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ExxonMobil's ( XOM ) new plant to boost Asian naphtha demand

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Complex produces high-end petrochemical products in China

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Commercial operations expected in second quarter, sources

say

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The plant also uses LPG as feedstock, sources say

By Trixie Yap and Chen Aizhu

SINGAPORE, Feb 28 (Reuters) - ExxonMobil ( XOM ) has purchased

several shipments of naphtha for its newly launched

petrochemical complex in southern China as the U.S. energy major

prepares for the formal start-up of the $10 billion plant,

industry and trade sources said.

The new plant is likely to buoy demand for the petrochemical

feedstock and lift Asian naphtha refining margins in the

near-term that are already supported by slower Russian supplies.

The complex, based in Dayawan Petrochemical Industrial Park

of Huizhou, Guangdong province, is one of the few mega

petrochemical plants in China wholly-owned by a foreign investor

that are designed to produce high-end petrochemical products.

The ExxonMobil ( XOM ) plant is set to receive a 55,000 metric ton

(489,500 barrels) naphtha cargo from Qatar's Ras Laffan refinery

this week, the third shipment of the petrochemical feedstock

into the complex since the plant was built last December,

according to two trading sources and LSEG shipping data.

While the U.S. oil major sought second-half March naphtha

deliveries earlier via a spot tender, it was unclear if a

purchase had been made, said two sources who received the tender

document.

The complex began test operations last month and by early

February had produced the first on-spec pellets of linear

low-density polyethylene (LLDPE), an intermediary for making

high-performance plastics, the company said earlier this month

on its official WeChat account.

The complex, ExxonMobil's ( XOM ) largest investment in China,

consists of a 1.6 million tons-per-year (tpy) flexible feedstock

steam cracker making ethylene, a key building block for plastics

and fibers used in a wide range of products like cars,

packaging, sports gear and pharmaceuticals.

The cracker is designed to process a mix of naphtha and

liquefied petroleum gas.

Other key units at the Huizhou complex include two LLDPE

units with a combined annual capacity of 1.2 million tons, a

500,000-tpy single-train low density polyethylene unit and two

high-performance polypropylene facilities with a combined annual

production capacity of 950,000 tons.

Four industry and trade sources familiar with the plant's

operations said the plant may enter commercial operation in the

second quarter.

A China-based ExxonMobil ( XOM ) representative declined to comment

on the timeline of the commercial launch of the complex and its

feedstock procurement.