• JG Summit to expand petrochem operations

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    GOKONGWEI-LED JG Summit Holdings Inc. plans to invest between $500 million and $600 million to expand its petrochemical facilities as part of efforts to help reduce the country’s dependence on imported fuels.

    In an interview following the company’s stockholders’ meeting, JG Summit president and chief operating officer Lance Gokongwei said they are planning to ramp up the capacity of their petrochemical facility from 320,000 tons to 500,000 tons a year.

    “This year is the planning stage but the heavy spending will start 2017, 2018 to prepare the ground and earthworks and securing all the bids and permits. So it will take three years up to 2019,” Gokongwei said.

    “We are confident that, through a combination of internally generated cash flow and borrowings, we should be able to fund this project,” he added.

    He explained that while the 320,000 ton-plant of the JG Summit Petrochemicals Group cost them about $1 billion to build, the plant already includes utilities and support facilities that can handle capacity of up to 500,000 tons a year.

    “Beyond 500,000 [tons], the plant will become more expensive to operate because the utilities are designed for up to 500,000 [tons]only,” Gokongwei said.

    The plan includes expanding its naphtha cracker facility and building further downstream for butadiene and aromatics, Gokongwei said, noting that the Philippines currently imports these materials.

    Butadiene is a colorless, flammable gas derived from butane or butane and is used chiefly in the manufacture of rubber and paint. Aromatics are derived from petroleum and are extensively used in the chemical industry as chemical feedstocks, solvents, and as additives to gasoline to raise its octane rating. The most common aromatics are benzene, toluene, and xylene.

    “Thus, we want to reduce the country’s dependence on imports,” Gokongwei said.

    “We are still exporting half of our production. The resins, we sell 60 to 70 percent domestically, 30 percent export,” he added.

    Bulk of their exports, such as polyethylene and polypropylene, go to North Asia and Europe.

    Gokongwei added that in the country, they see plastic demand growing by 10 to 15 percent, “provided GDP growth is sustained at 6 percent.”

    For this year, JG Summit Petrochem is aiming to achieve a 95 percent to 100 percent run rate as it improves operations and process management given the volatile market.

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