JG Summit allots $500 million for naphtha cracker plant

MANILA, Philippines – JG Summit Holdings Inc., the holding company of tycoon John Gokongwei, will invest $500 million for the construction of the country’s first ever naphtha cracker plant.

In an interview with reporters, Board of Investments (BOI) managing head Cristino L. Panlilio said that the long delayed project will finally begin next year. “Construction will start in January,” he said.

Lance Gokongwei, president and chief executive of JG Summit, visited Panlilio at the BOI in order to discuss the project. Panlilio said that Gokongwei has asked the government for incentives for their project.

Panlilio said that they are willing to extend help to Gokongwei to speed up the completion of the project.

Earlier, Gokongwei said that they will be investing $30 million just for the design and site development of naphtha cracker project. He said the project, which would be undertaken by wholly-owned subsidiary, JG Summit Olefins Corp., would cost less than the original P34.38 billion two years ago when it sought re-registration with the BOI.

In May 2008, the BoI approved the revised 2005 application of JG Summit Olefins (formerly JG Summit Petrochemical Corp.) to establish a naphtha cracker plant at a cost of P34.38 billion from the original P25.6 billion.

The plant was supposed to begin commercial operations in January 2012. This is four years behind their original target of 2008. Gokongwei said that the project was delayed because of the financial crisis that hit most companies worldwide.

The plant would be located in barangay Simlong, Batangas City, near the company’s polypropylene (PP) and polyethylene (PE) manufacturing plants.

The revised project has a production capacity of 320,000 metric tons of ethylene, 190,000 metric tons of propylene, 270,000 MT of Py gas, and other by-products like methane, pyrolysis fuel oil and acid gases.

A naphtha cracker is a plant that uses a “cracking process” to produce ethylene from naphtha. It is an upstream activity of petrochemical manufacturing complex while the PE and PP are midstream operation. The major control problem associated with naphtha crackers is to regulate the conditions in the cracking process to control the ethylene output.