Amidst global changes and volatility, businesses across industries are widely impacted. The petrochemical sector, in particular, has faced significant challenges due to geopolitical issues, fluctuating oil prices, and a slowdown in market demand. Meanwhile, supply remains high as major players shift from being net importers to producing petrochemical products like plastics for domestic use and export to other regions. Although plastic is an essential material for industrial production, the current global market slowdown necessitates rapid adaptation and strategic innovation, drawing close attention from industry stakeholders.
SCGC, a petrochemical business with over 40 years of operation and main production bases in three countries—Thailand, Indonesia, and Vietnam—has efficiently navigated challenges throughout every chemical's low cycle. However, this current cycle is more prolonged, stemming from the COVID-19 situation, geopolitical issues, oil prices, and numerous external factors, making it exceptionally challenging. SCGC has accelerated its business turnaround to enhance competitiveness by focusing on reducing production costs, leading to the "Ethane Feedstock Optimization Project at Long Son Petrochemicals (LSPE Project)" which will enable SCGC to compete in the long term, prepare for future petrochemical market recovery, and more effectively handle the next down cycle.
Game-Changing Strategy: Enhancing Feedstock Flexibility with Ethane
Looking back at the petrochemical production journey, "Naphtha," a feedstock derived from oil, has been a primary raw material for producing polymers or plastic pellets. In a situation where crude oil prices are highly volatile, production costs are inevitably affected. Therefore, SCGC sought additional feedstocks that maintain product quality at stable prices, leading to a significant game-changer: the introduction of "Ethane," a component of natural gas, as a new alternative for the LSP plant in Vietnam. This will increase feedstock flexibility, significantly reduce production costs by over 30% compared to current naphtha prices, and be more environmentally friendly.
SCGC has consistently studied the use of ethane in polymer production. However, limitations in gas export and infrastructure previously hindered its implementation. With these issues resolved, SCGC quickly seized the opportunity to strengthen its business, acting as a fast follower by adopting ethane in its production process, following the proven success of leading global petrochemical companies.
Rapid Partnership Negotiations and Successful Deals: Long-Term Ethane Supply Contracts, Transport Vessels, and Storage Tanks Secured
With the expertise and decisive leadership of SCGC’s management and operational teams, the LSPE Project has progressed significantly within just five months (November 2024 – March 2025). SCGC signed a long-term contract to procure approximately 1 million tons of ethane gas per year from the United States and signed contracts to charter five ethane transport vessels for 15 years, ensuring a continuous supply of ethane to the LSP plant in Vietnam.
Additionally, SCGC signed an Engineering, Procurement, and Construction (EPC) contract to build two ethane storage tanks at the LSP plant in Vietnam. These double-wall tanks, with external concrete walls and roofs and special-grade metal interiors, each have a capacity of approximately 55,000 tons and require temperature control of about -90 degrees Celsius. The LSP plant is currently developing supporting facilities for feedstock reception, with the project expected to be completed by the end of 2027.
SCGC Strengthens Global Partnerships
- Signed a long-term contract with Enterprise Products Partners, a leading ethane supplier from the United States, to procure approximately 1 million tons of ethane per year for 15 years. Read news
- Signed a long-term contract with Mitsui O.S.K. Lines (MOL), a world-leading feedstock transport service provider, to charter five Very Large Ethane Carriers (VLECs) for 15 years. Read news
- Signed an EPC contract with a consortium of China Tianchen Engineering (TCC) and PetroVietnam Technical Service Corporation (PTSC) to build two ethane storage tanks. Read news
With the strategy to increase feedstock flexibility using ethane gas, SCGC is confident in enhancing its long-term competitiveness and reducing production costs. The LSP plant will be able to receive up to two-thirds of its total feedstock from ethane, alongside propane and naphtha, to optimize feedstock selection based on price fluctuations.
Leveraging over 40 years of business expertise and the capabilities of its team, SCGC is ready to move forward, adapt, accelerate, and turn the game around to enhance its long-term competitiveness, reduce production costs, and accelerate the development of High Value Added (HVA) products and services that meet megatrends in sectors such as automotive, infrastructure, electrical appliances, packaging, medical, and renewable energy. Polymers or plastics remain essential materials for various industries, irreplaceable by other materials, and contribute to improving the quality of life for countless people. Therefore, the petrochemical business remains stable and poised for long-term growth.
-------------------------------------------
Explore More:
