphtha-based cracker with an olefins capacity of 1.65 million tonnes, a polyolefin plant of 1.45 million tonnes, chlor-alkali capacity of 280,000 tonnes, and PVC-related capacity with EDC of 330,000 tonnes and VCM of 400,000 tonnes.

The capital expenditure budget also covers the construction of utilities, a port, warehouse and power plant.

The project, located on Long Son Island in southern Vietnam, has two phases. The first phase, consisting of PVC-related products, will start up in 2011, while the second phase, covering olefins and other downstream products, will be completed in 2013.

SCG has been in business in Vietnam since 1990.

Chalida Ekvitthayavechnukul

The Nation