The 10 largest downstream and petrochemical projects planned for Asia in 2014/2015 June 2014

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1 The 10 largest downstream and petrochemical projects planned for Asia in 2014/2015 June

2 Asia is still the home of many of the major downstream and petrochemical projects planned for 2014, 2015 and beyond. Despite the renewed interest in North America and Europe, many of the largest projects and refinery upgrade are being rolled out in the Asia region. What are the 10 major projects? PROJECT NO. 10: KOCHI REFINERY EXPANSION Indian s State refiner Bharat Petroleum Corporation (BPCL) is expanding its Kochi refinery where it is also setting up a petrochemicals unit. The expansion and project envisages the refinery processing capacity at 310,000 bpd of crude after completion. BPCL is aiming at 100% mechanical completion of Kochi refinery expansion by March 2016 and the integrated commissioning of the plant by May The project is estimated to cost Rs 14,225 crore ($2.5billion). PROJECT NO. 9: PULAO MUARA BESAR BRUNEI REFINERY Hengyi Industries is planning the investment, construction, operations and maintenance of a 135,000 bpd Integrated Oil Refinery and Aromatics Cracker plant on Pulau Muara Besar Brunei. The investment for Phase 1 of the project is expected to amount to approximately $4 billion. PROJECT NO. 8: PERTAMINA REFINERIES UPGRADING Indonesia s PERTAMINA plans to upgrade its existing oil refineries with a $7 billion investment plan that will boost its combined oil-processing capacity. A feasibility study for the upgrade of PERTAMINA s refineries in Balongan (West Java), Cilacap (Central Java), Balikpapan (East Kalimantan), Plaju (South Sumatra) and Dumai (Riau) is to be concluded in 2014 with the project itself potentially starting in The work is estimated to take three years. PROJECT NO. 7: S-OIL ULSAN REFINERY UPGRADING S-Oil is investing $7.5 billion (8 trillion won) in its refining, petrochemical units. 5 trillion won will be spent to build heavy oil and petrochemical units by 2017 at the company s Onsan refinery in Ulsan, South Korea. The upgrade of the refinery includes the addition of a residue hydrodesulfurization unit, a residue fluid catalytic cracker and multiple downstream units to enable the refinery to produce higher value products and, in particular, maximize production of polymer-grade propylene. FEED contracts have been let in March Another 3 trillion won will be spent later to build additional petrochemical units. PROJECT NO. 6: NSRP The $8 billion Nghi Son Refinery and Petrochemical Complex (NSRP) project with a capacity of 200, 000 bpd is located in Thanh Hoa province, Vietnam. This project is jointly developed by Idemitsu 2

3 (Japan 35.1%), KPC (Kuwait 35.1%), PVN (25.1%) and Mitsui Chemicals (Japan 4.7%). The project has been licensed and in the process of finalizing financial arrangement for EPC award and implementation. PROJECT NO. 5: SINOPEC-KPC REFINERY The Sinopec-KPC refinery is a $9billion project in Southern China for a 240,000 bpd greenfield refinery project. PROJECT NO. 4: SINO-VENEZUELA GUANGDONG PETROCHEMICAL OIL REFINERY Petróleos de Venezuela SA (PDVSA) is partnering with China National Petrochemical Corporation (CNPC) to build a 400,000 bpd refinery, to be completed in The Sino-Venezuela Guangdong Petrochemical Company oil refinery project is located in the Jieyang Nandahai Petrochemical Industrial Zone in Guangdong province, China. It is the largest oil refinery project in China in terms of processing capability. Total project investment amounts to 58.6 billion yuan ($9.54 billion) with PetroChina a 60% stakeholder and Petróleos de Venezuela S.A. holding a 40% stake. PROJECT NO. 3: JAMNAGAR REFINERY EXPANSION tpy of polypropylene. Reliance Industries Jamnagar refinery Expansion project, costing $10 billion- $12 billion, will integrate the refining units with additional petrochemicals operations at the Jamnagar site, seeking to produce more chemicals such as ethylene, polypropylene and propylene. The Jamnagar complex can process 1.24 million bpd of oil and already produces 1.9 million PROJECT NO. 2: RAPID Malaysia s PETRONAS has approved the FID for developing a $20 billion Refinery And Petrochemicals Integrated Development (RAPID) project in Pengerang, Johor. This project includes a 300,000 bpd refinery, which industry expects will turn Malaysia from a net oil product importer to a net oil product exporter once it is operational. PROJECT NO. 1: NHON HOI REFINERY AND PETROCHEMICAL COMPLEX Nhon Hoi refinery and petrochemical complex project, owned by PTT, with a total investment cost of $28 billion and a capacity of 660,000 bpd (30 million tons / year), is located in Nhon Hoi economic zone, Vietnam. The Feasibility Study Report has been submitted to the Government for approval in April The project is expected to commence in the third quarter of 2015 and production will start in

4 Table 1 summarises key statistics of these major projects: Project Capacity (bpd) Investment ($Billion) Location (Country) Nhon Hoi refinery and 660, Vietnam petrochemical complex RAPID 300, Malaysia Jamnagar refinery 1.24 million 12 India Expansion Sino-Venezuela 400, China Guangdong Petrochemical Company oil refinery Sinopec-KPC refinery 240,000 9 China Nghi Son Refinery and 200,000 8 Vietnam Petrochemical Complex (NSRP) S-Oil Ulsan refinery 669, South Korea PERTAMINA refineries N/A 7 Indonesia Pulau Muara Besar 135,000 4 Brunei Brunei refinery Kochi Refinery 310, India Chart 1 demonstrates projects and investment amounts by different countries Japan & S. Korea ASEAN India Total Investment in USD (bln) No. of projects China

5 As we can see from the chart, half of the major projects and massive amount of investments will be seen in the downstream industry in the ASEAN region. What are the key factors determining the destination the investment for a major refining and petrochemical plant? We have researched with the major operators and industry experts, here are the highest ranked 4 key factors determining the new project location: 1. Supply and demand for the refined products that determines long-term project economics 2. Developing long term strategic partners 3. State and local government incentive and business environment 4. Access of crude and feedstock The long term economic return is ranked the most important factor when deciding the location of a new refinery/petrochemical plant, followed by key partnership and joint venture development. With no doubt, Asia is the top choice for developing these large projects due to the increased demand that promises long term strategic growths. In the next decade, there will be tremendous development in Asia s downstream industry as the key players actively seeking for new projects and partners to fulfil the increasing demand. The grass-root refinery projects are taking time to develop and there should be a breakthrough in thinking and action to overcome the constraints. - Mr. Rudy Radjab, President Director, PT. Kreasindo Resources Indonesia If you would like to find out more information about some of these projects, the key people involved and some of their requirements, contact Shantal@clarionevents.asia 5