SCG Chemicals, or SCGC, announced the latest progress on the ethane feedstock enhancement project at the Long Son Petrochemicals Complex (LSP) in Vietnam (LSPE Project). The project has reached another key milestone with preparations underway for the construction of ethane storage tanks. LSP has entered into an Engineering, Procurement, and Construction (EPC) contract for the ethane storage tanks, with construction expected to be completed by the end of 2027. LSP is the first petrochemical complex in ASEAN to utilize imported ethane from the United States as feedstock, which will significantly lower feedstock cost by more than 30% compared to the current naphtha price. This development will also enhance feedstock flexibility and more environmentally friendly, preparing LSP for the anticipated recovery of the petrochemical market in the region.
Sakchai Patiparnpreechavud, Chief Executive Officer & President of SCGC, said: "As SCGC previously announced the project to enhance feedstock flexibility with ethane feedstock, its supply chain to LSP includes: 1) an ethane supply agreement with export terminal, 2) Very Large Ethane Carriers (VLECs), and 3) specifically designed storage tanks for ethane, which has different properties compared to basic LNG and propane. The company has already secured a 15-year long-term ethane supply agreement from the United States and successfully secured the first lot of three VLECs last January."
"Regarding the latest progress, the company has pushed efforts to engage internationally recognized contractors with extensive experience in large-scale projects to construct the specialized ethane storage tanks. The tank construction is another critical element in this project. A consortium of China Tianchen Engineering Corporation and PetroVietnam Technical Service Corporation, a member of Vietnam Oil & Gas Group (PetroVietnam or PVN), has been selected as a contractor for the two tanks, with a capacity of approximately 55,000 tons per tank. These tanks will accommodate 1 million tons of ethane per year. We are confident that the LSPE project will be completed as planned by the end of 2027."
The ethane storage tanks to be installed at the LSP plant are designed with full containment featuring a double-walled structure, with the outer wall and roof made of concrete and the inner wall constructed from special-grade metal. Each tank, with a capacity of approximately 55,000 tons, is designed to safely store ethane at a temperature as low as -90 degrees Celsius. In addition, LSP is also preparing to enhance its production processes and upgrade supporting facilities to accommodate the feedstock.
"Regarding the 15-year charter agreements for five VLECs to carry ethane from the United States to Vietnam, the charter agreement for the first lot of three vessels has already been signed with Mitsui O.S.K. Lines (MOL), while The charter agreement for the remaining two vessels are currently in progress and are expected to be finalized soon," added Sakchai.
"The LSPE project's estimated investment is approximately 500 million USD, or approximately 18,000 million Baht, funded by SCG's internal sources. In the past, importing ethane from the United States for use in the petrochemical industry faced several limitations, such as constraints in the ethane storage and export capability from the United States, the long lead time and specialized construction of VLECs, and securing ethane supply through long-term agreement. However, after assessing the project's feasibility, SCGC promptly executes it in order to enhance competitiveness and significantly lower costs for the LSP plant, preparing for the recovery of the regional petrochemical market," concluded the Chief Executive Officer and President of SCGC.