SCG and PTTGC Explore Petrochemical Joint Venture Amid Supply Disruptions

SCG and PTT Global Chemical (GC) have signed an MoU to study a joint venture in olefins and polyolefins, aiming to bolster Thailand's petrochemical supply chains and ensure long-term sustainability. This initiative comes as global conflicts disrupt naphtha supplies, prompting SCGC to suspend some operations and accelerate ethane feedstock projects. The partnership seeks to enhance competitiveness and potentially double production capacity, with SCGC also diversifying raw material sources to mitigate future risks. The study is expected to conclude in Q3.

SET-listed Siam Cement Group (SCG) and PTT Global Chemical (GC) have entered a memorandum of understanding to investigate the feasibility of a joint venture focused on olefins and polyolefins businesses. This strategic move is driven by the imperative to strengthen Thailand's petrochemical supply chains, enhance industry competitiveness, and ensure long-term sustainability, especially in light of recent global supply disruptions. Thammasak Sethaudom, SCG president, stated that the study is anticipated to conclude by the third quarter of this year, with plans to establish a new company within 12 months.The urgency for this partnership is underscored by the Israel-US war on Iran, which has significantly escalated global energy prices and disrupted crucial naphtha supplies—a primary feedstock for petrochemical production. Consequently, SCG Chemicals (SCGC), an SCG subsidiary, has been forced to temporarily halt operations at its Rayong olefins plant in Thailand and the Long Son petrochemicals complex in Vietnam. During this downtime, SCGC is accelerating maintenance and advancing its ethane feedstock enhancement project at Long Son, which is 54% complete and slated for 2027 operation, positioning ethane as a strategic alternative to naphtha.Currently, SCGC operates two petrochemical plants in Thailand, capable of producing between 2.7 million and 3 million tonnes of polypropylene (PP) and polyethylene (PE). Should the proposed partnership with GC materialize, SCGC's chief executive, Sakchai Patiparnpreechavud, projects a potential increase in PP and PE production capacity to 6 million tonnes. To further mitigate supply vulnerabilities, SCGC is actively diversifying its raw material sourcing beyond the Middle East, exploring imports from India, Australia, and Nigeria, as 70-80% of its current naphtha imports originate from the Middle East. Despite these significant global challenges, SCG reported a resilient first-quarter revenue of 123 billion baht and a profit of 6.22 billion baht.