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Japanese petrochem firms dig foreign shores to stay afloat
Nov '12
Japanese petrochemical majors are scouting overseas countries to set up petrochemical plants either on the own or in joint ventures. Big petrochemical companies like Sumitomo, Asahi Kasei, Mitsui & Co, Mitsubishi Chemicals and Ube Industries have already set up overseas plants or are in the process of doing so.

According to Sumitomo Chemical, “Expansion of overseas operations is necessary for the survival and the development of the petrochemical business. Japan’s petrochemical industry faces various challenges, such as the transfer of user industries’ production bases abroad, the yen’s appreciation and a decline in cost competitiveness due to higher electricity bills in Japan”.

Recently, Sumitomo Chemical confirmed that it is moving ahead in its joint venture with Saudi Aramco on the Rabigh Phase II Project at a total investment which is projected to reach around US $7 billion. The Rabigh II Project will achieve superior cost competitiveness by using cost-competitive ethane as part of its feedstock and by utilizing the existing infrastructure of the Rabigh I Project.

The Rabigh II Project will use an additional 30 million standard cubic feet per day of ethane and approximately 3 million tons per year of naphtha as feedstock to produce ethylene propylene rubber (EPDM), thermoplastic polyolefin (TPO), methyl methacrylate (MMA) monomer, polymethyl methacrylate (PMMA), low density polyethylene/ethylene vinyl acetate (LDPE/EVA), paraxylene/benzene, cumene and phenol/acetone.

Sumitomo says, “We have been expanding our overseas business by investing in large-scale projects in Singapore and Saudi Arabia. By investing in the Rabigh II Project, we seek further expansion of our petrochemical business abroad”. Sumitomo and Saudi Aramco will continue to explore to implement projects related to acrylic acid, super absorbent polymer (SAP), caprolactam and nylon-6, including possible collaboration with a third party.

Incidentally, Sumitomo is the only Japanese petrochemical company to operate naphtha crackers outside Japan. It started operating naphtha crackers in Singapore as far as back as 1982. 

Japanese trading giant - Mitsui & Co along with a consortium of other Japanese companies has sketched a joint venture with Saudi International Petrochemical Co (Sipchem) to set up a plant to produce methanol with an annual capacity of 1.1 million tons in Jubail - Saudi Arabia. According to a spokesperson of Mitsui, cost competitiveness of raw materials is given the utmost importance, when they expand business overseas.

A spokesperson at Mitsubishi Chemicals revealed that they operate a PTA plant in China. It set up the 600,000 tons per annum PTA plant in 2007 in Ningbo province. Mitsubishi Chemicals also started commercial production of a new Bisphenol A (BPA) plant in China with a capacity of 150,000 tons per year in the current year.

Asahi Kasei Chemicals wants to become the top producer of acrylonitrile (ACN) in the world. A spokesman of Asahi Kasei informs, “In South Korea, we are planning to ramp up ACN capacity by 200,000 tons per annum, which will take ACN production capacity to 500,000 tons per year and in end-2011, Asahi Kasei began commercial production of an ACN plant in Thailand with a capacity of 230,000 tons per annum”.

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