(EnergyAsia, August 29 2011, Monday) — The following is an edited version of the speech by ChemOne Holdings’ vice chairman M.Y. Ling at the groundbreaking ceremony of the Jurong Aromatics plant on Jurong Island last Friday.
The event was attended by Lim Hng Kiang, Singapore’s Minister for Trade and Industry, Oh Joon, the South Korean Ambassador to Singapore, and more than 200 government and business officials, and members of the media.
“My long time business partner, Vijay Goradia, chairman of Vinmar Group who worked with me and the ChemOne team to realise this dream, cannot be here due to other commitments.
When we conceived Jurong Aromatics Corporation (JAC) in 2005, we wanted to create a plant that would be back integrated to feedstocks, in view of increasing condensate availability and tight naphtha supply. That initial concept led to the birth of our idea to combine a condensate splitter and an aromatics complex. We believed the combination offers an optimal way to extract greater returns from aromatics.
“With the technical concept figured out, our next hurdle was to scout for a suitable location. We looked at several places in Asia, and Singapore was the unanimous choice. Singapore’s robust infrastructure, reliable third-party services, strong support from the Singapore government, especially from the EDB, low country risk, and project financing environment, were all decisive factors.
“While we were still in the early stages of putting the project together, we were hit by the global financial crisis end 2007. The crisis led to a credit crunch, which affected our bankers’ ability to commit funding for the project. It didn’t seem like the best of times to be embarking on anything world-scale.
“However, Vijay and I, with our ChemOne team tenaciously explored various alternatives to complete the project. We were undaunted, went back to the drawing board and restructured the financing deal which included reducing the capex substantially in favour of outsourcing, – roping in two Korean export credit agencies as guarantors, with one of them being a direct lender as well, and putting together a subordinate debt programme that reduced the outlay equity parties had to put on the table.
“We hit the road with the new deal in 2010, and the restructured project found favour with many investors and bankers. They include international big names like the SK Group, BP and Glencore.
“It would be difficult to find a similar project elsewhere in the world so well-packaged, attractive and so well-positioned for growth and stability.
“All of JAC supply and offtake volumes have been contracted out on long-term agreements.
“These contracts were signed with a diverse portfolio of creditworthy counterparties, and the majority of suppliers and offtakers, including the SK Group, Vinmar, Sanfangxiang, Glencore and BP have a stake in JAC.
“This enhances the alignment of interests between the parties and ensures the plant’s long-term viability.
“The SK Group, The Export-Import Bank of Korea and Korea Trade Insurance Corp, deserve special mention, because their involvement was central to the successful restructuring of the project in turbulent financial market conditions.
“Ultimately, getting JAC off the ground during one of the worst periods in international commerce and finance taught us one lesson. It’s all about getting your business model and strategy right and having a strong team of good people to help you execute and align stakeholders’ and shareholders’ interests.
“So as a proud founding shareholder of the project, I’m pleased that everything is now in place, and the future of JAC is well secured and it’s in good hands.
“Finally, I would like to take this opportunity to thank the government agencies: MTI, EDB, EDBI and JTC, as well as all sponsors, bankers, stakeholders and other parties who have supported us throughout this project.”