U.S. energy behemoth Exxon Mobil Corporation (XOM - Analyst Report) has started operation in one of the world’s largest ethylene steam crackers in Singapore. This development is also the company’s most important multi-billion dollar expansion project at its petrochemical complex in Singapore.
The company’s new petrochemical plant expansion project will add roughly 2.6 million tones of finished products every year by increasing its capacity roughly by 100%. This expansion includes one polypropylene plant, one metallocene elastomers unit, one oxo-alcohol unit, an aromatics expansion and two new polyethylene plants. All of these units have started their operations while management expects their ethylene production to start by next few months.
Management believes this development to be the largest chemical expansion project in the company’s history.
The project is powered by cogeneration plant of 220-megawatt capacity. Compared to the traditional methods, cogeneration is much more efficient for the production of power and steam separately. Moreover, the operating cost and emission of greenhouse gas are also low for cogeneration.
The development – is expected to bring the total employment of Exxon Mobil’s chemical plant to 1,800 by increasing its workforce by 50%. Exxon Mobil plans to meet the demand of transportation fuel and chemicals used for manufacturing plastics across the Asia Pacific region by expanding its refining and petrochemical production in Singapore.
Irving, Texas-based Exxon Mobil is the world’s largest publicly traded oil company, engaged in oil and natural gas exploration and production, petroleum products refining and marketing, chemicals manufacture, and other energy-related businesses. Approximately 83% of Exxon Mobil’s earnings come from its operations outside the U.S. The company divides its operations into three segments, namely Upstream, Downstream, and Chemicals.
Exxon Mobil along with other energy biggies like Royal Dutch Shell plc (RDS.A - Analyst Report) and Anadarko Petroleum Corporation (APC - Analyst Report) currently retain a Zacks #3 Rank, which translates into a short-term Hold rating.
Exxon Mobil boasts of diversified operations across the world with several new projects expected to come online through 2013. While Exxon Mobil functions in all corners of the globe, the main areas of focus for the coming years include the U.S., Canada, Kazakhstan, West Africa, Australia, Russia, Angola and Iraq for new volumes.
However, as access to new energy resources becomes increasingly difficult, Exxon Mobil, like most of its peers, will likely face headwinds to replace its reserve. Other downsides include government regulations and weather conditions, as well as renewable fuel prices, which can result in increased costs, reduced growth and fines or other sanctions.