The coverage of such proposed facilities would include product line-up for benzene, toluene and xylene; and an added component would be propylene recovery unit (PRU).
The three petrochemical projects are intended for various applications including the production of plastics, textiles, pharmaceuticals, solvents, adhesives and food packaging.
The new facilities are expected to be on-stream toward the end of 2007; and has been part of the new $250 million investment plan unveiled by Petron officials during their stockholders meeting in July this year. "Our entry into petrochemicals supports our strategy of investing in higher margin businesses which will increase our presence in the regional market," stressed Petron president and chief executive officer Khalid D. Al-Faddagh.
He has further noted that this has been part of the company’s focus in the next 5 to 10 years, "to develop our refinery assets to capture the unique opportunities presented by the developments in the petrochemical industry."
The BoI has earlier approved the applications for registration of the company as new export producer of petrochemical products; primarily for benzene and toluene on a pioneer status; and mixed xylene on a non-pioneer status.
Similarly, the company has indicated to the investment board its plan to position itself as a new domestic producer of petrochemical products; primarily propylene on a pioneer status.
Incentives for these would include income tax holidays and lower duties on the importation of capital equipment.
Meanwhile, Petron explained that the PRU will produce propylene that is the feedstock used in the manufacture of plastic resins that is in turn used for making home appliances and automobile parts, among others.
The benzene project, the oil firm noted, will enable it to extract benzene and toluene; and will also allow it to double its mixed xylene production capacity.
The petrochemical market is growing faster than global GDP. Unlike the petroleum industry which has slowed in demand, petrochemical demand is projected to grow at a pace of about 5% from 2005-2015. Petrochemicals also command better regional and local prices than other petroleum products.
The five-year plan that indicates utilization program of Petron’s refinery also covers the upgrade of its present cracking unit to a Petro Fluidized Catalytic Cracker (FCC) that will increase the yield of higher value white products.
Aside from the production of petrochemicals, the new units are also intended to improve cost efficiencies at Petron’s 180,000 barrel-per-day Bataan refinery and provide more flexibility in the production of environment-friendly fuels.
As of the first half of 2005, Petron’s export sales, especially in mixed xylene, contributed nearly a third of its net income of P2.31 billion as it continued to take advantage of favorable prices abroad. (MMV)
