Communicator

$5.2 Billion Vietnamese Project Records $304 Million Loss in 2024, Continues to Weigh Heavily on SCG’s Financial Results in Early 2025

The Long Son Petrochemical Complex (LSP), Vietnam’s first fully integrated petrochemical facility, has experienced a turbulent launch and operational trajectory since its much-anticipated commercial start-up in late 2024. This article aggregates the latest developments, contextualizes them within broader industry trends, and references previous communications that highlighted both optimism and early warning signs.

Background and Launch

Long Son Petrochemicals Co., Ltd., located in Ba Ria-Vung Tau and wholly owned by Thailand’s SCG Chemicals (a subsidiary of SCG Group), represents a $5.2–5.4 billion investment and is designed to produce 1.55 million tonnes of polyolefins (polyethylene and polypropylene) annually. The complex includes a world-scale, so-called Flex Feed Cracker with a capacity of 998,000 tonnes of ethylene, 500,000 tonnes of propylene, and 101,000 tonnes of butadiene per year, using naphtha, LPG, and soon, ethane as feedstock.

*Data from the Long Son Environmental Permit (in Vietnamese Language) dated August 30, 2023.

Interactive Process Flow Chart of Long Son Petrochemical Complex based on 2023's Environmental Permit Data | Unique Feature available only on Portfolio Planning PLUS Platform.

After years of construction and trial runs, LSP officially began commercial operations on September 30, 2024. The launch was heralded as a transformative step for Vietnam’s plastics and downstream manufacturing sectors, reducing reliance on imports and boosting local industry competitiveness.

Operational Suspension and Financial Losses

Despite the high-profile start-up, LSP suspended operations in mid-October 2024—just two weeks after commercial production began. This abrupt halt was attributed to:

• High production costs: Naphtha, the primary feedstock, remained expensive amid volatile crude oil prices.
• Weak global demand: A global downturn in the petrochemical market, exacerbated by oversupply and sluggish downstream demand, led to poor product margins.
• Low chemical spread: The spread between naphtha and polyethylene/polypropylene prices dropped to $300–$343 per tonne, below the threshold for profitable operations.

SCG Chemicals reported a staggering loss of $303.6 million from LSP in 2024, with monthly expenses at the complex reaching $35.5 million—40% of which are non-cash items like depreciation. The financial drag from LSP sharply reduced SCG’s consolidated profit, even as its other businesses remained profitable.

Capacity Questions and Technical Details

Our prior communication raised questions about the actual cracker capacity and the interpretation of trial run figures, whereby we issued a mass balancing challenge that still awaits contributions from users of the PPPLUS Platform.

Various data sources have reported diverging plant capacities for both the cracker and the downstream plants. In addition, calculated feedstock requirements to match the reported ethylene and propylene outputs are not making any sense in terms of cracker capacity. The figures we have used to generate the site's mass balance and process flow chart are taken from the Long Son Environmental Permit (in Vietnamese Language) dated August 30, 2023. During the brief operational window, initial output was reported at 74,000 tonnes—well below nameplate, reflecting the ramp-up phase and subsequent shutdown.

Strategic Adjustments and Future Plans

SCG has not abandoned the project. Instead, it is adapting the business model to address structural challenges:

• Feedstock flexibility: LSP is being retrofitted to use imported ethane as a primary feedstock, which offers better margins than naphtha. The company plans to invest an additional $400–700 million to enable the cracker to use up to two-thirds ethane, with completion targeted by end-2027.
• Cost management: SCG is implementing group-wide cost reductions and discontinuing unprofitable businesses, aiming to save 5 billion baht and cut working capital by 10 billion baht by early 2025.
• Potential restart: With recent improvements in polyolefin-to-feedstock spreads (averaging $396/t in April-May 2025), SCG is considering restarting LSP as early as August 2025, contingent on further margin recovery and market stability.

Long Son Petrochemical Complex Assets | Market Intelligence by Portfolio Planning PLUS

Market and Policy Environment

Vietnam’s government has signaled support for LSP’s expansion, promising to streamline procedures and facilitate stable gas imports, including ethane from the U.S.. However, the domestic market remains under pressure from competitive international polyolefin imports and subdued export demand.

Summary on Key Facts and Timeline

• Sep 30, 2024 - Commercial Start-up: Official launch of Vietnam’s first integrated petrochemical complex in Vietnam.
• Mid-Oct 2024 - Suspension of Operations: Halted after two weeks due to poor margins and high costs.
• Full Year 2024 - 2024 Financial Loss: $303.6 million loss from LSP; group profit slashed.
• 2025 - 2027 - Upgrade/Expansion Plans: $400–700 million investment to enable ethane feedstock; expansion under review.
• August 2025 (TBC) - Potential Restart: Dependent on market spreads and demand recovery.

Outlook

The Long Son Petrochemical Complex exemplifies both the promise and pitfalls of mega-projects in volatile global markets. While its technical capabilities and strategic significance remain intact, the project’s near-term viability hinges on market recovery, successful feedstock diversification, and continued government support. SCG’s willingness to invest further and adapt its strategy suggests a long-term commitment, but the road to profitability remains challenging and closely watched by industry observers.

#technipenergies  #basf  #mitsuichemicals  # univation #unipol  #hypol  #steamcracking  #lsp  #steamcracker  #vietnam  #crackerfeedstock  #massbalance  #longson  #scg 

The description of the PRefChem Pengerang Petrochemical Complex configuration has been updated.

#aramco #petronas  #prefchem  #pengrang  #petrochemicalcomplex  #crackercomplex 

19 Sep 2024, Heavy Lifting News

deugro Delivers with Arrival of Second Shipment for INEOS Project One.

The second shipment with the last 5 massive storage bullets for the INEOS Project One has just arrived on board the MV Fairmaster for discharging in  Antwerp.

Both the first shipment with the MV Fairplayer and this voyage from Zhangjiagang,  China, were organized by deugro within a tight schedule from order to loading!

The details of the shipment are:

50,572.4m³ Total Volume
6,547.8 metric tons Total weight


24 Sept 2024, INEOS + AG&P INDUSTRIAL

AG&P Industrial (Atlantic, Gulf, & Pacific Company of Manila, Inc.) has completed the fabrication and shipment of the first batch of Outside Battery Limit (OSBL) modules with a total weight of 1,432.47MT for its first-ever  European contract with London-based INEOS, the fourth largest chemical company in the world. Fabricated in AG&P Industrial’s state-of-the art fabrication yard in Batangas,  Philippines, the modules were shipped to Port of Antwerp, Belgium, the second largest chemical site in the world.

AG&P Industrial, selected from among top 15 yards globally, to ship a total of 77 pre-assembled pipe rack modules and 58 pre-assembled support structures, weighing 10,443 MT for modules and 274 MT for support structures for INEOS Project ONE. AG&P Industrial’s last shipment is expected sail by February 2025.


5 Nov 2024, Project Cargo Journal

International transport and logistics company AsstrA recently completed the first phase of the OSBL module transportation for the Ineos Project One.
The company’s Industrial Project Logistics team moved a total of eight modules from the Philippines to Belgium via the Cape of Good Hope. Some of the modules measured 39 x 12 x 11 metres.

According to AsstrA, the delivery marks a milestone for Asstra Industrial Project Logistics as it is projected to transport almost 100 modules under this contract. It equates to more than 230,000 cubic metres of cargo.

The first batch of modules was transported by one of United Heavy Lift’s F900 heavy-lift multipurpose vessel, the UHL Flair.


Project One represents the largest investment in European chemistry in the past 25 years. The cracker, which will be the most sustainable of its kind, will be commissioned in 2026, according to Ineos. The facility will have a nameplate capacity of 1450kt of ethylene per year.

#ineos  #projectone  #cracker  #antwerp  #belgium  #steamcracker