Top Asian trader Hin Leong Trading has submitted a proposal to the Singapore government to build a large state-of-the-art refinery, two industry sources with direct knowledge of the plan said on Wednesday.
The plant, expected to cost US$6-8 billion ($7.9-10.5 billion), is slated to process at least 500,000 barrel-per-day of oil and take a maximum of three and a half years to build, possibly in partnership with a Chinese state oil firm, the sources said.
“All the infrastructure is ready...The key is if the government decides that Singapore needs another big refinery,” one of the sources told Reuters. “The project is good to go, all it needs is an agreement of the Singapore government to proceed.”
The Singapore government said that they do not have a specific aim of attracting greenfield refinery investments, but would evaluate all projects based on the value they bring.
“We will enhance the long term competitiveness of our existing refining base in Singapore by focusing on three pillars - refinery upgrading to increase the complexity of existing refineries, integration with chemicals and integration with lubricants,” a spokesman for Singapore’s Economic Development Board, which spearheads the country’s investment initiatives, said in response to queries.
Earlier this year, the Singapore government unveiled a 10-year masterplan to make Jurong Island Asia’s leading chemicals hub.
The refinery is expected to be a top-class facility, in the mould of Reliance’s plants in India, producing green fuels such as ultra-low sulphur gasoline, diesel and naphtha.
The plant is to be located next to Hin Leong’s US$570 million Universal Terminal, Asia’s largest commercial oil storage facility with 2.3 million cubic metres capacity, which can park two very large crude carriers at the same time.
“There could be a business case if the refinery is geared towards petrochemicals, such as in the production of naphtha,” said Tilak Doshi, principal economist with Singapore’s Energy Studies Institute.
The UT facility will provide the refinery more operational efficiency, giving immediately available storage both for crude oil and refined products.
The planned greenfield project will increase Singapore’s refining capacity by a third from the current total of about 1.4 million bpd.
Singapore already has three refineries -- ExxonMobil’s(XOM.N) 605,000 bpd, Royal Dutch Shell’s (RDSa.L) 500,000 bpd and Singapore Refining Co’s 290,000 bpd, which is jointly-owned by PetroChina and Chevron Corp.
One of China’s four national oil firms -- PetroChina(0857.HK), Sinopec Corp (0386.HK), CNOOC or Sinochem Corp -- could be Hin Leong’s partner for the massive investment and the trader may also rope in a European partner, the Business Times reported.
PetroChina, Asia’s largest oil and gas firm, already owns 35% stake in Hin Leong’s 14 million-barrel Universal Terminal storage facility.
The Chinese energy giant also owns nearly half of the 295,000-bpd Singapore Refining Co. Still, the source said PetroChina has enough room to expand further in the Asian oil hub given its financial strength.
“PetroChina has only 140,000 bpd capacity here. Look at what Shell has, 500,000 bpd; and Exxon, 600,000 bpd.”
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