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Perspective
13 October 2023

ChemOne nears close on petchem project debt

In:
Chemicals/Petrochemicals, Other, Renewables
Region:
Middle East & Africa, Americas, Asia-Pacific, Europe
Reporter
Singapore-based ChemOne Group is progressing towards financial close on the ECA-backed project debt funding its PEC petrochemical scheme while separate financing will be arranged for its Hydrotreated Vegetable Oil (HVO) renewable fuels plant.

ChemOne Group is expected to tap Islamic finance to push its Pengerang Energy Complex (PEC) project financing in Malaysia over the financial line by year-end or early 2024. The $2.9 billion ECA-covered loan – with support from SACE, Euler Hermes, CESCE, and US Exim – originally comprised a covered international bank debt and an uncovered local bank portion.

But now, given issues around drumming up the local bank portion, the Islamic Development Bank (IsDB) and ICIEC, the export credit organ of the IsDB, will replace the uncovered portion. Exact details are still sketchy though – but the estimated total project cost is $4.4 billion. 

Located in the strategic Pengerang Refinery and Petrochemicals Hub in Johor, the integrated condensate splitter and aromatics plant will have a processing capacity of 150,000 barrels per day (bpd) of condensate plus side feed of naphtha, an aromatics output of 2.3 million tonnes per annum, energy products output of 3.9 million tonnes per annum, and hydrogen output of 50,000 tonnes per annum.

Recent engineering improvements mean that the project's conversion percentage from condensate feedstocks into aromatic products has risen by almost 10%. This development is the result of changes to the input material balance by Honeywell UOP, a technology provider for ChemOne. PEC will now, in effect produce greater quantities of aromatics from the same feedstock.

ChemOne will also develop an Hydrotreated Vegetable Oil (HVO) renewable fuels plant alongside its PEC facility. A decision was taken to arrange separate financing deals rather than integrating the two projects after complications arose in talks over the PEC.

HVO is a second-generation biofuel produced from entirely renewable feedstocks. It is often used in hard to abate transport sectors to reduce fuel emissions and demand is expected to ramp up over the coming years. A blended version of Sustainable Aviation Fuel (SAF) could be used to support airlines in their decarbonisation efforts. 

Given the green credentials of the project, financing is not expected to present any issues and ChemOne hopes that the two projects can begin production at the same time. A launch date of mid-2026 has been touted previously but this is subject to change.




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