(EnergyAsia, August 31 2011, Wednesday) — Making up for lost time from years of delayed start-up, Jurong Aromatics Corporation (JAC) said it has sold off the entire production from its world-scale Jurong Island complex for the first seven years.

Based on today’s prices, the company said the sales would bring in revenue of around US$2.2 billion a year when the complex starts producing 800,000 tonnes of paraxylene, 200,000 tonnes of orthoxylene, 450,000 tonnes of benzene and a combined 2.5 million tonnes of gasoline, jet fuel and fuel oil from 2014.

The guaranteed sales, intricate and uniquely complex involving as many as 11 customers, provided vital cashflow that helped developer ChemOne Holdings Pte Ltd secure financial backing for the US$2.4 billion project just as credit was drying up at the start of the global financial crisis in late 2007.

The 11 customers are part of five of JAC’s main shareholders including South Korea’s SK Energy, China’s Jiangsu Sanfangxiang Group, Swiss commodities trading giant Glencore, BP and US-based trader Vinmar. Most of the contracts are with BP, SK Energy and Glencore, who each have committed to lift an average of 230,000 to 250,000 tonnes a year of products from the plant.

SK Group and Chinese polyester manufacturer Jiangsu Sanfangxiang are JAC’s largest shareholders, with 30% and 25% stakes respectively. The others are Glencore (10%), Arovin (10.5%), of Vinmar Group, M.Y. Ling’s Sridjaja family through Shefford (9.5%), Singapore’s EDB Investments (5%), Thai KK Industry Co. (5.1%), and India’s Essar Group (4.9%).

Apart from the aromatics complex, contractors SK Engineering & Construction Co and Essar Project will be constructing dedicated port and shipping facilities, and a 100,000 b/d condensate splitter to supply naphtha feedstock. The complex will utilise state-of-the art UOP technology.

JAC disclosed that it has secured 50,000 b/d of condensate supply from BP, and 25,000 b/d each from two of its shareholders Glencore and SK Energy.

At last Friday’s groundbreaking ceremony, JAC’s CEO, Mehdi Adib, paid tribute to ChemOne’s M.Y. Ling and Vijay Goradia of Vinmar for their vision and entrepreneurship in developing one of the world’s aromatics plants.

He said: “ChemOne’s tireless efforts at developing and executing a viable business strategy have helped JAC earned the support of the international feedstock suppliers and offtakers as well as the global financial institutions.

“(This) ceremony would not have been possible if they had not persevered and stayed the course while trying to get a world-scale project off the ground amid a very tough economic and financial environment. By any measure, this is an unqualified success.”

The event was officiated by the Minister for Trade and Industry, Lim Hng Kiang.

Mr Adib also cited the support of Singapore government agencies such as the Economic Development Board (EDB), EDBI, a shareholder in JAC, and JTC Corporation, and two export agencies, Export-Import Bank of Korea and Korea Trade Insurance Corp, for guaranteeing 80% of the US$1.56 billion in financing.

The 11 banks providing the US$1.56 billion, 15.5-year senior debt are ING Bank, Royal Bank of Scotland, Intesa San Paolo, Korean Development Bank, Standard Chartered Bank, Australia & New Zealand Bank, BNP Paribas, DnB NOR Bank, Natixis, DZ Bank and KfW. The balance of the borrowings will come from a US$200 million uncovered commercial bank loan and a US$115 million five-year working capital facility.

Mr Adib said: “Jurong Aromatics is truly an international and unique project in that there are no oil majors among our shareholders.

Our shareholders include international feedstock suppliers and petrochemical products offtakers. This gives our business a coat of insurance even before it’s up and running.”

Beh Swan Gin, EDB’s managing director, said:

“The JAC aromatics complex reinforces Singapore’s status as a leading producer of aromatics products to meet growing demands in Asia. The project also reaffirms Singapore’s attractiveness as a trusted location for regional and international energy and chemicals players to forge new business partnership opportunities.”

JAC will be the first tenant of Jurong Rock Cavern, Singapore’s underground rock cavern to store hydrocarbons due to start up in 2012.

Mr Adib said: “We’re in talks to secure storage equivalent to 30 days of consumption, or 100,000 b/d of condensates. Separately, JAC has tanks on our site to store 130,000 tonnes of condensates.”

Mr Adib, who joined the company in May this year, said JAC is already planning to expand beyond its 50-hectare site as part of its long-term strategy to compete against rivals in the Middle East and Asia.

“Singapore has first-rate infrastructure, excellent connectivity and a solid base of industry players and customers and these were major factors in attracting our shareholders to locate their plant here,” he said.

Mr Adib will be aided by chief financial officer Sean Sailes and chief manufacturing officer and head of planning, Lee Dong Keun, who was seconded from SK Energy.

Asked about the recent protests in China to stop the construction of paraxylene plants in Dalian city, Mr Adib said:

“It all depends on how and where the plant is built and designed. I don’t know how the companies are building their plants in China, but in Singapore, we have tough standards and practices. We won’t be able to do this if the company’s numerous partners did not think this met with world-class design and practices.”

In early August, municipal leaders in the northeastern Chinese port city said they were shutting down a paraxylene plant after thousands of protesters demanded its closure on environmental, health and safety reasons.