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Jan 26, 2018 / 15:25

SCG plans to fully acquire Long Son Petrochemicals complex

Thailand’s Siam Cement Group (SCG) could potentially become the sole investor of the US$5.4-billion Long Son Petrochemicals complex (LSP) in Ba Ria-Vung Tau.

SCG currently holds 71% of LSP’s charter capital, while PetroVietnam (PVN) owns the remaining 29%. 
Long Son Petrochemical complex is expected to spearhead SCG's expansion in this sector.
Long Son Petrochemical complex is expected to spearhead SCG's expansion in this sector.
Recently, SCG has sent a letter to the Vietnamese government expressing its intention to fully acquire the petrochemicals complex, according to a report released on January 19. SCG is currently negotiating with the government on conditions to revive the long-delayed project, revealed Roongrote Rangsiyopash, CEO of SCG, to local media. 

“No decision has been made,” added Rangsiyopash when asked about the potential purchase of PVN’s 29%, while SCG’s media representative in Vietnam has not verified this deal to Hanoitimes.

LSP is expected to play a key role in the growth of SCG’s petrochemicals business. “SCG aims to expand our business line in this sector, as well as our opportunities in Vietnam,” he said. 

The slow recovery of the Thai economy had a negative impact on SCG’s construction materials business. In 2017, the country’s total demand for cement dropped by 5%. SCG expects revenue from cement will increase by 2-3% this year after new infrastructure projects are kick-started.

In an effort to diversify production, SCG is expanding its cement plants in neighboring countries such as Cambodia, Indonesia, Laos, and Myanmar. SCG also considers investing in overseas packaging industries. 

Earlier this week, SCG has made inquiries about a potential purchase of 68.3% of the stakes at Malaysian packaging company Interpress Printers Sendirian Berhad for US$26.5 million.

SCG’s net profit in 2017 dropped by 2% to US$1.73 billion, while revenue increased slightly to US$14 billion, showing fierce competition in the cement and construction materials business.

SCG’s revenue from cement and construction materials accounted for 39% of the group’s total revenue, while that of petrochemicals was 46%. 

Long Son Petrochemicals complex was licensed in 2008 with an initial investment capital of $3.7 billion and with the participation of three groups: PetroVietnam, Vietnam Chemical Group (Vinachem), and SCG. 

VinaChem, however, withdrew its capital and was replaced by Qatar Petroleum International (QPI) in 2012.

In April 2017, QPI also decided to withdraw from LSP. At the time, through its wholly-owned subsidiary Vina SCG Chemicals (VSCG), SCG acquired a 25% stake from QPI in LSP Limited, the investor of the LSP complex, according to a statement published on SCG’s website. 

Located in southern Ba Ria-Vung Tau province in Vietnam, LSP targets to develop a 1-million-ton ethylene cracker with a flexible gas and naphtha feed, creating an olefin capacity of 1.6 million tons per year. As per SCG’s plan, the complex is scheduled to start commercial operations in the first half of 2022.