Gokongwei revives petrochem project

By Ayen Infante

05/26/2008

The Gokongwei group’s holding firm JG Summit Holdings had formed JGSummit Olefins Corp., in its renewed attempt to enter the petrochemical industry with a new proposal to spend P35 billion for the construction of a naphtha cracker facility in Batangas.

The proposed project cost was P10 billion more than the original plan applied with the Board of Investments (BoI) in 2005.

The revived project received fiscal incentives from the BoI which granted the firm tax breaks of up to six years among other fiscal incentives.

The activity is in the investment priorities plan (IPP) list this year under the retention, expansion and diversification (RED) program that covers projects of existing investors either considered as global players or engaged in strategic industries that are encouraged under the program.

The naphtha cracker project was identified as a strategic industry crucial to the country’s industrialization efforts.

The BoI believes the proposed project will complete the full integration of the petrochemical industry that would cut down the country’s dependence on imported ethylene and propylene feedstock. Such integration will be beneficial to the midstream, as well as downstream petrochemical industries.

The company’s main operation will be the production of polyethylene (PE) and polypropylene (PP) which are feedstocks for the production of plastic.

PP is a so called thermoplastic polymer used in a wide variety of applications including packaging, textiles (ropes, thermal underwear and carpets), plastic parts and reusable containers, laboratory equipment and automotive parts.

PE, meanwhile, is found in all types of packaging used to wrap furniture, computer components, electronics, sporting goods, plants, frozen foods, clothing, bowling balls, signs and metal products among others. PE is among the cheapest of artificially fabricated materials.

The Gokongwei group intends to put up the naphtha cracker plant in Brgy. Simlong, Batangas City near the existing polymer plant of JG Summit Petrochemical Corp.

Under the plan, the firm will produce 320,000 metric tons of ethylene per year; 190,000 mt of propylene; 270,000 mt of py gas, and other by-products such as Methane, Pyrolysis fuel Oil, and acid gases.

The project is expected to be completed in January 2012 and it is expected to create job opportunities for 87 Filipinos.

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