Exxon Mobil Corp. (XOM) has postponed the start-up of its 1 million tons-per-year (tpy) ethylene cracker in its second petrochemical complex in Jurong Island, Singapore by over a year. The operations, which were expected to start by the end of 2011, have been deferred to the later half of next year.
The setback is the consequence of the size and complications attached to the venture, which costs between $5 billion and $6 billion. A long drawn safety check that is much needed due to the complexities is also responsible for the delay. The start-up of the cracker would be the last among a host of various projects involved in the complex.
The plant comprises eight chemical-producing units that can manufacture a range of basic petrochemicals. It will also house units to generate value-added products from these chemicals for export to expanding markets such as China.
Apart from the deferred 1 million tpy ethylene steam cracker, the complex includes two 650,000 tpy polyethylene units, a 450,000 tpy polypropylene unit, a 340,000 tpy of benzene from an aromatics unit, a 300,000 tpy specialty elastomers unit, a 125,000 ton oxo-alcohol unit expansion, an 80,000 tpy paraxylene expansion and a 220MW power cogeneration unit.
Exxon already operates a 605,000 barrel per day (bpd) refinery and a petrochemical plant with a capacity to manufacture 800,000 tpy of ethylene on Jurong Island. The unit includes downstream plants to generate polyethylene and polypropylene. Upon completion, the second petrochemical complex will be fully incorporated with the existing refinery.
Exxon currently has a Zacks #3 Rank, which translates into short-term Hold rating. We are also maintaining a Neutral rating on the stock for the long term. BP Plc (BP) and ConocoPhillips (COP) are major competitors of Exxon.
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