ExxonMobil To Acquire Petrochemical Plant In Singapore
Zacks Investment Research | May 12, 2017 07:24AM ET
ExxonMobil Corporation (NYSE:XOM) recently announced that it is acquiring a massive petrochemical plant in Singapore from Jurong Aromatics Corporation Pte Ltd. at a discounted price. ExxonMobil refused to reveal the exact acquisition price.
The transaction is expected to be completed in the second half of 2017. The plant, which is located on Jurong Island in Singapore, is believed to be one of the largest in the world. The plant was built for $2.4 billion and has an annual production capacity of 1.4 million tons. It is likely to provide operational and logistical synergies for ExxonMobil’s neighboring integrated refining and petrochemical complex.
ExxonMobil's largest refining-petrochemical complex is in Singapore and it has a crude oil processing capacity of 592,000 barrels per day and two steam crackers. Acquisition of the Jurong aromatics plant will boost ExxonMobil’s aromatics production in Singapore to more than 3.5 million tons per year, including 1.8 million tons of paraxylene.
The aromatics chemical plant to be acquired by ExxonMobil was opened in 2014. Jurong Aromatics is struggling financially at present and is going through the U.S. equivalent of bankruptcy proceedings. The plant has been shut for the majority of its existence, only resuming operations in July.
The aromatics plant mainly produces paraxylene and benzene and the chemicals are known as aromatics because of their sweeter odor. Paraxylene is a chemical used to make polyesters and plastics, while benzene creates other chemicals, including gasoline additives. Per Jurong Aromatics, these are utilized for textiles and clothing, construction, tires, sports equipment and plastics.
ExxonMobil’s presence in Singapore dates back to over 12 decades and the company is one of the country’s largest international manufacturing investors. Singapore’s integrated petrochemical complex can process a wide range of feedstocks, from light gases to crude oil. Later this year, the complex will begin the phased start-up of new 230,000 ton per year specialty polymers facilities that will produce halobutyl rubber and performance resins for adhesive applications.
The projected increase in global demand for chemical products over the next 10 years of about 45%, or about 4% per year, is likely to be the driving force for ExxonMobil’s growth in Singapore. This is a faster than energy demand and economic growth.
Investor confidence on the ExxonMobil stock is reflected in its price chart. Shares of the company lost 0.5% in the last three months, while the Zacks categorized Zacks Investment Research
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