Last week, on a barren 50 hectare plot adjoining the sea at Singapore’s Jurong Island, work officially started on one of the largest aromatic projects in the world.
The $2.4 billion Jurong Aromatic Complex, which will produce 1.5 million tonnes per annum (mtpa) of aromatics, hydrocarbon products derived from crude oil, and 2.5 mtpa of petroleum products, involves eight equity investors.
These include South Korea’s S K Group, China’s Jiangsu Sanfangxiang, Swiss commodity trading major Glencore, Vinmar Group, Shefford, Singapore’s EDB Investments, Thai KK Industry Co and India’s Essar Group.
In particular for the Ruias’-owned Essar Group, which holds a 4.9 per cent in the project, the Jurong Aromatic Complex has added significance. Not only will its subsidiary, Essar Projects, service the $320 million (Rs 1,450 crore) engineering, procurement and construction contract for the complex, the venture is part of a larger plan to more than double the projects arms' current order book of $6 billion over the next five year, with half of the business coming from international projects.
“We are targeted on a number of territories. We began with West Aisa and Africa, South America, Southeast Asia and Australasia. For each one of them we have a different strategy. So, for example, in West Aisa, we are setting up a number of offices. In Africa, we are following our sister companies in areas where we have speciality,” Essar Projects President and CEO Alwyn Bowden told Business Standard.
“For Southeast Asia and Australasia, we are securing a good project to kick us off and work from that. Jurong Aromatics is a good project and an obvious place for us to start. We will use this as our base to expand in Southeast Asia. And we have also secured a project for ExxonMobil in Papua New Guinea that will be our springboard for Australasia,” he said.
At the Jurong Aromatic Complex, Essar Projects will construct storage tankages, jetties with loading and unloading arms, pipeline systems as well as the utilities for the entire complex within 32 months. Whereas in Papua New Guinea, it is constructing an airport for the US oil and gas major, ExxonMobil.
Although the scope of projects reflect the in-house capabilities at Essar Projects — its business units include those focused on hydrocarbons, steel, power, offshore and sea, pipelines and terminals and ports and jetties — the firm is likely to undertake its international expansion cautiously.
“We are relatively new, stepping out of India and wanted to make sure we covered our bets as far as possible. So, we covered all the territories where there is a possibility for expansion. As far as Southeast Asia and Australasia are concerned, these are territories at the moment are not as badly impacted by the turbulent market situation as the rest of the world. So, it’s an obvious place for us to be,” Bowden explained.
Moreover, apart from the hydrocarbons business, Essar Projects will explore opportunities in the iron-ore and coal mining sector in the region, which contains major mining centres such as Australia and Indonesia. “Both of these things are also important in Southeast Asia and Australasia. So there are some natural springboards for us here,” he said.
In India, where Essar Projects is involved in a range of projects including ONGC’s Mumbai High Field and Indian Oil Corporation’s Paradip refinery, the company will look at diversifying into the transportation infrastructure sector more aggressively.
It has already put in pre-qualification for 35 privately-financed road projects and is also looking at airports in the country.
“Our main thrust will be to stick to what we know. So there’s a huge focus on EPC and the refining sector, in particular, in steel, pipelines and ports and jetties, all our historically strong businesses. The one area where we are diverting away from that is in transportation, and that’s because there is such a huge programme of transportation planned in India,” Bowden said.
Of the country's expected $ 1 trillion spend on infrastructure in the next five-year plan starting 2012, a large part is slated to go towards creating and improving the transportation network in India.
Despite its major international plans, India will retain a substantial part of its business and going forward, domestic and overseas operations are likely to contribute equally to the order book, which itself is slated to grow significantly. “We would hope to get to $15 billion in about 5 years,” Bowden added.
