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Siam Cement takes over stalled $5.4bn Vietnam petrochemical project

Thai conglomerate now sees 2023 start to production at Long Son

Siam Cement Group is now the sole owner of what is to become Vietnam's first petrochemical complex. (Photo by Ken Kobayashi)

BANGKOK -- Thai industrial conglomerate Siam Cement Group has taken full ownership of a long-delayed petrochemical project in Vietnam after buying out its local partner in the $5.4 billion endeavor to build the Southeast Asian country's first such complex.

SCG bought 29% of the shares in Long Son petrochemical complex from Vietnam Oil and Gas Group, or PetroVietnam, for 2.9 billion baht ($90.2 million).

Roongrote Rangsiyopash, SCG's chief executive, said the acquisition was made through a wholly-owned subsidiary, Vina SCG Chemicals, as is expected to be completed by the end of June.

"The commencement of engineering, procurement and construction activities for this project will be in the third quarter of 2018, with the targeted commercial operation by the first half of 2023," Roongrote said in a statement, placing the project about four years behind its original schedule. 

As sole owner, SCG should have more flexibility taking the investment forward. "SCG will be able to capitalize on the rising trend of global petrochemical business that would bring in growth in the long run," said an analyst at Asia Plus Securities. 

The delay caused by shareholding issues has pushed estimated construction costs to $5.4 billion from the $4.5 billion budgeted four years ago when the project had three investors: SCG with 46%; Qatar Petroleum subsidiary QPI Vietnam with 25%; and PetroVietnam with 29%. 

The Qatari partner withdrew from the southern Vietnamese project in 2015 after global oil prices plummeted, and SCG bought its stake last year. 

SCG's 2017 net profit fell 2% on the year to 55.04 billion baht ($1.73 billion), on a 6% jump in sales to 450 billion baht, the group reported on Wednesday. It cited intensifying competition in cement and building materials.

Revenue from cement and building materials accounted for around 39% of the group's total, while petrochemicals made up 46%. Sales in Southeast Asian countries, excluding Thailand, increased by 9% year on year to 106 billion baht, representing 24% of the group's total.

SCG shares closed at 452 baht on Wednesday, down 2.59% from Monday. Tuesday was a public holiday in Thailand.

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