FS PP Dung Quat

Houston - London Singapore - Dubai
Chemical Market Associates, Inc.
Feasibility Study of a Polypropylene Facility at Dung

Quat, Vietnam
DRAFT Rev 1
Presented to
LG International Corp.
June 2006
www.cmaiglobal.com
Independent advisor to petrochemical industry participants in strategic and commercial planning, feasibility
and financial studies, due diligence support, competitive and market analysis.
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TABLE OF CONTENTS
WARRANTY & DISCLAIMER
1. INTRODUCTION
1.1
Historical Background
1.2
Project Purposes And Configuration
2. BUSINESS CONCEPT
2.1
Group of participants
2.2
Legal structure & Legal nature
2.3
Project financing
2.4
Project Management
11
2.5
Contractual Relationships
12
2.6
Operating philosophy
12
3. MARKETING STUDY
13
3.1
Worldwide polypropylene market and the feedstock for its production
13
3.2
Vietnam Polypropylene Market
22
3.3
Cost competitiveness ANALYSIS
30
4. TECHNICAL DESCRIPTION
34
4.1
Initial Data
34
4.2
Licensor Offers. Polypropylene Technology Description
41
4.3
Polypropylene Technology Selection
80
4.4
Off-site Facilities
96
4.5
Site Plot Plan
101
4.6
Civil and Architectural Concept
106
4.7
Basic Principles of Process Control
114
4.8
Electrical concept
115
4.9
Basic Provisions for Fire Fighting System
118
4.10
Basic Provisions for Telecommunication and Alarm Systems
120
4.11
Basic Provisions for Security System
123
4.12
Recommended Production Organization Chart and Personnel Requirements 124
4.13
Laboratory Equipment
133
4.10
Initial List Of Major Equipment And Recommendations For Vendors
136
5. PLANT SAFETY AND ENVIRONMENTAL IMPACT ASSESMENT
139
5.1
Safety
139
5.2
Environment Impact Assessment
141
This section of the document was compiled by CMAI from information obtained from LGI and PetroVietnam, and it is based on the original feasibility study completed by JSC
VNIPINEFT in 2001. CMAI has undertaken to compile and update the original feasibility study based on the LGI/PetroVietnam gaining permission from the original author.
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6. Budget Estimates and Project Schedule
148
6.1
Budget Estimates
148
6.2
Overall Project Schedule
150
7. RISKS AND RISK MANAGEMENT

7.1
153
General Provisions
153
8. FINANCIAL AND ECONOMICAL STUDY OF THE PROJECT
161
8.1
Project Financing
161
8.2
Taxation Principles
161
8.3
Technical and Economic Analysis
166
8.4
Economic Profit for Vietnam
192
9. CONCLUSIONS AND RECOMMENDATIONS
193
ATTACHMENTS
199
Attachment 1 CMAI Contract
199
Attachment 2 Environmental Impact Assessment by PetroVietnam Research + Development

Centre for Petroleum Safety and Environment
199
Attachment 3 Market Survey for Polypropylene in Vietnam by Vietnam Oil + Gas Corporation
Research + Development Centre for Petroleum Processing
199
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WARRANTY & DISCLAIMER

This service, reports and forecasts are provided for the sole benefit of the client.
Neither the report, portions of the report, forecasts, nor access to services shall be
provided to third parties without the written consent of CMAI. Any third party in
possession of the report or forecasts may not rely upon their conclusions without
written consent of CMAI. Possession of the report or forecasts does not carry with it
the right of publication.
CMAI conducted this analysis and prepared this report utilizing reasonable care and
skill in applying the methods of analysis consistent with normal industry practice. All
results are based on information available at the time of review. Changes in factors
upon which the review is based could affect the results. Forecasts are inherently
uncertain because of events or combinations of events that cannot reasonably be
foreseen including the actions of government, individuals, third parties and
competitors. NO IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE SHALL APPLY.
Some of the information on which this report is based has been provided by others
including published data. CMAI has utilized such information without verification
unless specifically noted otherwise. CMAI accepts no liability for errors or
inaccuracies in the information provided by others.
While CMAI believes the results presented herein are reflective of actual costs and
revenues, these estimates are either curve type or study estimates about future
conditions. As such they have a customary +/-30% range assumed for this type of
feasibility study. Accordingly, more detailed engineering and market analysis would
be required before proceeding further with any of the recommendations contained
herein.
CMAI has prepared this feasibility study based on the previous feasibility study
prepared by JSC VNIPINEFT in 2001. The reproduction of drawings and text from
the original report has been completed by CMAI under the instruction of LG
International and PetroVietnam, who have sought permission from the JSC
VNIPINEFT to utilize the previous study. To this end, CMAI does not accept any
copyright liability should LGI and PetroVietnam have not secured consent from JSC
VNIPINEFT to update the original document.
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1. INTRODUCTION
1.1
HISTORICAL BACKGROUND
The Dung Quat Refinery is the first refinery to be built in Vietnam. PetroVietnam has
awarded Technip as the EPC contractor for this project and the refinery is now in the
detailed engineering stage, with commercial operation for overall refinery planned for
February 2009.
In line with the construction schedule of the refinery, PetroVietnam plans to build a
Polypropylene (PP) plant which will utilize propylene produced from the refinery as its
feedstock. The polypropylene plant will add value to the propylene stream from the
refinery, and at the same time it will provide an outlet for the propylene from the FCC
unit of the refinery. The intention is that the refinery will supply enough polymer grade
propylene to allow for 150,000 tons per year of on-spec polypropylene to be made.
Should the PP plant not be able to take the full amount of propylene, it can be sold
on the merchant market.
The construction polypropylene plant in Vietnam is warranted du to the following
factors:
1. The current and growing demand for polypropylene in Vietnam, which at this point
in time is being satisfied by the importation of PP resin.
2. The ability to add value to the refinery propylene stream and thus increase the
profitability of the overall refinery project.
Based on these factors, LGI was invited into the partner selection process which was
used to select PetroVietnams partner in developing the PP project. LGI was
successful in this process, and as a result, PetroVietnam and LGI agreed to start a
new feasibility study for the PP project and prepare necessary documents for the JV
setup. The two partners signed a MOU on 24th March 2006.
In order to proceed with the feasibility study report, including the market study and
economic modeling, PetroVietnam and LGI entrusted the development of the new
feasibility study to CMAI, a third party industry consultant.
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1.2
PROJECT PURPOSES AND CONFIGURATION
The Detailed Feasibility Study (DFS) for the Dung Quat polypropylene production
plant was performed according to the MOU signed between LGI and PetroVietnam
on the 24th March 2006.
Two PetroVietnam subsidiaries, RDCPP and RDCPSE, developed a local market
analysis for PP product and an Environmental Impact Assessment respectively.
CMAI performed the overall combined market analysis, and competitive assessment,
as well as the projects financial analysis. In addition to this, CMAI also agreed to
update the previous JSC VNIPINEFT feasibility study report by compiling the data
and information provided by LGI and PetroVietnam.
The purpose of this work is to establish the economic feasibility for the project as well
the expediency for the PP plant construction in the industrial area in Dung Quat,
Quang Nai Province, Vietnam.
PetroVietnam, LGI and CMAI had to resolve the following objectives during DFS
development;
To select licensed polypropylene technology that will be a base for further
calculations
To clarify the system configuration of Polypropylene plant
To define Polypropylene plant construction cost estimation
To provide maximum integration with the Refinery facilities
To define possible investments for the expansion of certain Refinery off-sites
and utility facilities resulted from construction of new PP production complex.
To define markets and conditions for propylene product sales
To perform economic analysis for the project
To provide Environmental Impact Assessment caused by the PP complex
facilities
This document will make it possible for the parties involved in Joint Venture to start
negotiating all matters concerned with the PP complex development, and to obtain
an approval for this production facility construction from local government authorities.
Polypropylene Complex comprises the following units;
o PP Plant
o Intermediate Propylene storage
o Control / Substation Building
o Fire water tanks and pump station
The Polypropylene Complex is located directly adjacent to the Refinery.
Integration with the following Refinery systems is provided to the PP complex.
Power supply system

Flare System
Plant / Instrument Air System
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Fuel System
Steam / Condensate System
Service Water System
Demineralized Water System
Potable Water System
Cooling Water System
Hydrogen Gas System
DCS and ESD System (in regard to emergency alarms)
Fire and Gas detection system (in regard to emergency alarms)
Phone, etc. system
The following Refinery facilities are provided to be used as well
Treatment facilities
Maintenance Workshops
Jetty Topsides
Propylene Storage
Laboratory
Fire Station / Gas Rescue Station, etc.
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2. BUSINESS CONCEPT
2.1
GROUP OF PARTICIPANTS
Considering the fact that Dung Quat Refinery project is being implemented solely by
PetroVietnam without having any direct foreign investment and the Project is
requiring considerable amount of capital, it is desirable to perform the construction of
the polypropylene plant through setting up the independent legal entity in Vietnam.
Polypropylene Complex project will be developed via a joint venture (JV) to be
founded under the law of Vietnam. The JV will be composed of the following parties:
Vietnamese Party Vietnam General Company of Oil and Gas PetroVietnam
Korean Party - LG International Corp.
Nevertheless, PetroVietnam and LGI agreed that other foreign investment sources
might participate in the Project in order to increase the feasibility and may help to
facilitate project implementation. Therefore the participants in the JV may be altered
at a later date.
2.2
LEGAL STRUCTURE & LEGAL NATURE
The planned legal structure & legal nature of the plant to be constructed is based on
a joint venture company (JVC) which will distribute profits amongst the Vietnamese,
Korean and other foreign party, if any. The legal form of the JVC will be limited
liability company (LLC) under the new Investment Law of Vietnam to be effective as
of July 01, 2006. The specific equity stake that each Party will take in the JVC shall
be determined upon the final results of the DFS and be provided in the JV
Agreement.
The required capital for the JVC is anticipated about USD 175 million (excluding
Working capital) and will be provided by Vietnamese, Korean and other foreign (if
any) parties, respectively.
Implementation of the polypropylene plant construction project will require sufficient
capital from the JVC and structured financing by the competent financiers
2.3
PROJECT FINANCING
The project cost is expected to be met from a combination of shareholder equity and
debt sourced from commercial banks and Korean export credit agencies.
It is assumed that the financing of the project for PP plant construction will be
provided within the framework of a common strategy for financing the JVC, which will
be established, and the financing mechanisms will be provided by the financial
consultants.
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From the point of view of the sources of the project assets formation, the financing is
subdivided into;
Equity investment, which forms capital of the Project Company at the expense
of the founders and other participants of the project;
The equity investment in the project financing represents the risk capital. It forms the
basis for lenders or investors advancing more senior forms of capital to the project.
This is the motivating factor for investors providing equity capital. Equity is typically
advanced as the subscription price for common or preferred stock.
Debt investment provided to the Project Company in the form of the bank credits
and loans or commercial credits. The latter are provided by the equipment
vendors, contractors in the form of delay of payment against contracts, etc.
The senior debt of a project financing usually constitutes the largest portion of the
financing and is usually the first debt to be placed. The senior debt will be more than
60 per cent of the total financing. Most borrowings from commercial bank lenders for
a project financing will be in the form of senior debt.
There is a wide range of funding sources available to the project. The Project
Company may be capable of obtaining funding opportunities outside of its domestic
financial market or the financial market of the shareholders countries.
The possible sources for loans can be divided into two groups:
Commercial lenders: international commercial banks, commercial finance companies,
institutional investors, investment management companies.
Export credit agencies
Export credit agencies have the following characteristics;
Loans and guarantees: export credit agencies provide support in the form of loans
and guarantees, or in a combination of both. The Korean Export Import Bank, for
example, itself provides funding and guarantees. The export credit agencies in some
countries provide a guarantee of the financing, which is then used to secure a loan
from the regular commercial banking sources of the country.
Buyer credit: In a buyer credit financing, the loan is made to the buyer instead of to
the supplier.
Typical terms: long tenors (around 10 years), low interest rate and fees compared to
commercial sources.
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2.4
PROJECT MANAGEMENT
The Owner is the Joint Venture Company, which will be founded at a later date.
One of the conditions for acquiring project financing from export credit agencies and
other financial institutions, is the use of proven management methods and project
execution systems.
According to the Vietnamese Construction and Investment Management Regulations,
and in consideration of the Clients management abilities and project implementation
schedule, it is recommended that the Owner shall directly manage the project
execution.
Furthermore, the Project Consultant, Inspection Legal organization (for certification)
will assist Owner during time of Design, Engineering, Procurement, Construction,
Pre-commissioning, Commissioning and Operation the polypropylene Plant with the
objective of providing:
Uniform approach to design and engineering

Work schedule management
Resources management
Cost control
Safety assurance
For the early identification of the critical problems during all the stages of project
execution and their resolution, the Project Management Team should develop the
Project Master Schedule.
For the closest tie-in of the polypropylene production project in Vietnam with the
Refinery project, the polypropylene plant project management should be combined
with the Refinery construction project management.
Decisions on the supply of some types of equipment shall be permanently updated
to meet the schedule. In this case, the purchase and procurement plan shall be
linked with the project financing plan.
When planning the construction works, the peak values of manpower demand shall
be defined by the EPC Contractor in advance. This is in order to have enough time
for personnel hiring and training. After studying the specific technical requirements
for goods transportation and unloading, the demand in special cranes shall be
developed in advance by the EPC Contractor.
The functions of the Project Management Team also include the organization of
project risks management and insurance.
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2.5
CONTRACTUAL RELATIONSHIPS
Issues regarding the contractual relationship are solved on the basis of the selected
financing schemes.
All relations between the Client and numerous enterprises and companies, which will
participate in the polypropylene plant project construction & realization in Vietnam,
will be determined by the contractual arrangement. For solving the disputable issues,
which are regulated by the Vietnamese laws, the Prime Ministers permission shall
be obtained.
At first priority, the following contracts shall be concluded for proceeding with PP
plant construction based on fast track:
2.6
Agreement on land allocation (long-term is desirable)

License agreement with the licensor
Contract with General Contractor
Contract for technical maintenance with the equipment vendors
Contract for importing propylene for additional feedstock required for reaching
the possible maximum capacity of 150,000 tons per year of the polypropylene
plant under design.
OPERATING PHILOSOPHY
The main operating philosophy principle is to provide the maximum profitability of the
plant at its optimum ratio with the capital and operating costs (Capex vs Opex vs
Revenue) during the polypropylene plants operational stage.
With respect to maximizing the project economics, the following three points are
considered in the PP technology evaluation:
Process Flexibility
Product Quality
Operating Economics
Catalyst development for the production of propylene polymers is on-going and

continually breaking new ground both for PP production efficiency and quality. It is
therefore imperative that the technology selected has a suitable catalyst research
and development center, in order to allow flexibility and maintain optimal production
over the life of the PP asset.
Bulk polymerization in loop reactor by itself presents the highest potential in being
adapted to new operating conditions.
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3. MARKETING STUDY
In 2006 the Research and Development Centre for Petroleum Processing (RDCPP)
prepared a report on the Vietnam Polypropylene Market for JVC.
This section combines the relevant information from that report and adds in CMAIs
supply & demand forecasts as well as its price forecast for both propylene and
polypropylene.
3.1
WORLDWIDE POLYPROPYLENE MARKET AND THE FEEDSTOCK FOR

ITS PRODUCTION
3.1.1
Polypropylene
Polypropylene () demand over the past 30 years has been very dynamic. This
thermoplastic continues to find new applications in all sectors of the global economy,
from household containers, packaging, automotive and furniture. This ever
increasing market for PP has seen the global demand increase from just under 13
million tons in 1990, to just under 41 million tons in 2005.
2005 World Polypropylene End Use Demand
Raffia
13%
Other
8%
Fiber
16%
Blow Molding
1%
Film & Sheet

21%
Extrusion Coating
0.2%
Pipe & Extrusion
3%
Injection Molding
38%
2005 Demand = 40.7 Million Metric Tons
The major end use sectors for PP globally continue to be injection molding
applications, as well as film & sheet applications for the packaging industry. This
thermoplastic which is characterized by good processability and impact strength
has continued to see a solid demand growth during the own between 2000 & 2002.
From 2000 to 2005, CMAI estimates that the global demand growth rate (Average
Annual Growth Rate, AAGR) was 6.0%. Global PP demand is projected to grow at
an AAGR of 4% through too 2025, reaching 87 million tons of demand. This is as a
result of yearly growth rates which are typically equal to or higher than GDP growth
rates on a global basis.
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World Polypropylene Supply and Demand

Million Metric Tons
Operating Rate %
120
100
FORECAST
100
90
80
80
60
70
40
60
20
50
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
%AAGR (00-05, 05-20)
Demand (6 / 4.3)
Nameplate Capacity (4.2 / 2.2)
Hypo. Add'l Capacity (4.2 / 4.4)
Oper. Rate
The major demand centres in terms of volume will continue to be North America and
Europe and Northeast Asia. Demand growth will be the strongest in Asia, and in
particular China, where the current 8 million ton demand will reach almost 19 million
by 2020. Southeast Asia is also forecast to see good annual demand growth rates
for PP over the same period, as many of its economies continue to develop.
Polypropylene Demand Growth by Regions

Re gions
North America
2005
2020
05-10
10-15
15-20
(MM Tons)
(MM Tons)
% AAGR
% AAGR
% AAGR
8.18
13.64
4.15
3.48
2.79
South America
1.93
4.20
6.91
4.90
4.17
NE Asia excl. China
4.69
7.12
3.25
2.73
2.50
China
8.12
18.93
7.50
5.54
4.41
Southeast Asia
3.26
6.62
5.95
4.60
3.95
Indian Subcontinent
1.67
4.25
9.64
5.60
4.18
Europe
9.65
14.76
3.70
2.71
2.21
Africa/Middle East
W orld
3.17
6.79
6.94
4.78
3.93
40.67
76.33
5.39
4.09
3.39
Currently there is a great deal of activity globally in terms of capacity additions. By

the end of this decade the major PP producing regions will be NEA, North America,
West Europe and the Middle East. In total, some 60 million tons of capacity will be
available to produce PP by 2010.
The current schedule for PP additions on a global basis indicates that year on year
capacity additions are likely to meet the year demand increases for PP. However
2009 is currently indicating a dramatic yearly increase in the yearly capacity increase.
This excess supply will bring down both the global utilization rates of the installed PP
capacity, as well as the prices and margins for PP.
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The majority of the PP additions are in Asia and the Middle East. Within Asia, China
commands the bulk of the additions, while the rest of Asia adds capacity in
increments.
World PP Capacity Expansions vs. Demand Growth
Million Metric Tons
5.0
FORECAST
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
95
96
97
98
99
00
01
02
03
04
05
Capacity Expansions
06
07
08
09
10
11
12
13
14
15
Demand Growth
Northeast Asia
Polypropylene is a leading polymer in Northeast Asia with the regions capacity
growth rate averaging at 4.8 percent annually from 2000-2005. The capacity growth
is forecast to grow by around 4 percent per year through 2025. Polypropylene
capacity in 2000 was 9.8 million tons and grew to 12.4 million tons in 2005 and
projected to grow to 18.1 million tons in 2015.
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With modest capacity growth and a strong growing demand, Northeast Asia is set to
become a large net importer of polypropylene. The region is forecast to have a net
import amount of close to 2.2 million metric tons of polypropylene resin each year
during 2005-2010. This is mainly driven by Chinas demand, which is forecast to
remain as the worlds largest importer and consumer of polypropylene for many
years to come. China naturally accounts for more than 90 percent of the entire
regions import requirement. To meet its growing demand, exports are forecast to
decline steadily throughout the forecast years while imports will gradually increase.
Southeast Asia
Polypropylene plant capacity in the region grew by 3.4 percent annually from 2000
to 2005; from 3.1 million tons to 3.7 million tons. By 2015, the regions capacity will
grow to 6.2 million tons primarily due to new PP plant being planned in Thailand.
With polypropylene demand growing at healthy rate around the world and around
the region due to the wide diversity of end use application, the regions demand
growth will have to be met more by imported polypropylene.
Domestic demand in the region will start to overtake total production in 2005, which
would mean that imports would grow strongly and steadily to help supplement
production. Additional hypothetical capacities would need to be built in 2007 and the
years beyond in order to support the growth in demand. However, it should be noted
that capacity growth is likely to be restricted by the availability of propylene
feedstock in the region. Malaysia and Indonesia are the two most likely countries to
increase polypropylene resin capacities during the forecast period.
Demand for polypropylene is forecast to grow at an annual average rate of around 5
percent annually to around 5.4 million metric tons by 2015 and to around 7.8 million
metric tons by 2025. Generally, a significant portion of polypropylenes demand and
consumption falls in the category of durable goods and it is therefore more
susceptible to economic conditions and outlook compared to polymers that are
heavily used in packaging and other non-durable or commodity-based applications
that will be widely consumed regardless of economic conditions or outlook
Overall, Asia will have highest demand growth for polypropylene consumption,
based on the increased consumption generated by the developing economies in that
region. In particular, China will command the majority of the Asian regions demand
growth, as it strives to become the manufacturing floor of the world.
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ASIA POLYPROPYLENE SUPPLY/DEMAND BALANCE

Million Metric Tons
Operating Rate, %
50
100
Forecast
40
95
30
90
20
85
10
80
75
95
96
97
98
99
00
01
02
03
04
05
06
07
08
Demand
09
10
11
Capacity
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Operating Rate
Global Trade and Target Markets

Polypropylene will experience changing trade patterns relative to history. The
significance of the Middle East will be more evident in the forecast period. Asia will
definitely be the worlds largest import destination (specifically China), but the U.S.
will play a declining role in the exports of PP resin over the next several years.
South Korea will continue to be the leader in world export of polypropylene, but it will
be challenged by the new Middle East capacity. Japan is predicted to become a
minor polypropylene exporter.
World Polypropylene Net Trade

Million Metric Tons
8
FORECAST
Net Exporter
6
4
2
0
-2
-4
Net Importer
-6
-8
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
N. America
S. America
W. Europe
C. Europe
CIS & Baltic States
Africa
Middle East
NE Asia
SE Asia
Indian Sub.
14
15
The excess polypropylene supplies in Asia will be aimed for China market and some
emerging Indo-China countries market.
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The JVC will have to compete against an ever increasing amount of export material.
In particular, the producers of SEA will be looking at Vietnam as a close alternate to
the Chinese market, thereby gaining a better netback on their resin.
With significant capacity coming on line in 2009 and the bottom of the petrochemical
cycle forecast at that time, a large number of PP producers will be looking for
alternate markets.
3.1.2
Propylene market
Global propylene demand has historically grown by 5.0-6.0 percent per year. The
size of the world polymer/chemical grade (PG/CG) propylene market grew only
moderately in 2005 to about 63.6 million metric tons (4.3 percent growth versus
2004). Over the next several years, world PG/CG propylene demand growth is
expected to average 4.8 percent, with polypropylene being the dominant driver for
growth.
Propylene demand growth to 2025 is expected to advance at a rate of 3.5 percent,
on average, per year. Approximately 49 million tons of propylene additions will be
necessary by 2025 to meet this demand.
World Propylene Supply & Demand
M illion Metric Tons
180
Operating Rate %
100
Forecast
160
95
90
140
85
120
80
100
75
80
70
60
65
40
60
20
55
50
0
95
96
97
98
Demand
99
00
01
02
03
04
Nameplate Capacity
05
06
07
08
09
Hypo. Capacity
10
11
12
13
14
15
20
25
Operating Rate
In the future, propylene production growth from steam crackers is expected to be

slightly lower than the corresponding ethylene production growth, due to the addition
of large amounts of low-propylene-yielding ethane-based steam cracking capacity in
the Middle East. Propylene production from new and existing FCC units has grown
more quickly than production from steam crackers, and this trend is expected to
continue in the long term forecast with 3.7 percent per year through 2025 for FCC
units and 2.6 percent for steam cracker production.
As propylene demand maintains growth at a rate that is stronger than ethylene
demand growth, questions regarding future propylene supply sources continue to
emerge. Regional propylene prices appear to be trending to higher levels relative to
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ethylene, which helps to support on-purpose supply sources and more product is
being extracted from refineries as well.
Investments in on-purpose propylene technologies are becoming more common
throughout the world, although this production source continues to represent a minor
portion of total world supply (3 percent in 2005) of PG/CG propylene. Metathesis
units are planned in the U.S., Japan and China; others will likely be announced
officially in the next few years. New propane dehydrogenation units are planned in
Saudi Arabia and Egypt. An investment in Superflex (olefin cracking) is planned in
South Africa, and an investment in methanol to olefins is planned in Nigeria. Global
propylene demand is expected to be about 90 million tons by 2015.
2005 World Propylene Demand by Region

Middle East
4%
NE Asia
27%
SE Asia
7%
Africa
1%
Indian Sub.
3%
CIS & Baltic States

2%
C. Europe
2%
N. America
27%
W. Europe
23%
S. America
4%
2005 Demand = 67.1 Million Metric Tons
Southeast Asia
New alternative sources of propylene other than from steam crackers or propane
dehydrogenation units continue to pose a challenge to the region to meet current
and potential propylene shortfalls. Countries such as Singapore and Thailand are
embarking on feasibility studies to seek alternative means to increase the propylene
supply through new technology such as metathesis.
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Southeast Asia Propylene Supply & Demand

Million Metric Tons
12
Operating Rate %
100
95
Forecast
10
90
85
80
6
75
70
65
60
55
0
50
95
96
97
98
99
00
Demand
01
02
03
04
05
Nameplate Capacity
06
07
08
09
10
Hypo. Capacity
11
12
13
14
15
20
25
Operating Rate
Northeast Asia
New alternative sources of propylene other than from steam crackers or propane
dehydrogenation units continue to pose a challenge to the region as countries such
as Japan are seeking ways to increase the supply of propylene through Olefins
Conversion Technology, specifically known as the metathesis process.
Northeast Asia Propylene Supply & Demand
Million Metric Tons
45
Operating Rate %
105
Forecast
100
40
95
35
90
30
85
25
80
20
75
70
15
65
10
60
5
55
50
95
96
97
98
Demand
99
00
01
02
03
04
Nameplate Capacity
05
06
07
08
09
Hypo. Capacity
10
11
12
13
14
15
20
25
Operating Rate
Japan and South Korea are significant exporters of propylene monomer to Taiwan
and a few countries in Southeast Asia. In the coming years, exports of propylene
monomer will gradually decline as more propylene is being consumed internally.
Overall the balance for propylene both globally and within Asia will continue to be
tight. With the demand growth of all the major propylene derivatives showing solid
growth over the forecast period, particularly the demand growth for PP. available
propylene molecules will tend tom command a premium in order to secure them.
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As such, integrated propylene derivative producers will command a level of

advantage, as they have both a secure propylene source, as well as some form of
cost advantage.
It is recommended that the JVC does not rely on imported propylene for any length
of time. It is likely to make the asset uneconomic, and it would be one of the highest
costs of production assets in Asia. All attempts to leverage the integration with the
refinery should be made, particularly the propylene feedstock price.
3.1.3
Propylene and polypropylene global prices
The cost of production from local suppliers will effectively provide a floor value for
the spot CFR price.
Propylene generated from local steam crackers and FCC units is well integrated with
either local derivatives or LPG markets. There is very little local swing supply
capability and therefore little impact of traditional propylene cost and alternative
value influences. The Southeast Asia propylene market must be balanced either
through propane dehydrogenation or by imports. With this higher cost structure, the
price forecast for Southeast Asia is considerably higher than the U.S., which will be
the marginal supplier to Asia. During these time periods when the market needs
product from the U.S., the CFR import price will rise to levels high enough to
encourage propylene deliveries from the U.S. Southeast Asia countries are forecast
to remain the largest net importers of propylene monomer in the world.
Asia polypropylene markets have a significant influence on local propylene prices.
During weak polypropylene market periods, such as market conditions since 1997,
the resin producers are only willing to pay propylene prices that provide break even
economics, setting a maximum price. Improvements in market conditions of
polypropylene, as forecast for the 2005 to 2006 period, will allow propylene prices to
increase again.
POLYPROPYLENE TO PROPYLENE (FORMULA) SPREAD

1995 -2030
Dollars Per Ton
1,600
1,400
Forecast
1,200
1,000
800
600
400
200
0
95
97
99
Spread
01
03
05
07
09
11
13
PP GP Homopolymer, CFR SEA
15
17
19
21
23
25
Propylene (formula), CFR SEA
27
29
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3.2
VIETNAM POLYPROPYLENE MARKET
3.2.1
Vietnam Economy Outlook. Plastics Industry
The Renovation and Open-Door policy was initiated in 1986. These changes have
begun to create a favourable environment for economic development. Vietnam has
succeeded in achieving a high GDP growth rate based on good macroeconomic
performance. After the Asian financial crisis, the Vietnamese economy has
continued to see GDP growth rats greater than 6%.
VIETNAM GDP GROWTH 2000 - 2020
Percent
9
8
Forecast
7
6
5
4
3
2
1
0
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
Based on the forecasts of the World Bank and the International Monetary Fund
(shown above), Vietnam is projected to continue its economic performance with a
trend line at just under 5% through to 2020. As mentioned previously, the demand
for PP is determined largely by the GDP growth within a particular country. With
such a healthy GDP outlook, the demand for PP is also forecast to be robust.
With this strong economic performance is an increasingly wealthier population,
which will tend to spend this wealth and purchase goods that contain PP. The
population of Vietnam is also forecast to increase from the current 84 million to 104
million by 2025.
Vietnam Plastics Industry has developed strongly with the plastics consumption per
capita in Vietnam growing in previous years based on the above trends.
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Table 11: Growth of PP Consumption

Year
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Thousand ton
25
39
42
45
48
52
62
104
135
155
184
198
211
268
282
306
329
kg per capita
0.4
0.6
0.6
0.6
0.7
0.7
0.8
1.4
1.8
2.0
2.4
2.5
2.7
3.3
3.5
3.7
3.9
Nevertheless, up to now, Vietnam has to import most of raw materials (resins) used
in plastics industry. The five main exporters of resins in this region are South Korea,
Singapore, Taiwan, Thailand, and the USA.
VIETNAMESE POLYPROPYLENE IMPORTS 2003 - 2005

Thousand Metric Tons
200
180
160
140
120
100
80
60
40
20
0
h
ut
So
a
re
Ko
nd
la
ai
h
T
d
ite
Un
a
St
s
te
a
di
In
e
or
ap
g
n
Si
an
iw
Ta
sia
ay
al
n
pa
Ja
15
EU
lT
na
er
t
x
(E
)
de
ra
m
iu
lg
e
B
na
hi
C
nt
ge
Ar
d
ite
Un
a
in
m
do
ng
i
K
(C
m
to
us
s)
G
m
er
ce
an
Fr
y
an
h
nc
re
F
(
to
us
s)
m
In Vietnam polymer materials are used in construction, consumer goods, technical

plastics and packing. Major plastics manufacturers are small and medium
enterprises.
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Table 12: Structure of Plastics Consumption in Vietnam

Total (thousand ton)
Application share (%)
Consumer goods
Packing
Building materials
Engineering
1994
200
1995
300
1996
440
1997
560
65
20
8
7
50
2
55
25
12
8
55
25
12
8
15
10
For two years (1997-1998), the Vietnam plastics industry has marked the turning
point with the birth of the raw material production industry: one plant producing PVC
(polyvinyl chloride) resin (capacity of 80,000 ton per year) and DOP
(dioctylphthalate) (total capacity of 30,000 ton per year). In coming time, demand in
plastics in Vietnam is expected to growth strongly due to the economic development
along with the 2004 expansion and development of other sectors in the domestic
economy (agriculture, automobile industry, electronics, construction, and consumer
goods). By the year of 2005, plastics output is estimated to reach nearly 1.5 million
ton (approximately 16 kg per capita) and by the year of 2010 plastics output in
Vietnam is predicted to reach 2.3 million ton.
Currently, the South areas with the centre in Ho Chi Minh shares 80% of plastics
market, 15% fall to the North areas with the centre in Hanoi/Hai Phong and 5% to
the central areas with the centre in Da Nang. In the future the situation will change
slightly with increasing the shares of North and central areas.
2006 PP DEMAND WITHIN VIETNAM
30% of total demand
Ha Noi
5% of total demand
Da Nang
VIETNAM
65% of total demand

Ho Chi Minh
At present, there are more

than 800 medium and small
plastics processing factories
and about 130 foreign plastics
supplier representative offices
in Vietnam.
Large companies typically buy
raw materials for manufacturing
plastic
products,
including
polypropylene,
directly
from
foreign companies or through
companys representative offices
in
Vietnam.
Small
private
companies are not permitted to
import polypropylene and other
raw
materials
for
plastics
manufacturing
directly
from
abroad and they have to use
government brokers to import
materials on their behalf.
2005 Domestic Demand = 329,000 tons
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Multiple agents are common in Vietnamese plastics industry. They all have to their
own transportation serve door to door.
After completion of the polypropylene plant in Vietnam, PP will be supplied for the
first time directly to end users from a domestic source.
3.2.2 Demand for Polypropylene in Vietnam
From 1990 to 2005 demand for PP grew from 39,000 ton to 329,000 tons, almost
20,000 tons per year growth rate. This rapid growth was due to the tremendous
versatility of polypropylene, and the sudden economic growth that the domestic
economy went through.
One of the reasons for the growth in PP demand is an increase in the urban
population, which results in keen demand for household goods, namely, plastic
furniture, domestic use container, etc.
A considerable portion of polypropylene consumed in Vietnam is used for
manufacturing woven products, namely, bags, ropes, etc.
Vietnam is an agricultural country and a major rice exporter. Grain production
increased from 17 million ton in 1988 up to 31.4 million ton in 1999 or 1.85 times;
coffee production increased from 31 up to 510 thousand ton or 16.5 times for the
same period. Due to mechanization in agriculture as well as the use of fertilizers and
new breeds, agricultural production continues to grow. Consequently, the demand
for PP woven bags used in agricultural production (packaging for fertilizers, rice,
coffee, etc.) also shows a rapid growth
Another factor influencing the growth of polypropylene demand is the construction
boom in Vietnam. This boom leads to increasing demand for PP bags for packaging
and shipping cement and building materials made of polypropylene.
Geotechnical textiles are needed for soil treatment during civil works for roads, dams,
sea dikes, and hydraulic works. South of Vietnam is a main market due to a weak
soil quality. A significant increase in consumption of this product has been notified
during the last decade. The main suppliers are Thailand, South Korea, Taiwan,
Malaysia, and China. There is a domestic production of this product at capacity of
500 ton per year. The current demand in polypropylene for these textiles is around
1,200 ton per year with an annual growth rate of 30%.
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PP demand within Vietnam is forecast to grow at 5.5% AAGR through to 2025. This
would see the domestic demand reach 966,000 tons in 2025.
Raffia grade is still projected to dominate the end-use segment with its use in
agriculture and bagging and construction. Film & sheet and injection moulding
applications are forecast to grow as the economy and the population become
wealthier.
Year
2005
2010
2015
2020
Demand
(000s MT)
329
489
641
790
Anticipated PP expansions subsequent to the JVC are in line with the projected
domestic demand growth. However, as the subsequent PP plants are ear-marked to
be built in the North and the south, these facilities will have a distinct logistical
advantage over the JVC located at Dung Quat, as the subsequent PP plants will be
located in the larger demand regions.
VIETNAM POLYPROPYLENE SUPPLY/DEMAND BALANCE
Operating Rate, %
Million Metric Tons

1.0
100
Forecast
0.8
80
0.6
60
0.4
40
0.2
20
0.0
0
95
96
97
98
99
00
01
02
03
04
05
06
Demand
07
08
09
Capacity
10
11
12
Imports
13
14
15
16
17
18
19
20
21
22
23
24
25
Operating Rate
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3.2.4
PP Consumption Quality Structure in Vietnam
There are three polypropylene quality types: homopolymer (), random

copolymer (RCP), and impact copolymer (ICP).
In Vietnam the majority of the PP consumed is homopolymer (>95%), i.e.
polypropylene of lower quality compared with copolymers.
As for electrical appliances and automobile industries, where copolymers are in wide
use, Vietnam is in its infancy. Under the effect of Asian economic crisis, these
industries in Vietnam are developing slowly and at present the PP demand in these
industries is too small.
The share of copolymer will gradually increase. However, due to the low starting
level of Vietnamese polypropylene market, homopolymer will be the dominant grade,
with potentially 10% of the total Vietnamese demand consisting of Copolymer.
3.2.5
Forecast Prices of Propylene and Polypropylene in Vietnam
Prices of propylene and polypropylene have the important effect on the projects
economics.
LOGISTICS COSTS FOR PP WITHIN VIETNAM
According to the current laws

of Vietnam, the import duty
for propylene in case of
encouraged investments is to
be 5%.
Ha Noi
The rates of import and

export
duties
for
polypropylene are to be 0
(zero) percent, i.e. users and
exporters are practically
exempted from import/export
duties.
US$21.2/MT
US$19.5/MT
US$27/MT
Dung Quat
US$20.6/MT
US$25/MT
US$19/MT
Ho Chi Minh
Ocean transport
Rail transport
Road transport
The overriding propylene

import price for the JVC
asset would therefore be
Spot CFR SEA, which is on
a delivered basis within SEA.
For a Vietnam domestic PP
price, a CFR SEA price +
port and handling charges +
local truck transport will be
used.
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Polypropylene is transported by sea in 20 feet (20 ton) containers. A standard

marine ship carries 1000 containers when transporting freight from overseas. The
berths at the refinery can also be used for exporting polypropylene. Polypropylene is
also exported by road.
The freight cost of containers for domestic lines in Vietnam is more expensive
because of the lack of competition monopoly of transporters. For domestic lines the
standard marine shipload is to be 400 containers.
It is believed that around 90% of the total polypropylene flow from the planned PP
plant shall be transported by sea to the North and South areas of Vietnam and to
export also, when required.
Polypropylene will be transferred to the central areas of Vietnam (Da Nang) by truck
or rail. The above diagram outlines the transportation cost associated with moving
PP around Vietnam.
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PETROCHEMICAL PRICE FORECAST

CURRENT U.S. DOLLARS
Product,
Grade
Indexes, GDP Deflator, Percent

Change from Last Year
Crude Oil, Dubai
Origin
North America
Middle East
Southeast Asia
Southeast Asia
North America
West Europe
Spot, Avg.
Spot, Avg.
Spot, Avg.
Contract Market
Contract Market
US$ / Barrel
US$ / Metric Ton
US$ / Metric Ton
US$ / Metric Ton
US$ / Metric Ton
Propylene
Contract Formula
estimate
Polypropylene GP
Homopolymer
Ethylene
Southeast Asia
Southeast Asia
Spot, Avg.
Spot, Avg.
US$ / Metric Ton
US$ / Metric Ton
Delivery Basis
Index
Deflator
2006 = 1.00
FOB Fateh
CFR SE Asia
FOB SE Asia
CFR USGC
CFR WEP
CFR SE Asia
CFR SE Asia
1995
2.05
0.80
16.11
522
474
462
524
497
913
411
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
1.89
1.67
1.11
1.44
2.14
2.44
1.74
2.03
2.63
2.91
2.57
2.30
2.10
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
0.82
0.84
0.85
0.86
0.87
0.89
0.91
0.93
0.95
0.97
1.00
1.02
1.04
1.07
1.09
1.11
1.13
1.15
1.18
1.20
1.22
1.25
1.27
1.30
1.32
1.35
1.38
1.41
1.43
1.46
1.49
1.52
1.55
1.58
1.61
18.55
18.13
12.17
17.20
26.15
22.81
23.80
26.79
33.63
49.30
60.92
58.00
43.47
40.06
37.82
37.48
37.82
38.66
39.57
40.59
41.79
43.21
44.90
46.79
48.75
50.59
52.26
53.74
55.08
56.35
57.57
58.78
59.98
61.20
62.44
478
502
309
398
487
405
472
572
846
976
992
886
801
719
689
701
729
805
753
739
757
779
804
831
859
886
911
934
956
977
997
1,017
1,038
1,059
1,080
429
452
258
346
435
351
417
517
789
918
932
824
738
655
624
634
661
736
682
667
684
704
727
753
780
805
828
850
870
889
908
926
945
964
983
383
418
281
296
486
376
390
460
688
882
949
919
723
613
579
594
644
713
678
661
676
693
714
736
759
781
801
819
836
853
870
887
904
921
939
384
467
323
323
504
413
416
539
684
885
997
942
784
673
633
619
668
720
685
674
689
706
725
746
768
789
809
827
844
860
876
892
909
925
942
411
458
301
335
488
394
422
519
732
905
970
906
762
661
627
631
674
739
698
684
700
719
740
763
787
811
832
851
870
888
905
923
941
959
977
803
705
469
532
611
532
583
706
947
1,071
1,149
1,151
1,017
914
882
931
996
1,153
1,041
1,001
1,024
1,049
1,078
1,110
1,143
1,175
1,205
1,232
1,259
1,284
1,309
1,334
1,359
1,385
1,411
464
553
358
451
603
450
422
513
930
918
1,004
878
783
700
659
670
716
805
774
766
786
808
834
862
891
920
946
969
992
1,014
1,035
1,056
1,077
1,099
1,121
US$ / Metric Ton
The prices presented herein are strictly the opinion of CMAI and are based on information collected within the public sector and on assessments by CMAI staff. CMAI MAKES NO GUARANTEE OR WARRANTY AND ASSUMES NO LIABILITY AS TO THEIR USE.
This section of the document was compiled by CMAI from information obtained from LGI and PetroVietnam, and it is based on the original feasibility study completed by JSC VNIPINEFT in 2001. CMAI has undertaken to compile and update the original feasibility
study based on the LGI/PetroVietnam gaining permission from the original author.
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3.3
COST COMPETITIVENESS ANALYSIS
Methodology
CMAI has developed cash cost of production models for polypropylene. This model
is based on CMAI price forecasts, and involves the use of CMAIs database of
producer information such as technologies, capacities and feedslates.
CMAI has developed a methodology that ensures that consulting services requiring
insight into competitive production costs can be undertaken to provide the
appropriate conclusions, but still retain the privileged status of the client input
data. CMAI has an extensive database, including a broad range of cost models for
the full spectrum of products it analyzes. This database is routinely updated and is
used for producer comparisons by adjusting data inputs to reflect each producers
situation. Factors considered include, technology elements of local fixed and
variable cost, fixed cost variance due to plant scale and feedstock, and product
value adjustment due to integration and location. CMAI cost analyses are based
upon the following inputs:
Raw material usage and product yield by technology.
Raw material and co-product prices adjusted for location and site specific
factors.
Utilities usage by technology, with prices adjusted by location.
Direct fixed costs.
Estimates of manpower costs.
Maintenance (as factor of replacement capital).
Indirect fixed costs.
Estimates of local taxes and insurance.
Plant overhead (as a factor of direct fixed costs).
Our assessment includes delivered cost analyses to the South Vietnamese market,
identified as one of the target markets for the project. No Duty was included, in order
to compare the competitive position of international producers to the JVC domestic
producer.
The results of CMAIs cost assessment should be evaluated relative to each other as
opposed to absolute. There has been no attempt to incorporate specific producer
data into the cost analysis beyond those factors described in this study.
The following is a graphical overview of the model structure for the PP cost of
production model.
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PP Cash Cost Model

Fixed
Variable
Net Feedstock
CASH COST PRODUCTION
Insurance = n (plant capacity)

Administration = n (plant capacity +
regional costs)
Maintenance = n (plant size)
Labour = n (plant size +regional costs)
Miscellaneous chemicals = n (technology)
Electricity, Fuel, Cooling water = n (regional cost)
Feedstock cost = n (integration level &

regional price)
PRODUCER A
NOTE: Model does not include: interest on working capital, depreciation,
debt services, R&D, corporate overheads
CMAI maintains a
database for the
following
Regional cost
Labour
Electricity
Fuel
Cooling Water
S
GIE
LO
O
HN
TEC
&
I ES
CIT
A
S
P
CA UNIT
L
NA CES
I
GIO
RE CT PR
DU
O
PR
TO
DS
FEE
CK
CMAI has evaluated the cost competitiveness of the proposed JVC Vietnam PP
facility in comparison to other regional competitors. Several important factors are
considered in generating such an analysis:
Feedstock Costs: The single most important factor in developing a total cost. CMAI
examines the source of the monomer to the polymer facility to determine whether
the economics should be based upon a local market price, an integrated cash cost,
or more likely, a mix of the two. CMAIs understanding of buyer-seller relationships
plays an important role in this determination. Furthermore, it is important to be
aware that integrated producers will also have different means of evaluating their
own businesses. Margin that may normally be credited to the cracker may indeed by
forgone in order to provide a lower cash cost to the downstream polymer unit, thus
providing a more competitive price in export markets. Such are the variables in an
evaluation such as this.
Variable Operating Costs: These costs will vary from producer to producer based
upon location. Energy values account for the majority of the differences in costs.
Fixed Operating Costs: While producers have many different methods of
accounting for fixed costs, CMAIs method is to examine the size of the production
unit and the corresponding fixed investment. Fixed costs are modelled as a direct
relationship to the fixed investment (which has location factored in as well as size).
Labour costs are also embedded within this category.
Logistics Costs: CMAI examines several costs, which combined; give a total
delivered cost to the end user. CMAI includes: bagging the polymer, transport to
load facilities, ocean freight, receiving costs and finally, local delivery to customer.
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Duties: Lastly, CMAI uses published import tariff data to determine the applicable
tariffs or duties on the products. No attempt is made to calculate duty drawback or
any other form of credits.
JVC Vietnam PP Cash Cost of Production
CMAI has examined the competitiveness of the proposed JVC PP plant against
imports using the following methodology:
When examined on a delivered-to-customer basis, the issues of freight, handling
and duties must be included in the analysis. Naturally these values fluctuate based
upon market conditions and individual contracts, but the relative value of each is the
key criteria. CMAI identifies several key components of this cost:
Bagging of pellets
Transport / handling to load port
Ocean shipping
Receiving costs
Delivery to end user
Applicable duties
Modelling carried out for the year 2010 was done without the addition of duty in
order to reflect long term competitiveness within an ASEAN FTA, and in general
freer trade globally.
Where CMAI has examined an integrated facility, the propylene monomer has been
transferred at cost from the cracker to the polypropylene unit. This provides an
understanding of the floor costs achievable. The exact mechanisms employed by
individual producers to allocate profitability to these symbiotic units are thereby
rendered moot. A world scale cracker needs the associated derivatives to be
commercially viable in an area such as Southeast Asia where there isnt an active
trade of monomer via pipeline networks (such as the U.S.G.C. or Northern Europe).
Differences in the plant sizes are reflected in the fixed cost components of this
analysis. Again, all companies treat these costs differently and CMAI has therefore
used the industry-accepted practice of relating fixed costs to asset replacement
costs. Labour costs are also embedded within these fixed costs, so areas of lower
rates such as China enjoy an advantage over areas such as Japan, Korea and
Australia.
Variable operating costs fluctuate due to energy costs in the producing country, and
this advantage can be seen in particular when a Saudi Arabian producers costs are
examined.
It is therefore the summation of not only the integrated cash costs of production that
determine the competitiveness of an export-oriented producer, but also the distance
from market and the effects of duties and tariffs as well. A higher cost of production
in the receiving market can be offset with higher logistical costs to import materials
from lower cost production areas.
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Additional advantages that are not quantitative and therefore are not included in this
type of analysis, but may allow the proposed JVC PP plant to maintain a domestic
market share include:
The apparent quality of product

Stated after sales service
Stated reliability of supply & relative distance to customers
Logistical delivery time
PP Delivered South Vietnam

The delivered cash cost of production for the proposed JVC PP unit is based on the
2010 FOB Singapore propylene price forecast. The competitors feedstock costs are
based on the light olefin production cash cost for the respective olefin units, based
on CMAIs internal cash cost model of these producers.
The propylene cost is the single largest factor in determining the cash cost of
polypropylene for each producer, and in this case this is the determining factor for
the estimated position of the JVC PP plant against imports.
This however does not mean that the JVC PP plant would not make money, it only
reflects the fact that if at the bottom of the price/margin cycle, a price war was to
ensue, and the JVC PP plant would be disadvantaged.
Polypropylene Production Cash Cost Delivered South Vietnam
2010
US Dollar per Ton

1000
900
800
700
600
500
400
300
200
100
0
PetroRabigh,
Saudi
SABIC,
Saudi
Arabia
Thai PP,
Thailand
Titan,
Malaysia
Honam PC,
S.Korea
JVC Vietnam
(FOB)
JVC Vietnam
(Blended)
Total Cash Cost
399
492
602
702
743
Logistics
135
135
65
60
75
771
783
805
820
840
110
75
90
25
Fixed Costs
95
78
80
83
25
93
78
86
105
88
Variable Costs
64
45
51
88
55
63
70
67
69
71
Feedstock
105
234
406
71
504
512
513
555
541
636
656
Formosa, ExxonMobil, Reliance,

Taiwan
Singapore
India
~
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4. TECHNICAL DESCRIPTION
4.1
INITIAL DATA
All potential bidders of polypropylene technology selection were provided by the

assignments with initial data description, required performance features, scope of
PP Plant, product quality and required scope of information for each technology.
Initial data used as a base for Licensors proposals and this DFS are given below:
Plant capacity - 150 MTA polypropylene production.
Turndown range: 50 % - 100 %
The plant shall be operated 8,000 hours per year.
Polymerization section: one (1) reactor shall be provided to produce homopolymers
and random copolymers (in future). Plot shall be provided for future impact
copolymer reactor.
A single-train extrusion section shall provide for extrusion of 100% output.
Products: unpainted heat and light stabilized polypropylene (homopolymer) pellets.
Highly effective catalyst, maximum specific consumption of 0.033 to 0.05 kg per ton
of polypropylene.
Duration of polypropylene storage in silos: 5 days.
Shipment: by trucks in 25-kg bags on Euro pallets.
Machine for packing in bags:
Train number:
Design working time:
2 shifts per day

8 hours per shift
5 days per week.
The plant shall include:
Catalyst preparation and storage section

Section for polymerization and production of powdered homopolymer (with
random and impact copolymer production in future)
Polypropylene powder extrusion (granulation) section
Machine for packing product polypropylene into 25-kg bags and palletizing
Machine for automatic pallet wrapping
Silos for polypropylene homogenization and storage
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Product storage including an automatic handling and warehousing system

Machine for producing polyethylene film for manufacturing bags, including
flexographic printing
Machine for producing shrink polyethylene film to wrap pallets with bags
containing polypropylene
Emergency emptying system
Local wastewater treatment unit (treated waste water quality shall allow for
sending to biological treatment facilities).
Automatic fire alarm and fire-fighting system
Unit for thermal incineration of liquid effluents
Plant control room including DCS and ESD.
The product polypropylene will be used for fibers, packaging film production and in
household application.
Feedstock
Polymer grade propylene is sent to the polypropylene plant from the Propylene
Recovery Plant via the pipeline. Processing of imported propylene delivered by
tankers and stored at the Product Tankage (Unit 052) propylene spheres is provided
as well. Conditions at the Battery Limits are as follows:
Pressure: 26 kg/cm2 g
Temperature: Ambient
State: Liquid
Propylene specification:
Grade
Composition:
- Propylene
- Hydrogen
Inerts:
- Propane
- Uncondesables (N2, CH4)
- Ethane
- C4, C5, sat. hydrocarbons
Copolymerizing monomers:
- Ethylene
- Butene
- Pentene
Poisons:
- Acetylene
- Methylacetylene
- Propadiene
Chemical
Polymer
95
20
99.5% by vol. min.

20 ppm by vol. max.
5
300
500
1000
0.5% by vol. max.

100 ppm by vol. max.
10 ppm by vol. max.
5 ppm by vol. max.
3 ppm by vol. max.
5 ppm by vol. max.
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Grade
- Propadiene
- Butadiene
- Green oil (C6 C12)
- Oxygen
- Carbon monoxide
- Carbon dioxide
- COS
- Total sulphur
- Methanol
- Isopropanol
- Water
- Arsine
- Phosphine
- Ammonia
- Cyclopentadiene
Chemical
Polymer
5 ppm by vol. max.
50 ppm by vol. max.
20 ppm by vol. max.
2 ppm by vol. max.
0.03 ppm by vol. max.
5 ppm by vol. max.
1 ppm by wt. max.
5 ppm by vol. max.
15 ppm by vol. max.
2 ppm by wt. max.
5 ppm by wt. max.
Hydrogen containing gas specification:

Hydrogen containing gas from the Refinery Reformer is supplied to PP Plant under
the following conditions:
Pressure
50 kg/m2g
Temperature Ambient
State - Gas
Grade
Composition:
- Hydrogen content
- Inerts (N2, CH4) to balance
Poisons:
- Carbon monoxide
- Carbon dioxide
- Oxygen
- Water
- Total sulphur
- Mercury (electrolysis)
- Acetylene (cracking)
- Ammonia (fertilizer)
Polymer
99.5% by vol. min.
5 ppm by vol. max.
5 ppm by vol. max.
2 mg/Nm3 max.
1 ppm by wt. max.
2 mg/Nm3 max.
10 ppm by vol. max.
5 ppm by wt. max.
Utilities
As a minimum requirement, the following utilities supplies are expected to be
available at plant B.L.:
Low pressure steam (supply pressure 2.7 barg min).
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Demineralized water (supply pressure 6 barg min (*)).

- Total hardness (as Ca) 1 mg/1 max
- Total alkalinity (as CaCO3) 5 ppm max.
(*) In case available supply pressure is lower, buffer pump can be provided.
Cooling water /Jacket Water supply temperature 33 oC max
- Supply pressure 4.5 bar g min
- Return pressure 2.5 bar g )
Instrument air (dust and oil free)
- Dew point = -40 C
Plant air (dust and oil free, no free water)
Nitrogen (dust and oil free)
- Purity 99.9% vol. min.
- Oxigen 5 ppm vol. max.
Carbon monoxide 5 ppm vol. max.
Carbon dioxide 50 ppm vol. max.
- Dew point -65 oC
Electric power (3 phase, 3 wires, 50 or 60 Hz)
- The standard voltage ratings are acceptable.
Raw Material and Utility Consumption
Specific consumption per 1,000kg of Products and Plant Capacity Homopolymer.
Consumption
Raw Material
- Propylene
- PSC Catalyst ZN 111
Special ZN 178
Aluminum Alkyl
Utilities
- LP Steam
- Cooling Water
- Electric Power
(Polymerization)
- Electric Power
(Extruder PKG)
- Nitrogen
Unit
Kg
Kg
Kg
Kg
YD
1004
0.038
Product Type (Sample)

Q
S/YS
S28C/F
1004
0.038
1004
0.032
1004
0.2
0.2
0.2
0.038
0.2
Kg
M3
KWh
360
130
110
330
125
100
330
120
100
330
120
100
KWh
420
380
350
350
kg
12
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Fuel Gas
- LHV
- Mol Wt
Composition (% Vol)
- Hydrogen
- Methane
- Ethane
- Ethylene
- Propane
- Propylene
- Butane
- Butylene
- Pentane and above
- Hydrogen Sulphide
- Nitrogen
(MJ/tonne)
(Kg/Kmol)
Norm
Mol Wt
107,376
6.06
Max
Mol Wt
45,598
54.85
Min
Mol Wt
117,639
2.75
82.42
7.89
4.64
3.44
0.19
0.47
0.39
0.52
0.03
0.0003
0.02
0.00
0.00
0.00
0.00
15.28
1.90
33.59
47.80
1.43
0.00
0.00
96.78
1.19
1.82
0.00
0.09
0.00
0.07
0.00
0.03
0.00
0.02
Climatic Data
Air Temperature
Maximum recorded
Minimum recorded
Maximum monthly average
Minimum monthly average
Design maximum
Design minimum
41.4 C
12.4 C
34.4 C
21.8 C
36.0 C
16.0o C
Relative Humidity
Maximum monthly average
Minimum monthly average
Average monthly humidity
Design maximum
Design minimum
89%
80%
85%
100%
40%
Rainfall
Maximum recorded annual
Minimum recorded annual
Average annual
Maximum recorded in 24 hours
Maximum rainfall intensity
3052 mm
1374 mm
2268 mm
525 mm
40 mm for 10 minute period
60 mm for 30 minute period
108.1 mm for 60 minute period
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Barometric Pressure
Maximum
Minimum
Average
Design
1023.6 mbar
988.8 mbar
1009 mbar
1013 mbar
Environmental data
Extreme moisture tropical climate
Seismicity - Non-seismic area
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Applicable Codes and Standards

Design, fabrication, inspection and testing, construction, pre-commissioning and
commissioning will be in accordance with the following Codes and Standards:
International Codes and Standards

Buyers Codes and Standards
Manufacturer country Standards
Manufacturer Standards
Licensor and Contractor Standards and Specifications
International Codes and Standards specified in the below table are proposed for use
in the Project. Vendor and Manufacturer country Codes and Standards can be used
when their application is justified from a technical and economic point of view.
Licensor and Contractor Standards, Specifications, Practices and Procedures shall
be applied for specific equipment items and activities at site.
Codes and Standards applicable to the equipment and materials will be defined in
Contractor Specifications.
The following International Codes and Standards, but not limited to, will be selected
for Contractor Scope of Work and Supply:
1
Engineering Standard
2
3
Material Specification
Pressure vessels and
boilers Code
Heat exchangers
Pumps
Compressors
Another Machines
Piping
Tanks
Instrumentation
Electrical
4
5
6
7
8
9
10
11
12
13
14
Hazardous
classification
Civil code
Pressure
devices
area
relieving
Detail
Engineering
Contractor
Standards, Vietnamese National
Standards, Buyers Codes and
Standards
ASTM
ASME
TEMA, ASME
API, Manufacturer Standards
ANSI
API
IEC, ISA
NEC,
IEC,
CELENEC,
BS,
Vietnamese National Standards
NFPA
UBC
API
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4.2
LICENSOR OFFERS. POLYPROPYLENE TECHNOLOGY DESCRIPTION
4.2.1
UNIPOL Process Description
Dows Unipol technology has been successful in licensing a substantial amount of

new polypropylene technology over the last 10 years. Some of the success is likely
due to the strength of the Unipol technology in linear polyethylene. With its strong
patent position, the Unipol process is the only totally gas phase process that uses
the fluid bed technology. Shell (SHAC) originally developed the high activity
catalysts, but Dow now owns the catalyst rights. Dows efforts in metallocene for
polyethylene have brought metallocene capability to polypropylene. Unipol is also
known for its extensive range of resins with different melt flows and for product
consistency. This technology is probably not as suitable as others if the product
slate involves many product transitions. Shortcomings can be helped by careful
planning of the product wheel (schedule of the sequence of resin types).
The process flowsheet shown above is for the gas phase polyethylene process. Dow
polypropylene process is very similar.
Advantages of the Dow Process:
Dow has a big brand name in Europe and Asia
Licensing fees are marginally lower
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Extensive range of resins

Raw Materials Purification Section
Polymer grade liquid propylene (99.6% wt.) from the Intermediate Storage is
pumped to the Raw Materials Purification Section. In this Section propylene is dried
in series on the molecular sieves for H2O removal and catalytic treatment from
remaining COS traces. This guard is required, as all polymerization catalysts are
sensitive to certain impurities available in the feedstock.
Hydrogen containing gas from the Refinery is supplied to PSA Unit where this gas is
recovered up to hydrogen content of 99.9% mol., compressed and further supplied
to the reaction area.
Nitrogen from the Oxygen and Nitrogen Separation Station is treated to remove
minor (ppm) O2, H2O and another polar impurity, compressed and further supplied to
the reaction circuit, low pressure nitrogen is supplied to another process area.
Ziegler-Natta catalysts of the 3-rd and the 4-th generation on titanium base (SHAC
Series 200 and 300 catalysts) in the form of slurry in mineral oil, co-catalyst
concentrated TEAL (100%, approx.) and donor stereomodifier are supplied from
the Refinery Chemicals Store in vendor containers (drums, etc.) to feed drums with
further accurate metering to the reaction area.
Reaction Section
Reactor circuit comprises fluidized bed reactor, cycle gas compressor and cycle gas
cooler.
Propylene, hydrogen, catalyst, co-catalyst and donor are fed to the reactor where
polymerization takes place under the following conditions:
Pressure: approx.
3.5 MPa;
Temperature:
60-70oC
Residence time: approx. 1.25 hours
The cycle compressor circulates reaction gas through the catalyst bed in the reactor
providing required fluidization and heat of reaction removal. Reaction heat is
removed from the circulating gas in water cooling shell-and-tube heat-exchanger by
circulating propylene cooling and partial condensation. Fluidized bed provides
proportional mass and heat exchange. Produced polymer has a uniform particle size
distribution.
The polymerization reaction can be stopped, if necessary, with a kill gas (CO)
injection (covered by Reaction Section equipment).
Polymer powder discharge from the reactor is provided automatically via product
discharge system as per the height of fluidized bed. The product shall be separated
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from entrained monomer in the in sequent chambers having different pressure and
further supplied to the purge system.
Polymer Degassing and Vent Gases Recovery Section
Polymer leaving the reactor contains non-reacted hydrocarbons.
hydrocarbons are purged from the polymer and recycled to the process.
These
Polymer is supplied to the separator where it is purged with counterflow recycle

nitrogen to remove hydrocarbons.
Vent gas flowing overhead separator is supplied to Vent Gas Recovery system via
the filter. In this system the gas is compressed and chilled to condense monomers.
Light gases without removed condensed hydrocarbons are discharged to the flare.
Condensed hydrocarbons are supplied to the simple tower for rough separation.
Tower overhead rich propylene stream is recycled to the reaction area, tower bottom
propane rich stream can be recycled to the process or utilized as a fuel.
Polymer powder from the separator is supplied by rotary feeder to the purge bin for
entrained monomers final removal and catalyst reminder deactivation.
Fresh nitrogen is supplied to the bottom of purge bin to vent hydrocarbons from
polymer. Purge nitrogen containing a small amount of hydrocarbons is routed to
nitrogen/hydrocarbons separation with further recovery of that stream. A small
amount of steam is fed to the bottom of purge bin to deactivate any reminder of
catalyst and co-catalyst.
Polymer powder from the purge bin is supplied to Additive Handling Section and
further to Extrusion and Pelleting Section.
Additive Handling Section
Facilities are provided for handling both, solid and liquid additives. Solid additives
are fed to the pelleting system in the form of mastermix. Mastermix is made in a
batch process by diverting a small quantity of polymer from the common stream.
This small stream is fed to the water- jacketed vessel where it is fluidized with
nitrogen and cooled as required to facilitate blending with solid additives. The cooled
polymer flows by gravity to the horizontal ribbon blender. Solid additives are charged
by hand and blended with the polymer. Resulted mastermix is fed to the extruder
feed bin.
Liquid additives are transferred from the drums by gravity to the storage tank and
pumped to the extruder feed bin.
Extrusion and Pelleting Section
Polymer powder and prepared additives are supplied to the extruder feed bin. In the
extruder they are melted, homogenized, gelled, filtrated and pelletized.
Pelleting is provided in the subaqueous pelletizer.
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Polymer pellets are run away by circulation (demineralized) water to the separator
for polymer and water separation.
Separated water is collected in the drum and then recycled by pump to the pelletizer.
Polymer pellets from the separator are supplied to pellet classifier. On-spec pellets
are conveyed by air to blending and storage silos, off-spec pellets are collected in
the container. Polymer pellet blending silos are provided to obtain homogeneous
polymer batches.
Storage capacity of polymer storage silos provides a possibility to store the product
within 5 days maximum.
Bagging and Palletization Section
Commercial polypropylene is bagged automatically into 25 kg PE bags. The bags
are automatically palletized and wrapped by PE shrink film and transported to the
warehouse by a forklift.
The PP Plant comprises facilities for PE bags and shrinks film production.
Emergency Discharge System
In case of emergency (e.g. power failure) recycle gas shall be purged out from the
reactor and discharged to the Refinery flare header via blow-down drum and cyclone.
Effluent Treatment System
Oily water which may contain traces of hydrocarbons due to possible oil leaks at the
PP plant is routed to the oily water pit via oily water sewage.
Water from paving which may be contaminated with solids, mainly from the
Extrusion and Pelleting Section is routed to the water pit.
Water from the pits after oil skimming and polymer powder separation shall be
pumped out to the Refinery treatment facilities.
Effluents Disposal
Effluent disposal section covered by the PP Plant is provided for effluents
incineration.
Spent oil from the PP Plant and non-diluted laboratory wastes (acetone, xylene, etc.)
are to be combusted in the incinerator on intermittent base. Effluents are to be
delivered to the incinerator in bottles by trucks. Flue gas filtration from solids (ash,
polymer powder) is provided at the bag filter for environmental protection purpose
prior to flue gas discharge to incinerator stack.
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4.2.2
SPHERIPOL Process Description
Basells Spheripol technology is supported by one of the strongest R&D groups in

the industry and the world. As such, Basell has excellent catalysts that are
continually being modified and improvements incorporated into their operations.
Basell has such a strong position in Ziegler-Natta catalyst systems that it has not
emphasized metallocene catalysts as much as some other polypropylene producers.
With the merger of Targor and Montell to form Basell, its metallocene position was
strengthened by the efforts of Targor in this area. The Spheripol technology offers a
broad range of products utilizing its multiple reactor capability. As the global leader
in capacity, Basell is in a better position to provide resin for market seeding and
actually using some of the new units material in the markets.
In the Basell process, a homogeneous mixture of polypropylene spheres is

circulated inside the reactor loop. If the production of random copolymer or
terpolymer is desired, ethylene and/or butene-1 are introduced in small quantities
into the loop reactor. This process achieves very high solid concentration (>50% by
weight), excellent heat removal (by water circulation in the reactor jacket) and
temperature control (no hot spots). The resulting polymer is continuously discharged
from the reactor through a flash heater into a first-stage de-gassing cyclone.
Unreacted propylene from the cyclone is recovered, condensed and pumped back
into the loop reactor.
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For the production of impact and specialty impact copolymers, polymer from the first
reactor is fed to a gas-phase fluidised bed reactor that operates in series with the
loop reactor (this gas-phase reactor is bypassed when homopolymer or random
copolymer is produced). In this reactor, an elastomer (ethylene/propylene rubber)
formed by the introduction of ethylene is allowed to polymerize within the
homopolymer matrix that resulted from the first reaction stage. The carefully
developed pores inside the polymer particle allow the rubber phase to develop
without the sticky nature of the rubber to disrupt the operation by forming
agglomerates.
Fluidisation is maintained by adequate recirculation of reacting gas: reaction heat is
removed from the recycled gas by a cooler, before the cooled gas is recycled back
to the bottom of the gas-phase reactor for fluidization. This type of gas-phase reactor
is efficient because it maintains a high degree of turbulence in order to enhance
monomer diffusion and reaction rates, and offers an efficient heat removal system.
Some specialty products, incorporating two different ethylene content copolymers,
require a second gas phase reactor in series.
Advantages of the Basell process
Basell has a big brand name and is the most focused of all the potential
licensors on PP licensing.
Most experience in the markets
Basell have been the driver for polypropylene growth in the past and are
focused to do so for the future.
Basell have been very successful in catalyst as well as polypropylene grade
developments.
The following describes in more detail the process characteristics:
Spheripol plant generally composes of the following process sections:
- Sect. 100:
Co catalysts and Catalyst Preparation

Catalyst Metering System
Co catalyst Washing Circuit and Liquid Additive Feeding
- Sect. 200 :
Prepolymerization
Bulk Polymerization in Loop Reactor
- Sect. 300 :
Polymer Degassing
Propylene Scrubbing and Storage
- Sect. 400 :
Gas phase copolymerization (option)
- Sect. 500 :
Polymer Steaming
Polymer Drying
- Sect. 600 :
ISBL Process Facilities
- Sect. 700 :
ISBL Monomers Purification
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- Sect. 800 :
Additivation and Extrusion plus, for reference only:
- Sect. 900:
PP pellets blending, bagging and palletizing (to be part of

engineering scope)
Co catalyst and Solid Catalyst Preparation and Metering

(See flow sheet No. 1A/1B)
Co catalyst 1, an electron Donor, available in drums in the liquid state, is transferred
into D110 A/B tanks and there is diluted to improve accuracy in metering with HC oil.
The Donor solution is delivered to catalyst precontacting by P104 A/B metering
pumps.
Co catalyst 2, TEAL, available in cylinders at 100% concentration, is discharged to D
101 tank. From here it is fed to the catalyst activation unit (precontacting) by P 101
A/B metering pumps.
HC oil and grease, are discharged into the heated tanks D 105 A/B, mixed and then
transferred to catalyst mud preparation unit X101, where the Solid Catalyst
Component is fed from drum by hoist Z 104. The solid catalyst component is
dispersed in the HC oil, then adding grease, at a prefixed temperature and then with
continued agitation, cooled down to set the dispersion into a stable mud. Low
temperature is maintained during metering of the solid catalyst mud to catalyst
activation unit X 101.
Catalyst Activation
(See flow sheet No. 2)
Catalyst activation unit X 201 consists of two steps. Catalyst mud is first mixed with
both co catalysts in a precontacting pot. Then the active catalyst mixture is mixed in
line with chilled liquid propylene and then held for a short residence time in the small
loop reactor where additional propylene is fed and a prepolymerization takes place
at low temperature in order to ensure morphology control by adopting mild
conditions during the very first polymerization step.
TEAL washing circuit Liquid Additive Feeding System
(See flow sheet No. 1A)
HC oil is still used to wash piping and equipment containing TEAL in case of
maintenance.
Return HC oil from washing is sent for neutralization to D 607 through pump P 102.
A two-drum system for liquid additive storage and metering, with dewatering facilities
ensures reservoir for continuous metering of dry chemical when necessary and for
all discontinuous feeding points, thus ensuring protection against catalyst activity
decay due to water presence in polymerization and against the risk of generating
Alumina in low pressure degassing (items D112 D115 P110 P111).
Bulk polymerization
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Polymerization is performed in liquid phase in loop-type reactor. The prepolymerized
catalyst slurry from X201 enters the loop reactor R 201 with additional propylene and
hydrogen for molecular weight control. A portion of propylene polymerizes while the
remaining, in the liquid state, serves as diluent for the solid polymer. Circulation
pump P 201 maintains high velocity and very uniform mixing inside reactor.
The slurry density is kept constant at 50-55% wt of polymer. During the production of
random copolymers or terpolymers, ethylene (and/or butene-1) is fed to the reactor
at a controlled ratio according to the desired comonomer(s) content. The heat of
reaction is removed in E 208 by circulating water into the jacket through pump P 205.
Pressure, temperature, and slurry density are monitored and automatically controlled.
Reactor pressure is automatically stabilized and controlled by means of a
pressurization drum D 202 in order to guarantee the required slurry subcooling.
Spheripol design grants high hydrogen response, excellent morphology control, high
flexibility of the cooling circuit, and a more accurate control and operability on a
much wider range of products families (very broad MWD and very high fluidity
grades are a typical example of increased capability through new catalyst families).
The polymer slurry is continuously discharged from R 201 through a steam jacketed
pipe, so as to ensure monomer vaporization during polymer conveyance to the
cyclone type drum D 301, which operates at a pressure in the range of 15-18 barg.
Polymer degassing and steaming
(See flow sheets No. 3A/3B/5A)
When producing homopolymers, random copolymers or terpolymers, the polymer
collected on the D 301 bottom is conveyed to the bag filter F301, which is
maintained at approximately atmospheric pressure, in order to separate the
remaining unreacted monomer(s) from the polymer.
The relatively small stream of unreacted monomer, after scrubbing in T 302 column
to separate any entrained polymer fines, is compressed by the PK 301 compressor
and then conveyed to the propylene recovery section.
High pressure propylene degassing section ensures enhanced monomers stripping.
Higher degassing rate and outlet temperature allows for lower flow rates to the
recycle compressor, high efficiency in the steaming unit and lower specific energy
consumption in extrusion step resulting from higher temperature on polymer feed.
From F301, the polymer powder is discharged by gravity to the steaming unit D 501
where live steam is injected to complete removal of any dissolved monomer and
propane and to deactivate catalyst residual activity so as to improve product quality.
Steam is condensed and discharged from the steamer to the sewer after passing
through the scrubber T 501. Residual unreacted monomer(s) and propane,
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compressed by means of PK 501, can be sent to battery limits for propane purging,
after water removal in PK 502 (if necessary for upstream recovery conditions).
Polymerization of Heterophasic Copolymers, Polymer degassing and Ethylene
Stripping (future option)
(See flow sheets No. 4)
When producing heterophasic (Impact and Specialty Impact) copolymers, the
polymerization is carried out in two different phases. In this case, the homopolymer
discharged from the flash drum is fed to the first gas phase reactor R 401.
In the gas phase reactor a rubber ethylene-propylene phase is added to the
homopolymer matrix (coming from bulk polymerization carried out inside loop
reactor) to improve impact resistance of the final material.
Gas phase reactor R 401
The rubber phase is produced in a vertical cylindrical reactor fed with homopolymer
matrix from D 301. Polymer is fluidized by means of reacting gas recycled by
compressor C 401 and distributed under the polymer bed.
Gas surface velocity is in the range of 0.7 m/s and operating conditions of the gas
phase reactor are the following:
pressure: 14 barg
temperature : 80/90oC
average residence time: 0.3 hours
average bed density : 300/350 kg/m3
The copolymer produced is bottom discharged under reactor level control. New gas
phase rector design without agitator has been introduced in the new Spheripol
process plant of BASELL for commercial testing (started-up at end of 1998) and
included in process design package following successful experience, while extreme
reliability has been achieved in process control due to a new design in gas phase
sampling system.
Ethylene stripper
Polymer from F 301 bottom is discharged to steaming and drying section. Filter top
stream is recompressed by PK 301 and fed, after cooling in E 403, to ethylene
stripper T 402. Ethylene-rich top gas is recycled to R 401 while propylene/propane
bottom joins D 301 gas stream to T 301.
T 402 condenser temperature set is adjusted in order to keep the desired inerts
content inside R 401.
By proper configuration of T 402 condenser, the ethylene stripping tower can also be
used as butene-1 recovery tower at the end of terpolymer runs (gas phase units not
in operation), in order to shorten transition time.
Polymer drying
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(See flow sheet No. 5B)

Whichever run, the polymer is discharged from the steamer to the fluid bed drying
unit D 502 where removal of surface water is effected by means of hot nitrogen. The
wet nitrogen is sent to T 502 column to separate entrained powder and condense
water before recycling it to the dryer. Circulation of nitrogen is maintained by C 502
blower.
Dry polymer is transferred to the finishing unit surge silos by nitrogen closed loop
Pneumatic conveyor PK 801.
Propylene scrubbing and feed tank
(See flow sheet No. 3B)
Unreacted propylene and propane stream recovered from the flash drum D 301,
together with the discharge of compressor PK 301 (when producing homopolymers
and random copolymers) or with T 402 bottom stream (in case of gas phase reactor
operation), are sent to the propylene scrubber T 301 in order to separate any trace
of entrained powder from the recycle stream.
Vapors from T 301 are then condensed in E 301. The condensed recycle stream is
collected into the propylene feed tank D 302 which also receives the fresh propylene
make-up. High head centrifugal pumps P 301 A/B ensure the liquid
propylene/propane feed to bulk polymerization unit.
The vaporizer E 302 keeps a constant overpressure in D 302 to avoid pump P 301
A/B cavitation; while pumps flow rate is kept at design value acting on flow bypass
through E 305 cooler
I.S.B.L. Process facilities
(See flow sheets No. 6A/6B)
Condensated steam recovery
All the condensated steam recovered from the PP unit is collected in D 606 and sent
to battery limits by pump P 603 or used as make-up water in cutting water tank D
806.
Reactors blow down
Two blow-down vessels are provided to collect polymer from emergency discharges
to flare. The cyclone S 601 and the third blow-down D 603 are also provided as a
guard to separate possible polymer entrainment from any vent sent to the flare
header. Polymer recovered in the blow down is treated with steam, and dried with
nitrogen before discharging in box, generally to be sold as off-spec product.
Refrigeration unit
A small flow rate of refrigerated water is required in the plant. The chilled water is
prepared in the plant through PK 601 (propylene refrigeration pack.), stored in D604
and pumped through P601A/B.
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Refrigerated water circuit configuration is a pressurized one in order to improve

pumping efficiency.
Nitrogen compressor
If not available at B.L., a nitrogen compressor can be provided I.S.B.L. for high
pressure nitrogen supply during pressurization tests.
Instrument Air buffer drum
On line back up is provided I.S.B.L. for Instrument Air in order to guarantee at least a
30 minutes supply in case of failure, which enables controlled plant shut-down
operation.
Centralized oil system
HC oil used in several process units Centralized storage and distribution system
provides improved and cleaner plant operation and ensures water removal.
Exhaust HC oil treatment
The section works discontinuously. From TEAL circuit and T 302, the HC oil polluted
by cocatalyst 2 is collected into D 607 vessel. Liquid additive used for neutralization
is added to D 607 in semi batch mode to deactivate trialkylaluminium.
Temperature is controlled by water circulation in the jacket.
Oil is then disposed from D 607 bottom into drums and normally sent to incineration.
Waste water treatment
Waste water from process plant is collected in the underground basin Z601 (fllow
sheet No. 6C), where it is separated from oil and powder contaminants and then is
sent to the centralized biological treatment facility OSBL by means of vertical pumps
P610 A/B.
Contaminated rain or washing water from polluted areas is also reaching the basin
through a diverting box, which diverts such water to the clean sewer when the level
in the basin reaches a maximum.
When level inside the collection basin is high, P610 A/B alternatively and
automatically, activated by level control inside the basin, start to send the waste
water to B.L. Pumps can be operated manually by means of a push button, either
separately or together.
Z601 internal baffle keeps water normal operating level with a retention time high
enough to obtain good sedimentation. The volume between maximum and normal
level is calculated in order to ensure at least 10 min of collecting capacity in case of
heavy rain or fire fighting intervention.
The basin is located underground and must be opened to atmosphere for safety
reasons.
The area shall be classified for Unconfined Vapor Claud Explosion (UVCE) due to
potential presence of organic vapors. Underwater steam injectors ensure winterizing.
Floating polymer powder can be removed manually from water surface.
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Additives feeding and extrusion

In most typical finishing unit configuration presently adopted, PP polymer from the
dryer D502 is fed to intermediate silos D 802 on top of the extrusion building by
means of nitrogen closed loop pneumatic haulage PK 801.
Polymer powder is continuously discharged from the surge silo through W 801
metering device and SF 801 screw feeder, to the extruder.
Additives (pure liquid and solid or solid masterbatches) metering units are designed
to improve additivation section flexibility and quality reproducibility. Additives are
continuously proportioned, through suitable metering devices, to the extruder
according to the desired stabilization recipe.
In EX 801 extruder, polymer and additives are homogenized, gelled, extruded and
granulated through underwater cut.
After granulation the polypropylene pellets are fed to D 805 dryer, where water is
separated, and then to S 803 screen. After screening for coarse and fines
elimination, polypropylene pellets are fed to the pneumatic haulage PK 802
conveying them to blending and storage. Demineralized water is collected in D 806
basins and recycled by means of P 801 A/B pumps to the extruder
head after filtering in F 801 A/B and cooling in E 803.
Monomers purification (subject to feedstock specs confirmation)
Assuming PP production facilities being part of an integrated complex, monomers
purification units are typically included in the olefins production plant. Depending on
specifications of monomers available at PP B.L., I.S.B.L. facilities can be installed as
a guard for light ends, and most frequent poisons, such as: COS, and water for
propylene and Sulfur, CO, CO2 and water for ethylene (random copolymers and
future impact copolymers production, if applicable).
A booster pump for propylene as well as compressors for ethylene and hydrogen, if
necessary, can be provided I.S.B.L. Need for raw materials purification will be
confirmed based on final determination of the available feedstock composition.
Polymer pellets homogenization and storage
Detailed configuration of homogenization and storage facilities is highly affected by
local conditions (namely: bagging frequency and shipping characteristics) and is part
of engineering scope.
For reference only, the following paragraphs summarize some general configuration,
to be discussed and confirmed during KOM.
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Assuming continuous bagging on two shifts, 7 days per week, bagging section would
consist of one bagging line 1800 bags per hour (tubular film machines), a standard
configuration for homogenization section would includes 4 blenders 600 m3 each for
both lines (1 silo enable about 12 hours storage, one silo is filling, one silo is
emptying while one empty silo can be kept as additional capacity or for grade
change).
The number of storage silos merely depends on the plant production rate to be bulk
loaded (if any) and from the actual stock policy. For lot characterization consistency
the size of storage silos is usually balanced to the size of blending silos,
corresponding to an average of 12 hours of production for PP line.
Product bagging, palletizing and storage facilities specifications are out of Licensor's
scope and do not involve any process design consideration. Based on the definition
of the plant output, the stock size and logistic optimization vs local constraints, it is
typically Contractors scope to select a proper layout and to procure standard
equipment available on the market.
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4.2.3 NOVOLEN Process Description

ABB Lummus has another gas phase process, Novolen, which has had recent
success in new licensees in Saudi Arabia and South Africa. The vertical reactor
process uses agitation, rather than a fluidized bed, which allows for somewhat
quicker transitions from one polypropylene resin type to another. When the Targor
polypropylene process was acquired by ABB and Equistar, technology capabilities
were included and supported by Equistar. The early BASF/Targor units were
generally smaller than Unipol units, which raised the question of size limitation for
this process because of the mechanical agitation. The limitations appear to be
overcome as new units have been announced for Saudi Arabia.
Propylene, ethylene and any other required comonomers are fed into the reactor(s).
Hydrogen is added to control the molecular weight. Polymerization conditions
(temperature, pressure and reactant concentrations) are set by the polymer grade
being made. The reaction itself is exothermic and reactor cooling is achieved by
flash heat exchange, where liquefied reactor gas is mixed with fresh feed and
injected into the reactor; flash evaporation of the liquid in the polymer bed ensures
maximum heat exchange.
The polymer powder is discharged from the reactor and separated in a discharge
vessel at atmospheric pressure. Any unreacted monomer separated from the
powder is compressed and either recycled or returned to the upstream olefins unit
for recovery. The polymer is flushed with nitrogen in a purge vessel to strip it of
residual propylene. The purge vessel offgas is passed to a recovery system; the
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powder is transported to powder silos and is then converted into pellets that
incorporate a full range of well-dispersed additives.
Advantages of the Novolen process:
Grade changes faster than Dow process
Products cover a broad range of applications
Small reactor volume minimizes residence time
QP can negotiate a favorable deal with ABB Lummus for the EPC contract
The disadvantage with the Novolen process is that the stirred bed reactor is more
prone to mechanical failure which may cause the operating factor to be lower.
Raw Materials Purification Section
Co-catalyst concentrated TEAL (100% approx.) and donor stereomodifier are
supplied in vendor containers (drums, etc.), to feed drums with further metering to
the polymerization reactor.
Mineral oil from the drums is fed to the drum which is used as a hydraulic seal.
Atmer 163 catalyst deactivation additive as well as liquid and fusible additives are
supplied in vendor containers (drums, etc.) to feed drums with further injection to the
extruder by metering pumps. Fusible additives are to be preheated up to melt flow
temperature prior to supply to the feed drum and the drum itself is traced as well to
maintain the additives in liquid form.
Polymer grade liquid propylene (99.6% wt.) from the Intermediate Storage is
pumped to the Raw Materials Purification Section. In this Section propylene is dried
in series on the molecular sieves for H2O removal and catalytic treatment from
remaining COS traces.
Nitrogen from the Oxygen and Nitrogen Separation Station is treated to remove
minor (ppm) O2, H2O traces. There are two grades of pressure for nitrogen
consumers at the PP Plant, some portion of nitrogen is supplied to low-pressure
nitrogen consumers, and another portion of nitrogen is compressed up to approx.
100 barg and fed to the surge drum with further supply to the reactor when required.
Polymerization and Polymer Degassing Section
Ziegler-Natta catalyst of the forth generation PTK4 is supplied in vendor containers
to catalyst preparation unit with its further metering to the reactor.
Purified propylene is also fed to the vertical reactor with mechanical agitator. Cocatalyst, donor and compressed hydrogen containing gas are fed upstream the
reactor. Continuous propylene polymerization takes place in the reactor under the
following conditions:
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Pressure:
Temperature:
Residence time:
approx. 2.2-3.0 MPa;

65-90oC
approx. 1.0-1.2 hours
Heat of polymerization reaction is removed by circulating monomer. Circulating

monomer from the top of the reactor is passed cyclone and filter, partially condensed
in water condenser and collected in the separator. Circulating gas is cycled by
compressor from the separator to propylene make-up line. Small portion of
circulating gas from the top of reactor is discharged via cyclone to the Refinery flare
for inerts removal.
Liquid monomer from the separator is pumped to the top of reactor where monomer
evaporates with polymer bed cooling.
Polymer powder and removed monomers are cyclic discharged from the top of the
reactor to discharge drum via discharge valve. Monomer separation from polymer is
provided in the discharge drum. Separated monomers are supplied to monomer
recovery unit via cyclone and filter.
Polymer powder from the discharge drum is fed to the purge bin by two rotary
feeders. In this bin monomer reminder (mainly propylene) is vented by nitrogen.
Powder purge prevents hydrocarbon accumulation in the powder conveying system.
Purge bin off-gas is routed to the membrane where monomer is separated from
nitrogen. Nitrogen is recycled to the discharge drum and separated monomer to
monomer recovery unit.
Polymer powder from the purge bin is conveyed by nitrogen to powder silos.
Buffer Silos for Polymer Powder and Peroxide Preparation
Polymer powder is collected in two silos. One silo is used as a buffer when extruder
shutdown and another one when polymer grades changing.
Polymer powder from the silos is supplied to the extrusion.
Peroxide (an additive to reduce polymer molecular weight) is fed from the bottles to
feed drum with further metering to the extruder.
Extrusion and Pelleting Section
Screw feeder via metering device supplies polymer powder from buffer silos to the
extruder feed bin to be mixed with pelletized and solid additives. Feeder controls
supply of pelletized additive from feed drum to the extruder feed bin.
Solid additives are fed from discharge hopper to two parallel blenders with their
further metering to the extruder feed bin. Parallel blender is provided to obtain fast
additive change in case of polymer grade changing.
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Liquid and fusible additives, atmer and peroxide are metered to the extruder directly.
Polymer powder and additives are melted, homogenized, gelled and filtrated in the
extruder.
A small quantity of demineralized water is injected to the extruder for catalyst
reminder deactivation.
Any fugitive reminders (water, reaction by-products with low molecular weights,
nitrogen, and propylene) are removed from polymer melt in the extruder by vacuum.
for polymer and water separation and further to air drier.
Separated water is collected in the drum and then recycled by pump to the pelletizer
via cooler.
Polymer pellets from the drier are supplied to pellet classifier. On-spec pellets are
conveyed by air to the deodorizing section, off-spec pellets are collected in the
container.
Deodorizing Section, Vacuum Unit, Blending and Storage Silos
Polymer pellets upstream deodorizer are separated from the conveying air in
cyclone and supplied by two screw feeders to the deodorizer. Nitrogen is injected
between the feeders for safety reason.
Any fugitives and odorants are removed from polymer pellets in the deodorizer by
nitrogen and steam. Deodorizer steam jacket is provided to prevent steaming gas
condensation. Steaming gas is supplied to the vacuum unit from the top of
deodorizer.
Polymer pellets from the bottom of deodorizer are supplied by screw feeder to the air
cooler where they are cooled by air directly. Cooled pellets are supplied to vibration
screen, agglomerates separated at this screen are to be crushed and recycled to the
main stream. Polymer pellets are conveyed by air from the intermediate drum to the
blending silos.
Vacuum unit is provided for deodorizer and extruder degassing. Deodorizer vapors
and the majority of extruder vapors are liquefied by compressing and cooling, and
any extruder vapors reminder is separated in the separator and discharged to the
flare.
Liquefied vapors are supplied to the phase separator where water is separated from
monomers and discharged to treatment facilities. Monomers are collected in organic
wastes tank and intermittently pumped out to incineration.
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Polymer pellets are blended in two blending silos provided to get homogeneous
polymer batches.
Polymer pellets storage silos serve as buffers between production sections and
bagging lines. Storage capacity enables to store the product within 5 days maximum.
Circulating Propylene Recovery Unit
Vent gases from the polymer degassing section are supplied to TEAL deactivation
tower where TEAL reminder is deactivated and removed by circulating absorbent.
Spent absorbent is used as a fuel.
Deactivation tower overhead vent gases are supplied by compressor to deethanizer
in order to get propane/propylene cut.
Deethanizer overhead vapors are partially condensed in water condenser and
supplied to separator where they are separated to the vapor phase that is
discharged to the flare, and liquid one that is pumped to the deethanizer as a reflux
stream.
Deethanizer bottoms are fed to the propane/propylene splitter.
Propylene and tower overhead light gas reminder via receiver are fed by compressor
to cooling and further condensation in water cooler and splitter reboiler, then
condensed gas is collected in splitter reflux drum. Some portion of the condensed
gas is fed back to the splitter and another portion (recovered propylene) is pumped
to the raw materials purification section.
Splitter bottoms are discharged to incineration.
The PP Plant comprises facilities for PE bags and shrink film production.
The system comprises vessels to collect all process discharges. Provision for liquid
evaporation in case of condensation is provided. Removed polymer powder
collected in the emergency discharge system is discharged to the containers after its
treatment with steam and nitrogen mixture.
Gaseous vents are supplied to the Refinery flare system.
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Effluents Disposal
Effluents disposal section covered by the PP Plant is provided for effluents
incineration.
delivered to the incinerator in bottles by trucks. Flue gas filtration at the bag filter is
provided for environmental protection purpose prior to flue gas discharge to
incinerator stack.
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4.2.4 INNOVENE Process Description

BPs Innovene technology has a unique approach to making polypropylene. Rather
than having standup reactors, the reactors are horizontal. The agitated plug flow
type reactor has one of the shortest transition times, with consistent product
uniformity. BP has its own catalyst system that is supplied to its licensees by
Englehard. The technology appears to be capable of producing a broad range of
products from general purpose homopolymers to high impact copolymers. The
second reactor used for producing impact copolymers is the same size as the first
reactor, which is different from most of the other processes. It might be possible
with the right piping alignment to have the capability of producing polypropylene as if
you had two separate units. BP provides extensive R&D funding to maintain a
strong technology position for its Innovene process.
A large polypropylene
producer in the U.S. switched from another technology to a process very similar to
Innovene when it added new capacity because it felt that the new process made
better impact copolymers.
Advantages of the Innovene Process

Simple and efficient process design and operation that leads to high onstream time
Very quick transition time due to the plug flow process as well as very small
amount of off-spec material made.
Attractive economics with low investment and operating costs
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Easily and economically scaled up and debottlenecked to higher plant

capacities
A single catalyst to make all products
Rapid product transitions (and thus minimal off-grade products during
transition)
Excellent product consistency, superior product properties, wide application
range and high potential for future product development
The Innovene polypropylene resins have a have a very sharp and very narrow
molecular weight distribution. While this results in superior quality resins, running the
resin especially for BOPP film has been problematic for converters. The other issue
with Innovene process is the catalyst development is not in-house.
Section 100: Catalyst Feeding
Ti-Mg catalyst CSTR of the 4-th generation in the form of slurry in mineral oil is
supplied from the Refinery Chemicals Store in vendor containers (drums, etc.) to
feed drums with further accurate metering to the reactor. Co-catalyst concentrated
TEAL (100% approx.) and donor stereomodifier are metered to the reactor from
vendor drums directly.
The feed rate and the ratios of the tree components are controlled accurately to
achieve the desired production rate and make the desired product grades.
Section 200: Polymerization
Purified raw propylene, catalyst, co-catalyst, donor and properly compressed
hydrogen containing gas (92,27 % mol. of hydrogen) supplied from the Refinery are
fed to the horizontal reactor with mechanical agitator. In the reactor polymer particles
are formed continuously by gas phase polymerization of propylene under the
following conditions:
Pressure:
Temperature:
Residence time:
approx. 2.0 MPa

70 oC
approx. 1.4-1.5 hours
All particles in the reactor are not only equally stirred over the whole reactor volume,
but they also move under the same velocity and residence time in the reactor is also
the same for all particles. All these features result in product uniformity.
Evaporated monomer leaving overhead the reactor is mixed with recovery monomer
and after cooling and partial condensation in water cooled heat-exchanger is
supplied to the separator for blending with make-up propylene from the Propylene
Purification Section.
Liquid propylene from the separator bottom is recycled by pump to the top of the
reactor providing required reaction heat removal by propylene evaporation. The
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minor flow of liquid from the separator is pumped out from pump discharge to the
battery limits for inerts removal. Liquid flow is controlled to achieve a desirable
temperature profile in the reactor.
Recycle gas from the top of separator is combined with hydrogen and compressed
to the reactor bottom.
The polymerization reaction can be stopped, if necessary, with a kill gas (CO)
injection (covered by the Polymerization Section equipment).
Section 300: Polymer Powder Deactivation
Homopolymer powder from the reactor contains non-reacted hydrocarbons.
Pressure release in the separator these hydrocarbons are separated from the
polymer, compressed and recycled to the process.
Polymer powder downstream the separator still contains absorbed monomers. That
is why it comes to the purge column. Wet nitrogen for monomers stripping from
polymer powder and any remainder of catalyst and co-catalyst deactivation is
supplied to the bottom of purge column.
Overhead vent gas from the purge column is supplied to vent gas recovery system
for monomer separation and recycle to the process.
Polymer powder from the purge column is supplied to blending with additives and
further to Extrusion and Pelleting Section.
Section 400: Product Finishing
Polymer powder from the purge column is supplied by screw feeder via metering
system to extruder feed been for blending with metered quality of solid and liquid
additives. In the extruder they are melted, homogenized, gelled, filtrated and
pelletized.
for polymer and water separation.
Separated water is collected in the drum and then recycled by pump to the pelletizer.
Polymer pellets from the separator are supplied to pellet classifier. On-spec pellets
are conveyed by air to blending silos, off-spec pellets are collected in the container.
Section 500: Blending silos
Polymer pellets are blended in three blending silos provided to get homogeneous
polymer batches.
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Section 510: Storage silos

Polymer pellets storage silos serve as buffers between production sections and
bagging lines. Storage capacity enables to store the product within 5 days maximum.
Section 550: Bagging and Palletization Section
are automatically palletized and covered by PE shrink film and transported to the
Facilities for PE bags and shrink film production are comprised of the PP plant.
Section 600: Propylene Purification
Polymer grade liquid propylene (99.6% wt.) from the Intermediate storage is pumped
to the Propylene Purification Section. In this Section propylene is in sequent dried on
the molecular sieves for H2O removal and catalytic treatment .
Remaining COS traces. This guard is required, as all polymerization catalysts are
sensitive to certain impurities available in the feedstock.
Section 700: Emergency Discharge System
The system comprises two drums; one drum is operated under pressure and
another one under the flare header back pressure.
All emergency discharges from the PP Plant are discharged to the first drum. Steam
jacket is provided at the bottom of the drum to flash liquid monomers.
Polymer can be transferred from the first drum to the second one. In the second
drum polymer is collected, treated by steam and nitrogen mixture and discharged to
the containers.
High pressure and low pressure gaseous discharges are routed to the Refinery flare
header.
Effluents Disposal
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incineration.
incinerator stack.
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2.5 HYPOL-II Process Description

The Mitsui Hypol polypropylene process has tended to make more specialty resins,
including TPOs and very high impact copolymers. With multiple reactors in series,
the unit costs are typically higher than the larger capacity single reactors. The
Hypol II process is relatively new with a large new plant being built by Mitsui in
Japan.
The following describes the process characteristics:
Feedstock and Raw Materials Preparation
Co-catalyst (concentrated TEAL, 100% approx.) and donor stereomodifier are
supplied in vendor containers (drums, etc.) to feed drums with further metering to
catalyst activation section.
Solid Ti-Mg catalyst HY-HS of the 4-generation is supplied in drums from the
chemicals store to catalyst preparation and metering section. Solid Ti-Mg catalyst
shall be dispersed in the blend of mineral oil and grease (thickener) and further
metered to the catalyst activation section.
Mineral oil shall be discharged from the drums to oil feed drum. From this drum
mineral oil shall be used for TEAL piping washing and degassing and for jacketed
vessel with agitator filling. Mineral oil from this jacketed vessel with agitator is
supplied to the catalyst preparation and metering section.
Grease from the drums is also discharged to jacketed vessel with agitator with
further supply to the catalyst preparation and metering section.
Additive for catalyst de-activation and washing oil degassing is to be discharged to
two feed drums. From the first drum it shall be supplied to low pressure propylene
washing tower and rich oil receiver, and from the second drum it shall be supplied to
the jacketed pipe provided for discharge of polypropylene slurry in propylene from
the reactor to high pressure separator.
Bulk Polymerization
In the catalyst activation section, the catalyst suspended in oil and grease is mixed
with co-catalyst and donor and is further mixed with small portion of liquid propylene
for pre-polymerization in small loop reactor.
Polymerization is performed in liquid phase in two loop reactors in series. Reactors
are of the same volume and operated under the same conditions, as follows:
Pressure 4.5 MPa, approx.

Temperature 80oC
Total residence time 1.5 hours, approx.
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Axial pumps are installed at the bottom section of the reactor. Reaction blend
circulation by these pumps provides a proportional temperature profile over the
whole length of the reactors.
Heat removal in the reactors is provided via demineralized water circulation in the
reactor jackets.
Hydrogen containing gas from the battery limits is fed to the hydrogen recovery (up
to 99.5% vol.) and compression section with its further supply to propylene feed line
upstream the reactors.
Liquid propylene from the propylene feed drum and hydrogen as well are supplied to
the both reactors. Some portion of propylene shall be evaporated upstream the
reactor for pressure control in the surge drum. This drum is provided to fill the
reactors completely and to avoid pressure swing in the reactors.
Blend from the catalyst activation section is injected to the propylene stream that is
fed to the first reactor only.
Polymer slurry from the first loop reactor feeds directly to the second loop reactor to
finalize polymerization. Polypropylene slurry from the second reactor is discharged
via jacketed pipe to the high-pressure separator for polymer separation from the
recycle propylene.
Polymer Degassing and Propylene Recovery
High-pressure separator is provided to separate polymer from the recycle propylene.
Polymer resin from the separator is discharged to the filter for polymer degassing.
The resin is further supplied to the steaming section for polymer steam-out.
Stabilization additives shall be injected into the polymer resin prior to steam-out.
Filter overhead gas is fed to washing scrubber where oil washing is provided for
fines removal in recycle gas. Specific additive shall be added to the oil for TEAL
traces removal.
Upon saturation with polymer rich washing oil shall be replaced with fresh one. Rich
oil is pumped out to recovery.
Scrubber off-gas is compressed, mixed with high-pressure separator off-gas and
supplied to the propylene recovery tower. Tower overhead vapors are condensed
and recycled to the tower as a reflux. Balanced recovered propylene is collected in
the receiver where fresh purified propylene is to be fed. Propylene from the receiver
is fed to the polymerization reactors. Propylene recovery tower bottoms are supplied
to the polymer filter inlet via jacketed pipe.
Polymer Steaming and Drying
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Downstream the filter polymer resin by gravity flow is supplied to the polymer
steaming section where catalyst reminder is deactivated and entrained
hydrocarbons are steamed out by direct steam. Vapor and gas mixture from the
steaming section is supplied to water scrubber for steaming and water washing.
Water condensate and steamed hydrocarbons are fed to the separator from
scrubber draw-off tray. Liquid from the separator is recycled to the scrubber and
vapor and gas phase is to be combined with scrubber overhead monomers and to
be supplied to water cycle compressor.
Cooled downstream water cycle
compressor vapor and gas phase shall be either routed to the flare system or
recycled to the process after drying. Organic liquid separated in the water cycle
compressor (oligomers) shall be discharged into drums after separation.
Wet polymer from the steaming section is conveyed to drying by circulating nitrogen.
Dried polymer is supplied by closed nitrogen transportation system to the surge silo.
Wet nitrogen from the polymer drying section shall be washed and cooled in the
scrubber. Then it is recycled to the drying section by blower via preheater.
Water is supplied to the scrubber for nitrogen washing. Water condensate with
polymer traces is discharged from the scrubber bottom to the waste water sump.
Flare KO Drums and Auxiliary Equipment
Emergency discharge from the reactor safety valves is routed to steam jacketed
high-pressure emergency blow-down drum. Discharges from the reactors shall be
routed to low-pressure drum when shutdown is required.
Polymer powder collected in the high-pressure drum is transferred to the lowpressure drum by steam and nitrogen mixture. After polymer powder de-activation
by circulating steam and nitrogen mixture, the powder shall be discharged to
containers.
Gas vents from both drums are discharged to the Refinery flare system via cyclone.
Refrigeration Unit
Chilled water (diethyleneglycol solution in demineralized water) is prepared at the
package supplied refrigeration unit where propylene is used as a cooling agent.
Then chilled water is collected in the receiver under nitrogen blanket (to prevent
corrosion) and pumped out to consumers.
Condensate Return
All steam condensate from the PP Plant is collected in condensate receiver and
further pumped out to the battery limits. Some portion of condensate is cooled and
supplied for expansion vapors condensing.
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Washing Oil Recovery

This section is under intermittent operation. Mineral oil contaminated with TEAL is
collected in the recovery vessel, liquid additive for TEAL neutralization is supplied to
this vessel as well. Recovered oil is routed to incineration.
Feedstock Preparation
Polymer grade propylene (99.6% wt.) is pumped from the intermediate storage to
the feed preparation section. In this section propylene is dried at molecular sieves
for water removal and treated by catalyst for COS traces removal. These treatments
are required, as polymerization catalyst is very sensitive to certain impurities in the
feedstock.
Silos, Extrusion, Pelletizing, Homogenization and Storage
Polymer from the surge silo is metered to blender. Solid and liquid additives are also
metered to the blender continuously. Polypropylene with additives from the blender
is fed to the extruder. Fusible additives can be added to the extruder as well, if
required.
In the extruder polymer and additives are homogenized, gelled and filtrated.
Pelletizing is performed in subaqueous pelletizer. Pellets are supplied by circulating
water (demin water) to separator and further to air dryer. Dry pellets are fed by
gravity to the classifier. On-spec polymer pellets are supplied to the feed drum with
further air conveying to the homogenization and storage silos. Off-spec pellets are
collected in the container.
Water separated from the polymer is collected in the drum with further recycle to the
pelletizer via cooler.
Polymer homogenization and storage silos are provided to get homogeneous
polymer batches. They serve as a buffer between production sections and bagging
lines. Storage capacity enables to store the product within 5 days maximum.
The PP Plant comprises facilities for PE bags and shrink film production.
Local Effluent Treatment
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Condensate and industrial and rainwater effluents, as well as floor washing effluents
are collected in the waste water sump. Water from the sump after oil and polymer
powder removal is to be pumped out to the Refinery treatment facilities.
Effluents Disposal
incineration.
incinerator stack.
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4.3
POLYPROPYLENE TECHNOLOGY SELECTION
4.3.1 Brief Overview of Polypropylene Industry Development

Commercial polypropylene production has existed for over 40 years.
Montecatini company (Italy) established the first commercial technology of
polypropylene production in 1957. There was a solution slurry polymerization
(gasoline was used as a diluent) taken place at the temperature of 55-60oC and
pressure of 1 MPa with Ziegler-Natta catalyst of the first generation produced as per
the reaction between metal-organic compound, mainly (C2H5)3Al, and TiCl3. Catalyst
efficiency was less than 1 kg of polypropylene per 1 g of catalyst.
In the 1960-s different companies developed modified polypropylene production
technologies based on the Montecatini process. Technologies with first generation
catalyst application are still widely used.
In 1985 the share of polypropylene produced with the first generation catalyst
application was found to be 42% of the total production of 2.6 MMTA in USA, 79% of
the total production of 1.35 MMTA in Japan and 71% of the total production of 2.3
MMTA in Western Europe.
This technology has serious shortages, mainly as follows:
Catalyst decomposition is required after polymerization due to propylene high
sensitivity to the catalyst;
Atactic component removal from polymer (its concentration may be up to 20%) is

required;
High polypropylene production expenses compared to another thermal plastics
due to higher capital investments for additional equipment required for catalyst
deactivation.
Nevertheless, the share of solution slurry polypropylene technology was found to be

31% of worldwide polypropylene production in 1990 and 20% - in 1999.
In 1970-1983 high efficient and stereospecific catalysts of the second (with catalyst
efficiency of 10-15 kg PP per 1 g of catalyst) and the third (with catalyst efficiency of
20-30 kg PP per 1 g of catalyst) generations were developed. These catalysts apply
TiCl4 on MgCl2 carrier with Al-alkyl and organic additive for polymer isotacticity
control.
By the middle of 1980-s different companies implanted the technologies based on
that catalysts. Propylene polymerization with high efficiency catalyst applications is
provided either as a bulk or gas-phase polymerization.
4.3.2 Justification of Polypropylene Technology Selection
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Polypropylene processes involve two key ingredients, the actual physical process
components/mechanics and the catalyst system. Of the two components, the
catalyst system is probably the more important, as exhibited in the schematic below.
Physical Process + Catalyst = Product
Good Process + Bad Catalyst = Poor Product
Poor Process + Excellent Catalyst = Acceptable Product
Good Process + Good Catalyst = Good Product
The physical process generally identifies polypropylene processes, allowing for
categorization of the different process types. There are three basic processes for
making homopolymer or random copolymer polypropylene. These are the bulk
slurry (loop reactors), bulk slurry (continuous stirred tank slurry reactors) and gas
phase reactor processes. If an impact copolymer is desired, an additional gas
phase reactor (possibly two reactors) is added to the process sequence.
Polypropylene can be produced in three forms: isotactic, syndiotactic and atactic.
Isotactic polypropylene is a polymer in which the propylene units are attached in a
head to tail fashion and the methyl groups are aligned on the same side of the
polymer backbone. This highly crystalline structure gives the polymer stiffness, good
tensile strength and resistance to acids, alkalis and solvents. Syndiotactic
polypropylene has methyl groups on alternating sides of the polymer chain in a
regular pattern. The resultant polymer has low crystallinity and is difficult to make.
Some syndiotactic polypropylene has been made recently using a metallocene
catalyst. No significant commercial use for this polymer has been identified. Atactic
polypropylene is a non-crystalline polymer that is too soft and rubbery for most
applications, similar in appearance and properties to an uncured elastomer. Each
time the desired isotactic polypropylene is produced, some atactic polypropylene is
also made. The objective is to keep the atactic component of the polypropylene to a
minimum. Atactic polypropylene that is removed from production is either sold for
use in hot melt adhesives, roofing and other specialized applications or incinerated.
Significant changes in isotactic polypropylene technology occurred during the 1980s
that broadened its use in many applications.
The most important change in technology has been the development of high-yield
and higher selectivity catalysts. These catalysts have essentially eliminated the need
for atactic and catalyst residue removal.
Polypropylene homopolymer has high stiffness, good clarity, low density (0.900 0.906 grams per cubic centimeter), chemical resistance, and relatively high
temperature resistance. However, the homopolymer has poor impact resistance,
especially at low temperatures. Polypropylene copolymers are produced to improve
properties for certain applications.
The use of metallocene catalysts in the manufacture of polypropylene is being
developed. As with polyethylene, metallocene catalysts appear to be the next
generation of catalysts. Several companies have seen significant differences in
properties while using these catalysts in the pilot plant and in selected full-scale
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production runs. The following improvements in using metallocene catalysts have

been noted:
Lower melting point of the polypropylene resin

The incorporation of new comonomers, such as hexene-1
Higher clarity in reactor product
Ability to achieve resin properties in reactor (i.e., higher melt flow) without the
use of the CR technique
A key alliance has been formed by ExxonMobil and Basell to further the
development of metallocene PP. ExxonMobil brings strength in the development of
metallocenes in fiber applications, whereas, Basell (through its Targor background)
has developed strength in injection molding applications. ATOFINA is also a strong
player in the PP metallocene arena.
The key licensors and their respective processes are as follows:
Basell Spheripol
Dow Unipol
BP Innovene
ABB
Lummus
Novolen
Loop slurry reactor

Gas phase reactor
Gas phase reactor
Gas phase reactor
Others that offer licenses, but have not been very active in new capacity additions
are:
Mitsui Hypol
Sumitomo
Gas phase reactors

Gas phase
While mentioned, the Sumitomo process is generally part of a Sumitomo business

venture. Borealis has also developed a process based on its polyethylene
technology.
In addition to the identified processes, Basell has announced a new polypropylene
process called the Spherizone process that is available for license. The
development of this multi-zone circulating reactor process (MZCR) was driven by a
desire to accomplish bimodality in a single reactor. The MZCR technology uses two
separate but connected reactors. There are several reaction zones, some having
variable residence time. Basell claims that this process can enhance rigidity, impact
resistance and improve the properties of polypropylene. In doing so, the process
can produce a larger product range including homopolymer, monomodal, bimodal,
random and twin random copolymers (bimodal capability has potential polyethylene
use). Product properties, enhanced by MZCR, are identified as improved stiffness,
improved thermal resistance, better melt strength and softness. No independent
(non-Basell ownership) licensees have been announced for this new process.
Indelpro (Basell joint venture) in Mexico has announced a new 350,000 metric ton
per year Spherizone process plant to startup in the last half of 2006. Basell appears
to have only a couple of units with this capability in its operations.
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Major PP Expansions By Process (2003-2006)

Spheripol
36%
Unknown
9%
Other
2%
Innovene
11%
Novolen
14%
Unipol
28%
7.2 Million Metric Tons
In examining the technologies selected for startup in the 2003-2006 time period, the
Spheripol process leads the group with 36.0 percent of the total, followed by Unipol
with 28.0 percent. Novolen and Innovene have had some success as well, as
illustrated in the pie chart.
If you expand the time period from 1998 to 2008, Spheripols share increases to 39.0
percent, but Unipol is slightly less at 24.0 percent. The other category is bigger with
a wider time period representing the earlier use of Mitsui and Chisso technologies.
Major PP Expansions By Process (1998-2008)

Unknown
10%
Other
9%
Spheripol
39%
Innovene
9%
Novolen
9%
Unipol
24%
18.3 Million Metric Tons
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For selection of a polypropylene production technology (homopolymers) at the

proposed JVC PP facility, CMAI has studied the publicly available information from
the 5 Licensors as well as its own internal database...
As indicated, the most widely used bulk slurry polymerization technology is the
SPHERIPOL process by Basell Company and HYPOL/HYPOL-II process by Mitsui
Company. In these processes polymerization takes place in loop reactors with slurry
circulation by integrated pump. However, consumption and utility features of the
SPHERIPOL process are currently higher compared to the HYPOL-II process.
Mostly widespread gas-phase technologies differ by the type of reactor applied and
agitator design:
Polymerization in UNIPOL process by Union Carbide Company takes place in
fluidized bed reactor without agitator;
Polymerization in NOVOLEN process by BASF (now ABB Novolen Division

GmBH) Company takes place in vertical reactor with mechanical agitator;
Polymerization in INNOVENE process by BP Company takes place in horizontal
reactor with mechanical agitator.
Fluidized bed UNIPOL process is found to be the most attractive gas-phase process
as heat and mass exchange is provided under better conditions. Probability of hot
spots formation is much less compared to the stirred bed technologies and this
improves the quality of produced polymer.
By 2000 basic technologies of above worldwide leading polypropylene production
companies did not change greatly. However, polypropylene producers are constantly
improving catalyst and process technologies in order to improve polymer
competitiveness, product quality and to extend the range of produced polymers.
Serious successes have been achieved in regard to quality improvement of
photopolymers with high Melt Flow Rates.
All leading polypropylene producers are able to produce all grades of homopolymers
required at the market with some differences in property ranges (e.g. Melt Flow
Rate).
For better demonstration and in order to have a concise approach to the selection of
the technology licensor, a table format of all the available data of the proposed
technologies follows:
Polymerization performance
Catalysts and chemicals cost and performance
Equipment characteristics
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Raw materials, catalyst, additives and utilities consumption per 1 tone of

produced polypropylene
Quality of produced polymer
Number of gaseous emissions, liquid effluents and solid wastes,

Other features.
Item
No
1
2
BASELL
ABB
BP
Mitsui
SPHERIPOL
4
NOVOLENE
5
INNOVENE
6
HYPOL - II
7
Gas
phase
polymeriz
ation
Bulk
polymerizati
on
Gas phase
polymerizati
on
Gas phase
polymerizati
on
Bulk
polymerizati
on
Fluidized
bed
Loop reactor
with
circulation
pump
Vertical
stirred bed
Horizontal
stirred bed
Loop reactor
with
circulation
pump
By gas
By
circulation
pump
Mechanical
Mechanical
By
circulation
pump
By
gaseous
propylen
e and
liquid
propylen
e partial
vaporizati
on
By water
(reactor
jacket)
By monomer
circulation
and liquid
propylene
vaporization
By monomer
circulation
and liquid
propylene
vaporization
By water
(reactor
jacket)
- Pre-polymerization
(yes / no)
No
Yes
No
No
Yes
- Preliminary
blending of the
components
(yes / no)
No
Yes
No
No
Yes
2
Process
characteristics
- Type of the process
- Type of the reactor
- Way of mixing
- Way of heat
removal
Union
Carbide
UNIPOL
3
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Item
No
1
3
Union
Carbide
UNIPOL
3
BASELL
ABB
BP
Mitsui
SPHERIPOL
4
NOVOLENE
5
INNOVENE
6
HYPOL - II
7
80 220
40 400
60 360
65 280
40 275
- Number of reactors
in one line required
for the capacity of
180 MTA
- Polymerization
reactor capacity, m
200 300
45 x 2
75
100 120
45 x 2
- Yearly reactor
treatment from
polymer required
(yes / no)
Once per
5 years
No
N/A
N/A
No
- Operability, %
(plant operation,
hours per year,
min)
95
(8200
hours)
97.7
(8440 hours)
N/A
(over 8000
hours)
97
(8380
hours)
N/A
(N/A)
- Required time for

polymer grades
changing, hours
14
13
24
13
13
No
Yes (for
some
polymer
grades)
Yes (for
some
polymer
grades)
No
Yes (for
some
polymer
grades)
3.5
4.5
3.5
- Temperature, C
60 70
80
80
70
70
- Residence time, hr
1.1 1.4
1.5
1 1.2
1.4 1.5
1.5
2
Process flexibility
3.1
- Capacity of one
line, MTA
- Possibility of
polymer product
production without
extrusion (yes / no)
3.2
Process parameters
- Pressure, MPa
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Item
No
1
3.3
Union
Carbide
BASELL
ABB
BP
Mitsui
UNIPOL
3
SPHERIPOL
4
NOVOLENE
5
INNOVENE
6
HYPOL - II
7
- Reactor
- Reactor
with
circulation
pump
Vertical
stirred
reactor
- Horizontal
stirred
reactor
Reactor
with
circulation
pump
- Cocatalyst
supply
pump
- Co-catalyst
feed pump
- Co-catalyst
feed pump
- Cocatalyst
feed pump
- Cocatalyst
feed pump
- Catalyst
injection
system
- Catalyst
injection
system
- Catalyst
injection
system
- Catalyst
injection
system
- Catalyst
injection
system
- Recycle
gas
compressor
- Recycle
gas
compressor
- Equipment
- Unique items:
(applied to specific
technology only)
- Recycle
gas
compress
or
3.4
Catalyst
- identification
SHAC
201, 205,
302
MCM 1
PTK 4
GPCD
HY-HS
- morphology
Controlled
Controlled
Uncontrolled
Controlled
N/A
- catalyst vendor
Own
Own
Purchased
Purchased
Own
- cost, $ /t of PP
20 23
(catalyst+
cocatalyst+
donor)
11 12
(catalyst+ cocatalyst+
donor)
13.1
(catalyst+
co-catalyst+
donor)
17.1
(catalyst+
co-catalyst+
donor)
13
(catalyst+
cocatalyst+
donor)
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Item
No
1
4
Union
Carbide
UNIPOL
3
BASELL
ABB
BP
Mitsui
SPHERIPOL
4
NOVOLENE
5
INNOVENE
6
HYPOL - II
7
1.013
1.002 1.005
1.010
1.015
1.005
- catalyst, g /t of PP
28.5 40
25 30
50
33
45
- co-catalyst, kg /t of
PP
N/A
0.14 0.20
0.37
N/A
0.08
- donor, kg /t of PP
N/A
0.006 0.010
0.0143
N/A
0.026
- hydrogen, nm /t of
PP
1.12
1.12 5.6
1.5
0.6
1.8
- power, kW / t of PP
270
260
320
320
320
- steam, kg / t of PP
255
300 305
300
100
LP310
HP 90
- cooling water, m /t
of PP
60 (115
max)
120 130
110
100
100
- nitrogen, nm /t of
PP
50
20 30
50
40
60
- air / nm /t of PP
35
25
N/A
40
12
- demin. Water, m /t
of PP
0.2
0.02
0.2
0.2
0.2
2
Raw materials and
utilities
consumption
4.1
4.2
- propylene, t /t of
PP
Utilities
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Item
No
1
5
Union
Carbide
UNIPOL
3
BASELL
ABB
BP
Mitsui
SPHERIPOL
4
NOVOLENE
5
INNOVENE
6
HYPOL - II
7
- product range
(molding, extrusion,
film, fibers),
number of grades
35
54
29
47
34
- particle size, mm
(from reactor)
0.8
0.3 5
0.8
0.7
N/A
- isotacticity index
(xylene insolubles),
%
94.5 99
90 99
90 99
Up to 98
96 98
- melt flow range,

g/10 min
0.6 35
0.2 40
0.5 50
0.5 38
0.5 40
- flexural modulus,
MPa
1100
1500
2400
1400 2400
1230 1770
800
2000
- melt temperature,
C
N/A
N/A
163 165
95 130
N/A
2
Polymer
specification
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Item
No
Union
Carbide
UNIPOL
3
BASELL
ABB
BP
Mitsui
SPHERIPOL
4
NOVOLENE
5
INNOVENE
6
HYPOL - II
7
33800
150000
30000
40000
110000
- fugitive emissions;
0.06
0.01
0.026
NA
0.02
- process vents
0.09
N/A
N/A
0.02
0.002
6.3
Liquid effluents, kg /t
of PP
0.03
0.037
0.13
0.1
0.095
6.4
Contaminated water
to Local treatment
facilities, kg /t of PP
N/A
85 178
170
20
80 280
6.5
Solids, kg /t of PP
- emissions to the
atmosphere;
0.01
0.005
0.04
N/A
N/A
- solid wastes
(offspec, product)
spent catalyst and
dryer beds
N/A
N/A
0.06
0.3
0.017
1
6
2
Emissions and
wastes:
6.1
Max. emergency
discharge to the
flare, kg/hr
6.2
Gaseous emissions
to the atmosphere,
kg /t of PP
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Item
No
Union
Carbide
UNIPOL
3
135 x 135
BASELL
ABB
BP
Mitsui
SPHERIPOL
4
250 x 100
NOVOLENE
5
150 x 120
INNOVENE
6
180 x 90
HYPOL - II
7
140 x 50
24 32
N/A
27
30
N/A
4 per shift
6 per shift
5 per shift
5 per shift
6 per shift
- Maintenance;
- Common;
- Laboratory
2 per shift
3 per shift
3 per shift
1 per shift
1
7
2
Unit overall
dimensions, M x M
Project duration,
months
Personnel staff
- ISBL;
CMAI has developed a brief listing of grade properties for the different producers by
the major applications.
Injection Molding Resin Property Comparison
Basell
Novolen Dow
MFR
(g/ 10 min)
22
17
20
Density
g/ cc
0.905
0.9
0.9
Flexural Modulus
MPa
1150
1400
1725
Tensile Strength
MPa
29
33
36
Notched Izod Impact Strength KJ/m2
2
Innovene
25
0.907
1200
2.5
Mitsui
17
0.9
1370
34.3
2
MFR
Density
Flexural Modulus
Tensile Strength
Elongation
Fiber Resin Property Comparison

Basell
Novolen Dow
(g/ 10 min)
25
25
g/ cc
0.9
0.9
MPa
1300
1300
MPa
30
30
%
>100
>50
-
Innovene
18
0.906
1380
29
100
Mitsui
21
0.9
1370
31.4
650
MFR
Tensile Strength
Elongation
Tensile Modulus
Raffia Resin Property Comparison

Basell
Novolen Dow
(g/ 10 min)
1.7
3.5
1.4
MPa
32
35
35
%
>100
>50
MPa
1500
1500
1590
Innovene
3.2
36
>200
1280
Mitsui
2.5
44.1
850
1370
Thermoforming Property Comparison
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MFR
Flexural Modulus
Tensile Strength
(g/ 10 min)
MPa
MPa
Basell
2
1400
34
Novolen
2.4
900
25
Dow
3.2
1600
35
Innovene
3
1800
39
Mitsui
2.8
1370
47.1
Melt Flow Rate (MFR) is a value obtained when a product is tested on an extrusion
plastometer. MFR provides a measure of the amount (in grams) of material that
flows through an orifice of a specified size in a specified length of time (10 minutes).
The procedure is described in ASTM D 1238. The higher the measured quantity, the
easier the material flows under a given temperature and pressure. This index is
inversely related to the viscosity (resistance to flow) and the average molecular
weight of the material. In other words, the higher the viscosity or molecular weight,
the lower the MFR.
Flexural Modulus: The ratio, within the elastic limit, of the applied stress on a test
specimen in flexure, to the corresponding strain in the outermost fibers of the
specimen.
Tensile strength: Measures the force required to pull something such as rope, wire,
or a structural beam to the point where it breaks
Points to consider when selecting a new process technology
Process flexibility broad product range: All of the producers have the capability to
make the same grade products. The Basell has a greater control over product specs
due to the loop process followed by the gas phase. Based on the technology, Basell
has the capability to manufacture the broadest product slate. Each of the
technologies are capable of producing impact grade PP.
Target market Needs: Since the primary market for polypropylene will be Vietnam
and Asia, the brand value for the product is very important. Basell, is established
players in this market, with Dow brand gaining increasing recognition. Innovene has
also been aggressively pursuing business in the region and have set up licensing
agreements in China and Malaysia.
Catalyst development: Basell has been ahead of its competition in the polypropylene
market in area of catalyst developments. Dow also making strides in this area.
Innovene is disadvantaged here since their catalyst development is not in-house
Process transition time: Innovene Process has the fastest grade transition time and
the lowest off spec material produced due to the nature of the plug-flow reactor
process on the front end. Basell can transition fairly quickly since having the
advantage of the loop reactor on the front end.
Size of the plant: Each of the producers is capable of setting up a world scale
Polypropylene plant of the discussed size.
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Does the process have the latest product and process advances:
polypropylene process is standard and CMAI does not see any break through.
The
Reasonably low production costs: the operating costs for all the processes are fairly
similar. The operating costs tend to be slightly lower for the gas phase technologies.
Lower capital costs: Basell process is more capital intensive than the others. Dow
and Innovene process are comparatively lower in terms of capital investment.
However, if JVC choose to make impact co-polymers in the future, the capital cost of
Dow and Innovene processes increases significantly.
Licensor offers resins for market seeding: Basell operates several PP plants around
the world and hence supplying resin for market seeding will be available. ABB is only
a provider of technology and not a manufacturer, and hence resin provision for
market seeding may be difficult.. Innovene will have facilities in China that could
supply the resin.
Licensor offers technology support before and after completion of the plant: Since
Basell have several units they operate in various regions of the world, CMAI expects
them to provide the best licensing support. ABB is only a provider of technology and
not a manufacturer, and hence licensing support will be limited.
What is the licensor attitude in negotiations: To be determined by JVC during
negotiations.
Since these technologies yield fairly similar returns, it is difficult for CMAI at this
stage to identify one particular technology. JVC will have to evaluate and
discriminate between the licensors based on the hard data and bids they receive.
Having said that however, compared to the main competitors, the Spheripol
technology is keeping its leading position in such fields as process flexibility, product
quality and economic performance features. This technology provides a possibility to
obtain wider range of products of different specifications and higher versatility.
Compared to other technology reviewed in this Feasibility Study, the Spheripol
technology has the following advantages under comparable investment and
operational costs:
Volume of the whole reactor is used effectively in the bulk polymerization, while
separation section for polymer separation from circulating monomer is required in
gas phase technologies. This eliminates possible product pollution during
discharge as there is no interface in the reaction volume;
Heat transfer efficiency in loop reactors is higher than in gas phase ones, as loop
reactors provide higher heat transfer velocities as well as more equilibrium heat
removal from polymerization particles. This provides reaction temperature better

control and stability (no hot spots);
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TECHNOLOGY MATRIX
In order to help evaluate the different polypropylene processes, CMAI has developed a matrix that compares they key polypropylene processes against key
parameters, including some licensing benefits.
Technology
Impact
Basell Spheripol
Yes
BP Innovene
Yes
ABB Novolen
Technology Type
World Scale
Plant Size
Catalyst Availability
Relative License
Fee
Licensor Support for

Seeding Market
400 kt
Full range + metallocene (2)
High
More than average
350 kt
Full range + metallocene
Moderate
Some
Yes
BS w/ GP for impact
GP w/ GP for
impact(1)
GP w/ GP for impact
400 kt
Catalyst purchased
Moderate
Likely limited
Dow Unipol
Yes
GP w/ GP for impact
350 kt
Catalyst supplied by Shell
Moderate
Some
Mitsui Hypol
Yes
GP w/ GP for impact
300 kt
Own catalyst
Moderate
Likely limited
Technology
Licensor Off Take

of Production
Plant Capital
Investment (4)
Engineering/
Design Support
PP Product Capability
Cost
Competitivenes
s Factor
Process Plant in
Region
Basell Spheripol
More than others
$550/annual MT
Excellent
Broad
100
Yes
BP Innovene
Some ltd time
$515/annual MT
Excellent
Broad
99
No
ABB Novolen
Low Amount
$550/annual MT
Good
Limited
103
No
Dow Unipol
Some ltd time
$525/annual MT
Excellent
Broad
101
Yes
Mitsui Hypol
Some ltd time
$610/annual MT
Limited
105
Yes
(1) BP uses a second reactor for impact copolymers that is the same size as the first reactor. Might lend itself to two line capability with material flow flexibility.
(2) Likely the strongest metallocene catalyst position of licensors. Producers with strong PP metallocene position are ExxonMobil and ATOFINA in addition to
Basell (Targor work before Basell merger).
(3) Only used internally so far no licensees. Fallout of HDPE technology.
(4) Fixed investment estimate including ISBL and OSBL.
This section of the document ing was compiled by CMAI, its use is conditioned upon the users agreement not to reproduce the document in whole or in part, nor the material described thereone, nor to use the document for any other purpose other than
specified in writing by CMAI
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FEASIBILITY STUDY
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Loop reactor design features provide more flexibility in the PP Plant capacity
increasing. Capacity increasing in case of gas phase polymerization requires
serious engineering study because of more stringent requirements to the reactor
design and limitations in the field of heat transfer;
Isotacticity and melt flow controls are more efficient in loop reactors compared to
fluidized bed or horizontal/vertical stirred bed reactors as co-catalysts and
hydrogen are injected to highly turbulent circulating stream (polymer slurry in
liquid monomer). This provides homogeneous and stable polymerization
conditions;
The Spheripol technology makes it possible to provide fast changing in product

range without operating cost increasing. Normal experience for Spheripol plants
is to produce 15-18 grades of product per month. The share of off-spec product
in case of homopolymers production (off-spec product could be sold as well) is
found to be 0.2%.
Due to high catalyst activity, providing high yield of polymer, residual catalyst
content in polymer (and metal content as a result) is very low. This results in
better color of product (low yellowness). Moreover, polymer powder treatment
with direct steam provides low soluble and fugitive components content in the
polymer. This results in good polypropylene product application in food and
medicine industries;
In case of controlled morphology catalyst application, production of polymer

powder with particle sizes from 0.3 to 5 mm is possible without plant
configuration changing as particle sizes do not impact on fluidization efficiency in
the loop reactors. Each catalyst produces the polymers with very narrow particle
size distribution and uniform polymer morphology. Spherical polymer powder
made from the polypropylene with very high or very low melt flow rates could be
used with the additives in non-pelletized form in extrusion applications;
The Spheripol technology provides higher reliability and operability compared to

the gas phase technologies. This is resulted from the following: low reliable
reciprocating compressors (their failure results in the whole plant shutdown) are
not used in bulk polymerization; controlled morphology of the polymer and
process features make it possible to obtain easily transported solid polymer
where limitations in performance ranges due to availability of hot spots, dead
volumes, plug starting point and risk of sticky product obtaining are absent at all
process stages;
Broad range and high quality of products produced as per the Spheripol
technology makes it possible to keep leading positions at worldwide
polypropylene markets in the high-quality applications. These applications for
homopolymers are to be as follows:
Production of biaxially oriented polypropylene (BOPP) film in high-speed
tenters;
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Production of single and multi-layer films in high-speed equipment;
Production of fine-fiber filaments and non-woven fibers;
Production of food, agriculture and medicine applications, including one-time

syringes;
Production of very rigid polymers (with Flexural Modulus of 2300 MPa) for
thermoforming applications.
Polypropylene Technology Recommendation

JVCs final choice of technology will be driven by:
Meeting target market needs
Primary grade profile
Licensing support
Investment cost
Operating cost
With these qualities in mind, CMAI would recommend that JVC utilize Basell
Spheripol for the proposed Vietnam unit for the following reasons:
The market acceptance of Basell resins will be very good
The cost position / grade capabilities are similar to competitive processes
Basell have developed a strong internal knowledge base
Market seeding can be done via utilization of material from other Basell units
Basell has both in-house catalyst and technical support
4.4
OFF-SITE FACILITIES
4.4.1 General
This Detailed Feasibility Study is developed with Polypropylene plant maximum
integration with the Refinery and application of the Refinery off-site facilities for PP
plant needs.
PP plant supply with power, steam, cooling and demineralized water, plant air,
instrument air, fuel gas and other utilities is provided to be fed from the Refinery offsites that shall be further extended with accounting of the PP plant demands, if
required.
Moreover, Refinery flare system, laboratory and catalyst/chemicals store will be
used as well.
Based on above, the PP Complex shall comprise the following off-site facilities:
Nitrogen and Oxygen separation station with oxygen bottles filling,
High-pressure nitrogen receivers,
Polymer grade propylene intermediate storage with pumps.
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Propylene from the Refinery Propylene Recovery Unit will be used as a feed for PP
Plant. Moreover, polymer grade propylene shall be imported as well.
Propylene imported via the Refinery Jetty Topsides shall be supplied to the
intermediate storage spheres via propylene export line and tanker loading/unloading
system in reverse direction.
Imported propylene supply from the Jetty Topsides to Product Tankage spheres via
the propylene export pipeline shall be done by pumps installed on board the ships.
Based on the size of the pipeline and generally accepted transferring velocities a
capacity of propylene pumping by the pipeline will be 10% of the Product Tankage
pump capacities.
Therefore, in case of propylene import on regular base special pumps shall be
provided at the Product Tankage.
In case of propylene import on intermittent base the pumps at the Product Tankage
could be used, but in this case pumps will be bypass operated at 90% and this is not
expedient from economic point of view.
Spheres capacity is enough to receive imported propylene.
4.4.2 Nitrogen and Oxygen Separation Station with Oxygen Bottle Filling
Local cryogenic oxygen and nitrogen separation station shall be provided to meet
the demand of the PP Complex in gaseous nitrogen.
The station capacity by nitrogen conforms to PP Complex continuous nitrogen
consumption of 1125 nm3/hr.
Air separation process results in the following products:
Gaseous nitrogen to PP Plant under pressure of 8 kg/cm2g and to high pressure
receivers under pressure of 200 kg/cm2g
Gaseous oxygen to oxygen bottles filling under pressure of 200 kg/cm2g.
The station is package designed. This provides its high readiness to installation.
In accordance with the assignment oxygen bottles filling section is provided. This
section capacity shall be 50-60 bottles per hour according to the station capacity and
bottle volume (40-50 liters).
Oxygen bottle filling section shall provide the following:
Filling of bottles
Empty bottles unloading from consumer truck
Bottle rejection
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Filled bottles loading to consumer trucks
The station shall be operated all day round in 3 shifts. Oxygen bottles shall be filled
when air separation section is under operation.
Oxygen bottles dispatch to consumers is provided in one shift.
4.4.3 High Pressure Nitrogen Receivers
The receivers are provided to meet intermittent peak demand in both, low-pressure
nitrogen and high-pressure nitrogen (which is required for 1000 m3 spheres pressure
testing).
There are 10 receivers with each receiver capacity of 25 m3 and pressure of 200
kg/cm2g.
Total receivers capacity provides nitrogen storage for 1.6 days based on continuous
consumption of low-pressure nitrogen as 1125 nm3/hr.
Supply of high-pressure (33 kg/cm2g) and low-pressure (8 kg/cm2g) nitrogen is
arranged via pressure controllers.
4.4.4 Propylene Intermediate Storage with Pumps
Intermediate polymer grade propylene storage is provided to feed the PP Plant. Two
spheres with each sphere capacity of 1000 m3 are provided to store the propylene.
Total capacity of the propylene intermediate storage is 2000 m3 equal to propylene
storage capacity for 1.85 days based on PP Plant design capacity of 180 MTA.
Each sphere shall provide the following:
To get propylene from the Refinery Propylene Recovery Unit

To get import propylene from the Product Tankage of the Refinery
To get pump spillback streams
To pump out propylene to the Polypropylene Plant.
The spheres are connected with a surge line.

Safety valves with gas phase discharge to the Refinery flare system in case of
sphere internal pressure increase shall be provided on each sphere.
Quick action shut-off valves with automatic and remote control shall be provided at
propylene inlet/outlet lines outside bund wall.
Two sealed pumps (1 operating and 1 spare) are provided for propylene supply to
the PP Plant. Each pump capacity conforms to design capacity of the PP Plant equal
to 180 MTA and is to be 45 m3/hr.
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A spillback line shall be provided at the discharge of each pump for pump capacity
control. Furthermore, emergency pumping from one sphere to another one could be
done by this spillback line application.
Pumps shall be located under shelter.
Fixed gas detectors shall provide continuous monitoring of explosive vapor
concentration at spheres and pumps location area of the intermediate storage.
Deluge system is provided for spheres fire fighting.
4.4.5 Steam and Demineralized Water Supply
LP steam in amount of 6 t/hr (8 t/hr maximum) shall be supplied to the PP plant from
the Refinery thermal system.
De-mineralized water in amount of 4.5 m3/hr (15 m3/hr maximum, during 2 hours)
shall be supplied to the PP Complex from the Refinery.
Pressurized chilled steam condensate in amount of 8 t/hr shall be discharged from
the PP plant to the Refinery.
Thermal supply shall be fed from the Refinery Thermal Power Station. Thermal
Power Station expansion in relation to steam and demineralized water production
and condensate collection is not required.
4.4.6 Water Supply System
The following water supply systems are to be provided ISBL Polypropylene plant:
Potable water
Fire water
Fresh water
Cooling water
Potable Water System

Water of potable water quality is used for domestic needs of PP plant personnel
(washers and WC) and for Oxygen/Nitrogen station laboratory. Drinking water shall
be supplied in bottles.
Potable water consumption is to be 2.1 m3/hr or about 7 m3/day.
Potable water to the production system shall be supplied from the Refinery system.
Fire Water System
Refer to Section 4.9.
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Fresh Water Supply

Fresh water is used intermittently for floor washing, equipment washing prior to
maintenance and for fire tanks filling.
Fresh water to the production system is supplied from the Refinery system.
Cooling Water System
Cooling water is used for the process equipment cooling.
Chilled cooling water is supplied to the production system from the Refinery system.
Cooling water return is provided to the Refinery system as well.
Maximum cooling water consumption is to be 3835 m3/hr or 92040 m3/day.
Existing Cooling Water Unit (031) at the Refinery shall be designed to meet the
requirements of the PP plant..
4.4.7 Sewer systems
The following sewer systems shall be provided at the PP plant area:
Domestic sewage
Industrial and Storm water sewage
Rainwater sewage (refer to Section 4.5 Site Plot Plan)
Domestic sewage
Domestic waste water from the PP Complex facilities shall be collected and
discharged to septic with their further delivery to the Refinery treatment facilities.
Waste water quantity conforms to potable water consumption.
No additional capital investments are required for the Refinery treatment facilities
expansion.
Industrial and Storm Water Sewage
Industrial waste water from the process equipment (e.g. pump seal leaks, etc.), floor
washing waste water, water from equipment and piping washing prior to repair shall
be discharged into the industrial and storm water sewer system.
Rainwater from curbed areas with the process equipment where contamination with
hydrocarbons and polymer powder is possible shall be also discharged into this
system.
All the effluents discharged into the industrial and storm water sewage shall be
locally treated in the ISBL sump. The sump is to be RC buried tank.
Effluent specification at the sump outlet is to be as follows:
Oil products not more than 4 mg/L
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Suspended solids not more than 40 mg/L.
Industrial and storm water effluents shall be discharged into the Refinery industrial
and storm water sewage.
No additional capital investments are required for the Refinery treatment facilities
expansion.
4.4.8 Pipe racks
Piping at the PP plant area (including off-sites) shall be routed on the pipe racks
having elevation of 6.0 m from site area level, rack spacing of 12.0 m and crosspiece width of 6.0; 4.8; 2.4; 1.2 m. Additional elevated structures might be required
for flare header routing.
Line route turns and shape expansion pieces shall be used for thermal expansion
compensation.
Line route from the Refinery pipe track to coordinate N.1400 is done in trench on
pipe supports having width of 6.0 m. The flare header is routed on the pipe rack with
rack spacing of 12.0 m.
Mainly carbon steel pipes and carbon steel flanged valves shall be used for piping
systems.
Steel platforms with stairways shall be provided for valve maintenance on the pipe
racks.
4.5
SITE PLOT PLAN
4.5.1 Site Area Selection

In accordance with item 21.2 of Quang Ngai Protocol of Meeting on clarification of
scope of work dated July 14-21,2000 it is suggested to review 2 options of PP
Complex construction area from the Western side of the Refinery (see figure
Options of PP Complex Location).
The options of certain area locations from the northern and the southern parts of
existing road going along N.1416 coordinate were studied.
Site Area No.1 (300 x 500 m2) is adjacent to the Western part of the Refinery area
and it is located in close proximity to the main process units, so this area can be
viewed as an expansion of the Refinery process area.
Location of the PP Complex at this area provides direct proximity to the Refinery
PRU and to utilities and off-site facilities as well. This provides a possibility to
shorten the length of process piping and another engineering works.
However, about 80 houses and rice fields are currently located at the Site Area No.1.
There are two schools, a market, and a channel also located in that Area. Those
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elements affect directly to the Site preparation schedule of the PP Complex and
raise the budget cost.
Site Area No. 2 (400 x 385 m2) is also adjacent to the Western part of the Refinery
area and it is located in close proximity to Refinery Tankages - the southern part of
existing road, this area also can be reviewed as a continuation of the Refinery
process area.
Site Area relief is characterized with hills and mountains and the elevations are
varying from 17.00m to 2.00m, part of the area is covered with scrubs that is why
appropriate site preparation activities are required
Location of the PP Complex at area No. 2 provides adjacency to the Refinery PRU
and to utilities and off-site facilities, as well. This provides an ability to save the
length of process piping and other engineering networks.
Although, the length of process piping and other engineering works to the PP
Complex in this case will be increased at 20% (average). This Area is considered to
be the best option because of speed with which the site preparation process could
be completed, thereby reducing the investment cost.
By studying of all options of the PP Complex location, the Site Area No.2 has been
found to be the most favorable option. This option is not much further from refinery
and maintains shorter piping lengths as does Site Area No. 1, however Site Area
No.2 reduces the scope of earth works and reduces the total investment cost of the
PP Complex construction.
4.5.2 Plot Plan

PP Complex area plot plan is developed based on PetroVietnam Standards,
PetroVietnam Refinery plot plan, Licensors recommendations regarding PP Plant
overall dimensions and with accounting of some off-site and administration facilities.
4.5.2.1 Location of the PP Plant facilities
Location of PP Plant facilities at the new area is provided within the following limits:
No.1: X=1697600/Y=588300
No.2: X=1697710/Y=588520
No.3: X=1697350/Y=588770
No.4: X=1697200/Y=588460
Site geological structure is represented by clays, engineering and geological
investigations are provided with Clients fax No. 113/VR-GSKT dated October
30,2000.
Civil coordinate network is taken as 200 x 200 m.
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Polypropylene Production Complex comprises the following facilities:

PP Plant
Propylene Intermediate Storage
Control/Substation Building
All designed buildings and structures are shown on the Plot Plan drawing.
RC wall shall be provided over above ground group of spheres periphery.
4.5.2.2 Vertical leveling, Water removal
Prior to the construction the following area preparation activities shall be performed:
Elimination of existing village with 40 houses
Site area mine clearing
Site area de-scrubbing
Hills and mountings are located at the site area. In order to perform rough vertical
leveling hills and mountains shall be cut at 10m in average (up to the area design
elevation). Soil from hills and mountains cutting shall be used for the backfilling at
the remaining area. Soil at the construction site area shall be compacted.
Earthworks shall be performed up to the absolute elevation of +07.00m.
Scope of the earthworks for site area preparation is to be as follows:
Soil excavation 211000 m3 approx.
Backfilling during leveling 504200 m3 approx., with accounting of cut soil.
Vertical leveling elevations of the PP Plant facilities, group of spheres and individual
facilities are taken with accounting of process pumping and air conveying system
and to provide water removal and engineering services and commercial
polypropylene shipment.
Road beds are to be elevated above surrounding areas.
In average, roads shall be located at 0.6 m above the leveling of surrounding
quarters. Road heights can be increased at cross points with on-ground piping.
Annular water passage PC culverts with the culvert heads shall be used for water
passage under the roads at the cross points. Culvert size varies from 1.0 to 1.5 m
depending on rainwater flow; culvert slope is taken as 5% minimum.
Rainwater removal from the unbuilt areas shall be provided as an open type removal
via the trenches having slope towards the Refinery water removal trenches.
A slope of water removal trench bottoms is to be 2%.
Width of side ditch bottoms is taken as 0.4 m, slopes are taken as 1:1.5. Water
removal trench bottoms and slopes are to be reinforced with cement concrete.
4.5.2.3 Roads
Polypropylene Complex area is divided in quarters as per the scheme that provides
roads through passage. This approach provides optimum conditions for free traffic of
fire and gas rescue vehicles in case of emergency and/or fire and trucks for pallets
and oxygen bottles transportation.
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Turn radii at road cross points are to be taken as 8 m over the road side.
Road lateral profiles shall field-type profile with road shoulders. Lateral slope of 2%
for the road itself and 4% for the road shoulder shall be taken for all roads.
Roads inside the quarters shall be considered as minor roads.
4.5.2.4 Footpaths and passage ways
Paved footpaths having width of 1.0 m shall be provided for personnel passage in
unbuilt areas where required. RC cross bridges over the water removal trenches
shall be provided where required.
Passage ways shall be provided to all buildings and facilities.
4.5.2.5 Engineering services and paving
Bottom and slopes of water removal trenches inside and outside embankments are
to be covered with cast-in-situ concrete.
Design of plant road pavement shall be as follows:
Hot-laid asphalt concrete, H(height) = 50 mm,
Crushed stone, H = 200 mm,
Sand, H = 250 mm,
Geotextile membrane,
Compacted soil.
Design of the polypropylene loading site pavement shall be as follows:
B25 concrete, H = 200 mm, with steel reinforcement from bottom and top,
Crushed stone base (0-30 mm fraction), H = 100 mm,
Sand base, H = 100 mm,
Geotextile membrane.
Monolithic concrete steps shall be provided at the road slopes.
Cross bridges shall be provided at footpath crosses points with side ditches.
When road height exceeds surrounding areas at more than 0.6 m, road guarding
made from the carbon steel (grade 40) 4 pipes shall be provided.
4.5.2.6 Engineering networks
In general piping shall be above ground.
Sewage piping and firewater piping shall be underground.
Electrical cables shall be routed underground in trenches.
4.5.2.7 Fencing
Mesh fencing is to be provided over PP Complex periphery. This type of fencing
provides good aeration
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This section of the document ing was compiled by CMAI, its use is conditioned upon the users agreement not to reproduce the document in whole or in part, nor the material described thereone, nor to use the document for any other purpose other than specified
in writing by CMAI
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4.6
CIVIL AND ARCHITECTURAL CONCEPT
The Polypropylene Plant shall include the following buildings and structures:
Administrative Building;
Polypropylene Bagging Building and Warehouse;
Extrusion Building;
Nitrogen and Oxygen Station;
Control Building/Substation;
Pump House at Polypropylene Warehouse;
Firewater Pump House;
Pipe racks.
Laboratory
Maintenance Workshop
Car Park
Gatehouse
Since the scope of survey is not adequate to decide on design of foundations for
buildings and structures, the final decision should be made after receipt of
outstanding data (i.e. at the stage of basic & detailed design development).
4.6.1 Extrusion Building
The extrusion building shall be five-storied. Production premises shall be located at
all the stories.
Apart from that, the ground floor shall accommodate a controller room and a
switchgear room, both having floating floor.
The building shall have two staircases with outlet to the roofing.
The building frame shall be made of monolith reinforced concrete. Outer and inner
walls shall be made of local red bricks, which shall be then plastered.
Floor slabs shall be made of monolith reinforced concrete. For the ground floor,
flooring underlay shall be a monolith concrete slab.
Columnar foundations of monolith reinforced concrete shall be used for the building
frame. Strip foundations of monolith reinforced concrete shall be used for walls.
Roofing of one-storied and two-storied parts of the building and the staircases shall
have a slope towards holes in the protruding floor slab to provide for rainwater flow.
Internal water drain shall be provided in the 5-storey part of the building.
The roofing shall be coated with solar-reflecting screed.
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External and internal doors shall be of aluminum. Window frames shall be of

anodized aluminum.
The engineering design of interior finishing is described in the Interior Finishing of
Rooms section.
4.6.3 Polypropylene Bagging Building and Warehouse
The building, where polypropylene is bagged, shall be assembled with the outdoor
warehouse, where containers with bags filled with polypropylene are stored and
polypropylene is shipped.
The building shall accommodate the following premises: propylene bagging plant,
PE film production plant, battery charging room, fork-lift washing plant, electrical
rooms, amenity premises, dispatch room, drivers facility, and service premises.
The adjoining polypropylene warehouse shall be constructed as a shed. Due to its
large area it shall be divided into two compartments with a fire break. A frame shall
be provided along the shed from a truck loading side. The warehouse shall have
light mesh fencing.
Truck balance could be adjacent to the warehouse area, if required. Cost of the truck
balance is outside cost estimate.
The frame of the polypropylene bagging building shall be of monolith reinforced
concrete. Outer and inner walls shall be made of local red bricks, which shall be then
plastered. The building floor slab shall be made of monolith reinforced concrete.
Flooring underlay shall be a monolith concrete slab.
A lattice three-dimensional structure made of tubes and coated with a shaped steel
plate shall be the shed floor.
Columns shall be made of monolith reinforced concrete. A warehouse flooring
underlay slab and a retaining wall of ramp shall be made of monolith reinforced
concrete.
frame and shed columns.
Strip foundations of monolith reinforced concrete shall be used for walls. Thickened
parts of monolith slabs with additional mesh reinforcement shall be used as
foundations for partitions.
The building roofing shall have a slope towards holes in the protruding floor slab to
provide for rainwater flow. The roofing shall be coated with solar-reflecting screed.
The shed roofing shall have a slope towards a tray, from which water falls via piping
into catch drains.
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anodized aluminum. Light-protective canopies shall be provided over windows of
office and amenity premises. Mesh gates shall be provided in the shed mesh fencing.
Rooms section.
4.6.3 Control Building / Substation
The building shall be one-storied with annexed boxes for transformers.
The building shall accommodate the following premises: control room, controller
room, gas-extinguishing plant, amenity premises, electrical substation, and battery
room. Floating floor and suspended ceiling shall be provided in the control room and
the controller room.
The building shall be of blast resistant design. Outer walls shall be made of monolith
reinforced concrete; inner ones shall be made of local red bricks, which shall be then
plastered. The building floor slab shall be made of monolith reinforced concrete.
Flooring underlay shall be a monolith concrete slab.
Partitions between the transformers shall be made of prefabricated concrete blocks.
The front wall shall represent mesh fencing with mesh gates. Columnar foundations
of monolith reinforced concrete shall be used for the building frame. Strip
foundations of monolith reinforced concrete shall be used for walls. Thickened parts
of monolith slabs with additional mesh reinforcement shall be used as foundations
for partitions. Foundations for the transformers shall present solid monolith concrete.
External doors shall be of painted steel, internal ones shall be of aluminum. Lightprotective canopies shall be provided over the windows of amenity premises.
Rooms section.
4.6.4 Administration/Office Building with Gatehouse
The administration building shall be two-storied.
The ground floor shall accommodate the following premises: lobby, laissez-passer
office, security room, electrical rooms, service and amenity premises, and canteen.
The first floor shall accommodate management offices, conference hall and service
premises.
walls shall be made of local red bricks, which shall be then plastered. Walls of a
prominent part of the first floor lobby shall be made of shadow glass.
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Floor slabs shall be made of monolith reinforced concrete. For the ground floor,
flooring underlay shall be a monolith concrete slab.
frame. Strip foundations of monolith reinforced concrete shall be used for walls.
Thickened parts of monolith slabs with additional mesh reinforcement shall be used
as foundations for partitions.
Roofing shall have a slope towards holes in the protruding floor slab to provide for
rainwater flow. The roofing shall be coated with solar-reflecting screed.
anodized aluminum. Light-protective canopies shall be provided over the windows.
Rooms section.
4.6.5 Nitrogen and Oxygen Station
The Nitrogen and Oxygen Station shall present a building and two sheds assembled.
The building shall accommodate the following premises: laboratory, electrical rooms,
instrumentation switchboard room, battery charging room, premises for painting and
drying bottles, repair and test shop, compartment for bottles analyzing and
warehouse.
The sheds shall be equipped with 3.2-t suspended mast cranes.
Ramps shall be provided for truck access, when loading the bottles, and fork-truck
passage along the shed. A canopy shall be provided along the ramp. The sheds
shall be equipped with wind barriers to protect against atmospheric precipitation.
walls and partitions shall be made of local red bricks.
The building floor slab shall be made of monolith reinforced concrete. Flooring
underlay shall be a monolith concrete slab.
Steel trusses with parallel chords shall be used as shed bearing structures. Columns
shall be made of monolith reinforced concrete. Shed columns and wind barriers shall
be made of shaped steel plates. Shed flooring underlay slabs and retaining walls of
ramp shall be made of monolith reinforced concrete.
frame and shed columns. Strip foundations of monolith reinforced concrete shall be
used for walls. Thickened parts of monolith slabs with additional mesh reinforcement
shall be used as foundations for partitions.
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Building roofing shall have a slope towards holes in the protruding floor slab to
provide for rainwater flow. The roofing shall be coated with solar-reflecting screed.
Water will be removed from the shed roofing due to sloped bearing structures.
External and internal doors and gates shall be of aluminum. Window frames shall be
of anodized aluminum.
Rooms section.
4.6.6 Firewater Pump Station and Pump Station at the Intermediate Storage
The pump houses shall be constructed as sheds. The frames of sheds shall be of
steel. Roofing shall be made of steel shaped plate.
Foundations of monolith reinforced concrete shall be used for the building. Floor
shall be constructed as a monolith reinforced concrete slab. Pump foundations shall
be monolith reinforced concrete. Monorail shall be provided to maintain the pumps.
All metalwork shall be protected against aggressive atmosphere influence by
painting with perchlorovinyl enamel.
4.6.7 Pipe racks
Single-layer pipe racks shall be provided to lay process pipelines across the
Polypropylene Plant area. Steel middle strips and cross-beams shall be used.
Columns shall be of monolith reinforced concrete. Columnar foundations of monolith
reinforced concrete shall be used.
Pipelines from the Refinery to the Polypropylene Plant shall be laid in trenches.
Columnar foundations of monolith reinforced concrete shall be used as pipe
supports. When passing under motor roads, small reinforced concrete bridges shall
be provided.
4.6.8. Laboratory
The laboratory for the PP Plant shall accommodate all equipment and facilities to
fulfill functions as required by the production process of PP Plant. Conceptual design
of laboratory shall be developed in basic design stage.
4.6.9.Maintenance Workshop
The building shall be located in a non-hazardous area. The Maintenance Workshop
Building will comprise but not limited to the following: electrical workshop,
mechanical workshop, test room, office(s) for receipt and dispatch, HVAC room,
instrument workshop, calibration room, storage rooms, analyzer shop, overhaul
areas, piping workshop, cleaning and painting room, tool storages, first aid room,
toilets, mess area, material offices, training room for maintenance staff.
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The Workshops shall be a fully equipped building with associated offices, changing,
toilet and washing facilities. The workshop facilities shall be designed to allow staff
service of up to 100 persons.
The building shall be equipped with a sufficient number of machinery and tools to
carry out maintenance works. The equipment list of the Maintenance Shop shall be
developed and specified during front end engineering design phase.
Construction of the building will be structural steel framework with pitched roofs,
reinforced in-situ concrete floors, and painted rendered masonry plinth walls. The
area of the Maintenance Workshop shall be defined during basic design and detail
design phase.
4.6.10. Warehouse
A building shall be provided to store various spare part, products, machinery,
equipment, etc of the PP Plant. The Warehouse Building shall be fully equipped
building with areas dedicated to spare part maintenance shop stores, part storage
and associated offices, toilets and other facilities. All area shall be provided with
dedicated air-conditioning units including all necessary fresh and exhaust air
systems.
The sizing of the building needs to be such so as to provide enough space to
accommodate all spare part of maintenance shop, equipments, tools in normal
operation as well as during commissioning of the refinery and occupying of staff
without any interference.
Construction of the building shall be structural steel framework with pitched roofs,
reinforced in-situ concrete floors, and painted rendered masonry plinth walls.
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4.6.8 Interior finishing

Building
Products
Warehouse
Control
Building
including
Substation
Nitrogen &
Oxygen
Station
Description
Warehouse with shed, ramp
Bagging, film production
and printing
Battery charging,
preparation of battery liquid
Offices, drivers facility,
dispatch room (janitor)
WCs, shower rooms
Corridors
Electrical room
Controller room, control
room
Corridors, lounge
Shower rooms, WC
Gas extinguishing room
Electrical substation
Outdoor transformer
substation
Nitrogen & oxygen station
(shed),
Bottle filling (shed), ramp
Bottle drying and painting,
battery charging
Duty personnel room,
stockrooms, corridors,
laboratory, smoking-room
HVAC
Electrical room
Receiver
area
Administra
tion
Building
Extrusion
Building
Lobby, corridor
Janitors room, laissezpasse office, canteen,
offices, security room,
secretary
Mans cloakroom,
womans cloakroom
WCs, shower rooms,
cleaners equipment rooms
Stockrooms
Conference hall
Staircases
Gallery
Control room
Electrical room
Staircases, tambours
HVAC
Production premises
Symbol of interior finishing type

Floor
Walls
Ceiling
F1
C7
F1
W4
C1
F6
W3
C6
F5
W2
C1
F4
F5
F2
F3
W4
W2
W1
W2
C1
C1
C3
C1
F5
F4
F2
F2
F2
W2
W4
W2
W1
W3
C1
C1
C2
C3
-
F1
W5
C7
F6
W3
C6
F5
W2
C4
F2
F2
F2
C2
C3
-
F5
F5
W2
W1
Mesh
fenci
ng
W2
W2
F5
W4
C1
F4
W4
C1
F5
F5
F5
F5
F3
F3
F5
F2
F4
W2
W2
W2
W6
W2
W1
W2
W2
W4
C2
C1
C1
C1
C1
C3
C1
C2
C6
C1
C1
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Legend
Floors:
F1
F2
F3
F4
- Mosaic concrete coating

- Concrete coating with polished surface
- Double floors on jacks
- Ceramic non-glazed tiles on cement-sand mortar.
Waterproofing: two Hydroisol layers.
Screed: cement-sand mortar
- Ceramic non-glazed tiles on cement-sand mortar
- Acid-proof concrete coating
F5
F6
Walls:
W1
W2
W3
W4
W5
W6
- Polymer cement painting from top to bottom

- Water-dispersion painting from top to bottom
- Chemically stable enamel up to 1.8 m, silicate painting above
- Ceramic piles up to a door/gate top height, water-dispersion
painting above
- Shaped steel plate painted at manufacturers with chemically
stable enamel
- Walls made of sash pulleys
Ceiling:
C1
C2
C3
C4
C5
C6
C7
- Armstrong-type suspended ceiling

- Glue painting
- Polymer cement painting
- Water-dispersion painting
- Silicate painting
- Chemically stable enamel
- Shaped steel plate painted at manufacturers with chemically
stable enamel
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4.7
BASIC PRINCIPLES OF PROCESS CONTROL
Polypropylene production is provided with Distributed Control System (DCS) and

Emergency Shutdown System on electronic and micro-processor base. These
systems provide automatic process control and safe process shutdown.
Process control will be provided from the following control rooms:
Central control building
Extrusion control room
Oxygen / Nitrogen station control room.
Work places for PP Plant process operator, off-sites operator as well as fire and gas
detection panels shall be provided in the central control building.
Extruder and additives metering control systems shall be provided in the extrusion
control room. These systems shall be connected to the central control building via
the data bus to provide remote control of extruder and additive metering operation.
Operators work place shall be provided in the nitrogen/oxygen station control room.
This work place shall be connected to the off-sites operator work place in the central
control building via the data bus.
Package supplied machinery shall be provided with local control panels. Common
trouble alarms from that panel shall be sent to the central control building.
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4.8
ELECTRICAL CONCEPT
4.8.1 Power supply

PP plant shall be power fed from the Refinery main substation with 22 kV voltage
level by two cable lines from 2 independent sources (two bus sections at the Power
Station 22 kV switchgear).
Substation with the switchgears at 22,6.6, 0.4kV and contactor panels is to be
located in the same building with the PP Complex central control building.
Two types of critical electrical consumers are available:
Allowing small interruption in power supply
Not allowing interruption in power supply.
These consumers shall be fed, respectively, from the emergency 6.6 kV switchgear
via 6.6/0.4 kV transformer located in the substation at the control building and from
UPS located at the same place.
Delta connection shall be provided for 6.6/0.4 kV transformer primary windings and
star connection for secondary ones. Neutral wire in this case shall be dead
grounded (winding connection is to be identified as /Y 11).
Extruder motor (4100 kW, approx.) is to be fed from 22 kV switchgear.
Step-down transformers at the Extrusion section and
Nitrogen/Oxygen station are to be fed from 3.3 kV switchgear.
substation
at
the
Firewater pump station, control building itself and outdoor lighting are to be fed from
the substation at the control building.
Propylene intermediate storage consumers and Nitrogen/Oxygen station 0.4 kV
consumers are to be fed from the Nitrogen/Oxygen station substation.
Polymerization section consumers, bagging and storage consumers and incinerator
consumers are to be fed from the Extrusion section substation.
0.4 kV switchgear fed from the Extrusion section substation is to be located at the
Bagging section. Office building is to be fed from this switchgear.
Reactive power compensation is provided at 6.6 kV and 0.4 kV voltage levels.
Ventilation with air excessive pressure shall be provided in all electrical premises in
order to obtain a non-explosive environment inside the premises.
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Power consumption is specified in the below table:

Item
Consumer
Power
No.
consumption,
kW
1
2
3
Polymerization section
Extrusion section
Bagging and Storage
section
Incinerator
Nitrogen/Oxygen
station
Propylene intermediate
storage
Ventilation and Air
Conditioning
Lighting
TOTAL
4
5
6
7
8
1900
4500
2000
Power
annual
consumption,
thousand kW
15200
33750
15000
130
980
80
7500
125
1000
830
6640
485
10950
1805
80975
DCS and ESD system on micro-processor base are provided for electrical drivers
control and monitoring.
Cable routings shall be provided as follows:
On cable structures of the cable racks and pipe racks outdoor area
On walls, in steel hoses and behind false ceilings indoor area
In cable channels in the substations.
Automatic gas extinguishing unit is provided for fire fighting in the cable channels.
4.8.2 Lighting
Lighting is divided in two groups connected to the different sources of power.
Escape lighting (220 VAC) is provided as well.
Floodlighting partial application could be provided for outdoor lighting.
4.8.3 Grounding
Common grounding circuit for personnel protection, static electricity protection and
lighting protection as well as special grounding system for computers is to be
provided.
4.8.4 Lightning protection
Floodlight stacks shall be used for lightning protection. Lightning adsorption steel
mesh laid on building roofs and connected to grounding points as well as steel
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structure frameworks also connected to grounding points could be used for lightning
protection of the individual facilities.
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4.9
BASIC PROVISIONS FOR FIRE FIGHTING SYSTEM
Fire fighting system comprises:

Firewater Pump Station
Firewater Tanks
Firewater Network
4.9.1 Firewater Consumption
Firewater demand is based on the extinguishing of the largest fire on the PP Plant
at the Polymerization Section area. Therefore, Fire Fighting System is to provide
enough firewater consumption for deluge systems in the Polymerization Section as
well as for three fire monitors in this area.
Total firewater consumption shall be as follows:
1450 m3/hr for deluge system
270 m3/hr for simultaneous operation of 3 fire monitors
Pressure at any point of the fire water network is to be at least 7 bar.
4.9.2 Firewater Tanks
Firewater margin is designed for firewater supply during 20 hours. Firewater shall be
stored in 2 tanks; the capacity of each tank is to be 20000 m3.
4.9.3 Firewater Pump Station
Two groups of pumps shall be provided in the Firewater Pump Station, namely as
follows:
a) Fire extinguishing pumps
b) Pumps to maintain the constant pressure in the network.
a). Fire extinguishing pumps
Two diesel engine driven pumps and one motor driven pump with the following
performances (for each pump) are to be provided:
Capacity 1032 m3/hr
Head 10 bar.
b). Pumps to maintain the constant pressure in the network
Two motor driven pumps with the following performances (for each pump) are to be
provided:
Capacity 60 m3/hr
Head 6 bar.
In case of fire absence the pressure in the firewater network shall be maintained at 6
bar.
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Motor driven pump shall be automatically started first by the signal from fire detector.
Then one of diesel engine driven pumps shall be started with 10 minutes time delay.
In case of one fire extinguishing pump failure the second diesel engine driven pump
shall be started automatically.
Constant pressure maintaining pump shall be shutdown automatically when fire
extinguishing pump starts.
4.9.4 Looped Firewater Network
Underground looped firewater network with installed hydrants shall be provided
around the PP Plant. Fire monitors and deluge systems shall be fed from this
firewater network.
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4.10
BASIC PROVISIONS
SYSTEMS
FOR
TELECOMMUNICATION
AND
ALARM
4.10.1 Telecommunication Systems

The following telecommunication systems shall be provided at the Polypropylene
plant:
Phone system;
Radio communication system;
Paging system;
Closed TV system;
Internal process communication system,
Optic-fiber telecommunication cable.
Phone system
Phone system shall be connected to the Refinery and public phone systems.
Radio communication systems
Portable radio stations shall be provided for the radio communication system. This
system shall cover Polypropylene plant and shall also provide radio communication
link with the Refinery facilities.
Area classifications shall be taken into consideration when radio communication
system is to be selected.
Paging system
Paging system shall allow connection to the Refinery Automatic telephone station. A
possibility to make a call via special switchboard connected to the basic paging
station located at the Refinery Administration building shall be provided also.
Closed TV system
Closed TV system shall be used for Polypropylene plant safety and monitoring
purpose.
Closed TV system monitors shall be located in the Control building.
Internal process communication system
Internal process communication system shall be provided for two-way operative
communication at the Polypropylene plant area.
Optic-fibber telecommunication cable
Optic-fiber telecommunication cables shall be routed from the Polypropylene plant to
the Refinery Control building and automatic phone station.
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4.10.2 Fire and Gas Detection System

Fire and Gas detection system shall be an addressable system and thus any
detector in alarm shall be identifiable from the panel.
Manual Call Points
Each building / facility shall have manual alarm call points (break glass units) located
at each exit of the building/facility. Each call point shall be of explosion-proof design
and be located close to exit ways.
Heat detectors
Buildings/facilities protected with sprinkler or deluge systems shall be provided with
the heat detection alarms on the fusible bulbs in the water or twin pneumatic fusible
tube heat detectors.
Smoke detectors
Point type smoke detectors shall be provided for all premises in the buildings /
facilities including corridors and electrical rooms. The signals from these detectors
shall initiate sound alarms in the buildings/facilities and report the incident to the Unit
Fire and Gas detection panel.
Point type smoke detectors shall be also provided in the premises protected with gas
extinguishing systems.
Beam smoke detectors shall be fitted along the roof apex levels of the warehouses.
Flame detectors
Flame detectors shall be located to monitor the Propylene spheres and
pumps/compressors handling hydrocarbons. No automatic operation of water deluge
systems shall be initiated by the flame detector signals.
Gas detectors
Gas detectors shall be located over plant periphery and in at the point of any
possible hydrocarbon and hydrogen containing gas leaks (pump and compressor
seals, etc.). Gas detectors shall be also located at the air inlets to ventilation and air
conditioning systems.
Alarm systems
All buildings / facilities shall be fitted with alarm bells to automatically sound on the
initiation of a fire detector in the building / facility itself. Sound and flash alarms shall
be initiated automatically in case of the operation of gas detectors.
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In operation of any sprinkler / deluge system a sound alarm shall be activated to

inform about these systems initiation.
All fixed gas extinguishing systems shall have sound alarm activated prior to
extinguishing gas discharge to the protected area. This signal shall sound for a set
period of time after fire detection and before extinguishing gas discharge. Moreover,
all entrances to the protected areas shall have an outside warming lamp to indicate if
the gas extinguishing system is locked off, set to automatic mode or discharged.
Control panel
Fire and Gas detection system addressable panel shall be located in the PP plant
Control Building with associated Gas detection system racks (PCB). This panel shall
receive the signals from the Fire and Gas detection system. These signals identify
signal activation point. The panel shall provide a possibility to start-up fire pumps at
the PP Plant. Common fire signal shall be also transmitted to the Refinery Fire
Station and common gas leakage signal to the Refinery Gas Rescue Station.
A mimic panel repeating the information transmitted to the PP plant Fire and Gas
detection system panel shall be provided at the Refinery Fire Station.
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4.11
BASIC PROVISIONS FOR SECURITY SYSTEM
PP Complex Security System shall protect the PP Complex from theft and
trespassers unauthorized entry to the territory.
Security complex shall comprise the following systems:
Plant area periphery and field facilities security alarm system;
Access control system;
TV observation system;
Plant area periphery guard lighting;
Information gathering and processing system.
Area Periphery and Field Facilities Security Alarm System
The system shall provide the receipt and processing of information from the alarm
facilities installed at the periphery and/or in the field facilities of the PP Complex,
information display at the indicator board and monitor (in a simple way for the
security service easy understanding), and deliver commands to execution units
initiation (TV camera, lighting, etc.).
Access Control System
PP plant personnel shall use plastic cards when passing through the turnstile at the
check entry post. Vehicle entry / exit to the PP plant area shall be also provided with
plastic cards.
TV Observation System
TV observation system shall allow monitoring of the situation at the most important
areas of the PP plant. This system arrangement and location shall be determined
during engineering phase.
Guard Lighting System
Guard lighting shall be provided along the area periphery. Guard lighting can
operate either in a continuous mode or being initiated on alert.
Information Gathering and Processing System
Information gathering and processing equipment and TV monitors shall be installed
at the Refinery security service building and at the Plant check entry post.
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4.12
RECOMMENDED
PRODUCTION
PERSONNEL REQUIREMENTS
ORGANIZATION
CHART
AND
The Operations Management Organizational Chart is in compliance with Licensors

recommendations, experience in operating the similar Russian and foreign plants as
well as the planned configuration of the Plant.
The organizational chart was formed based on a concept of integration of the
Polypropylene Plant into the PetroVietnam Refinery as a process unit and all offsite
services are integrated into corresponding centralized services of the Refinery:
Electric power and heat supply;

Water supply;
Air and fuel supply;
Instrumentation;
Chemicals and warehouse services;
Repair service;
Transport and other general services;
Flare system, rescue and security services, non-production group.
The Laboratory personnel supporting the operation of the Polypropylene Plant is

under managerial control of a head of the Plant and reports functionally to a head of
the Main Refinery Laboratory.
The management organizational chart is developed considering the selected
process flow chart, equipment, production control means and a distributed control
system of process control. The Plant is headed by a Plant Manager bearing
functions of process and administrative management in respect of all personnel of
the Polypropylene Plant.
As for professional background, managers and personal qualities, the Plant
Manager should have the modern higher education and be capable of taking critical
decisions.
The Polypropylene Plant Manager reports to a Refinery Operations Director in
administrative and technical aspects.
Qualification requirements: relevant higher education, experience of working at
executive positions not less than 5 years, fluent English.
Heads of operational sections and groups of sections execute the operational and
administrative & technical management of the sections.
Qualification requirements are the same as for the plant manager.
The main operational sections are combined on a process basis.
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The day-to-day plant and personnel management is executed by a shift supervisor.

Qualification requirements: special higher education, experience of work, fluent
English.
Labor of workers shall be managed based on the number of serviced equipment
items, a complexity of servicing and a field of operations.
Where bag handling, out packaging, etc. take place, the mechanization of manual
labor is utilized.
A team and shift form of the work shall be employed.
At the Polypropylene Plant, senior operators and control panel operators have the
highest qualification of workers. Field operators have lower qualification, etc.
Senior operators should have the higher education and the highest skill category.
They execute operational supervision of the corresponding sections from a control
room, take care of the field equipment operation.
Control panel operators should also have the higher education and the highest skill
category. They control the process via monitors from the control room, where they
have fixed workplaces.
The background and work experience of senior operators and control panel
operators shall allow them to replace each other if operational need arises.
Field operators shall monitor the field equipment operation, carry out preventive
inspections of their areas and report their findings to a Senior Operator; they make
necessary marks of the performed inspection in special cards placed at every
serviced unit (Inspection done Time). The inspection shall be carried out on a
regular basis at discretion of a shift supervisor.
PE film section operators shall conduct film production, PE bag manufacturing and
flexographic printing processes, monitor production of the shrinkable film used for
palette wrapping, packing product polypropylene into bags and palleting bags,
handling bags.
Fork-lift truck drivers carry out handling operations.
Qualification requirements for operators and forklift truck drivers: secondary
technical education (vocational school).
To maintain process equipment, electrical equipment and instrumentation with the
aim of assuring trouble-free and stable operation, the Polypropylene Plant staff shall
include a group of engineers in the following disciplines:
Mechanical Engineer;
Electrical Engineer;
Instrumentation Engineer.
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An emergency response team, being on round-the-clock duty and including workers

of necessary occupations, shall arrive from a Refinery Response Service to take
efficient and fast actions in emergencies on a request from the Polypropylene Plant
control room.
When establishing the staff, a principle of rational splitting of works and operations,
shift duration and holding of more than one function for some worker categories
were considered.
The planned plant shall be operated in 8-hour working shifts. The operating
schedule shall be sliding, in 3 shifts with 4 teams. This schedule assures continuous
round-the-clock process services and creates safe labor conditions.
Shift relief personnel of 12% of the shift personnel shall be provided to assure the
process continuity during vacation and high sick rate periods, holidays and days of
rest.
The staff shall be provided for maintenance of the process during normal routine
operation, strict execution of operating practices and qualified servicing the
equipment and operating mechanisms.
A control room shall be provided for maintaining the polypropylene production
process.
Special spaces, being readily accessible and convenient for the regular use, shall be
provided for keeping job descriptions, schedules, engineering documentation and
organizational documents.
The Polypropylene Plant shall include a nitrogen & oxygen plant. In addition to
supply the planned Polypropylene Plant with nitrogen, it shall provide for loading
sales oxygen in cylinders.
Consumer services and medical aid for the additional personnel will be provided by
the existing refinery facilities having adequate capacities.
It is necessary to provide cleaners for keeping order within the outdoor territory and
in administration rooms of the planned plant in the general service of the refinery.
No additional operating personnel is required for servicing the intermediate feed
(propylene) tank farm, local waste treating facilities and a liquid waste incinerator.
No personnel shall be provided for servicing the automatic fire-fighting system.
Product Shipment
The bulk of the product polypropylene will be shipped by sea transport using
facilities at the planned dry cargo ship port included in the Refinery configuration.
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The product polypropylene will be delivered to the port by trucks from the storage at
the Polypropylene Plant.
Product handling and expediting will be carried out mainly by the existing port
services. In connection with an increase in the volume of work an estimated
additional operating personnel employed for the above-mentioned works will be
three (3) workers per shift, totally six (6) workers at the two-shift operation.
The number of the Plant operational staff, personnel occupations and qualifications
Table 4.12-1
Position,
occupation
Labor
category
Shift
number
Technical
staff
--
Mechanical Engineer
--
Piping Engineer
--
Instrumentation Engineer
--
Electrical Engineer
--
Civil Engineer
--
Head of Sections 100 to900
--
Non-manual
worker
Non-manual
worker
14
23
20
12
12
39
2
Administrative and production staff
Polypropylene Plant Manager
Manager
Janitor at entrance
Secretary
Number of employees
Peak shift
Total
Total administrative staff:

Production staff:
Shift Supervisor
Senior Operator, Sec. 100-700
Senior Operator, Sec. 800
Technical
staff
Technical
staff
--
Head of Section 900

Supervisor of Section 900
Total:
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Position,
occupation
Labor
category
Shift
number
Number of employees
Peak shift
Total
Technical
staff
Technical
staff
Worker
17
Laboratory*)
Senior Chemist
Chemist
Laboratory Assistant
Total:
Plant Total
79
* Not considering operational personnel in a dry cargo ship port (tentatively 6 employees).
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Labor and Rest Schedule

The employees are planned to work considering an efficient labor and rest schedule
with alternating periods of labor and rest being justified from the physiological and
economic aspects, which guarantee a high efficiency and productivity of labor.
Rest breaks shall be short and their number shall allow for the recreation without
detriment to the optimal process maintenance and with the observance of all safety
rules.
All the operators shall be adequately trained prior putting the plant into operation to
relief regularly their coworkers for a short period during short breaks and lunchtime.
The efficient alternation of labor activity and regular short breaks within a shift will
allow to eliminate overworking and tiredness of workers and conserve the acuity of
response and vision.
The team working schedule for round-the-clock operation of the Plant is given in the
table below (Sections 100-700, 800).
The Government of Vietnam established a 40-hour, 5-day working week. This
decree shall be valid for employees at institutions and a managerial staff of plants.
Where a process runs continuously 24 hours a day, an appropriate operating
schedule shall be established. In this event the working week shall contain 40 hours
and the days-off may take place in any day of week according to the operating
schedule.
Recommended Duty Chart at 3-shift, 4-team operation
Table 4.13-2
Team No.
Team No.1
Team No.2
Team No.3
Team No.4
M
E
N
(-)
1
M
N
E
2
M
N
E
3
E
N
M
-
4
E
M
N
5
M
E
N
6
N
M
E
-
7
N
E
M
8
E
N
M
9
M
N
E
10
M
N
E
11
E
N
M
-
12
E
M
N
13
M
E
N
14
N
M
E
-
15
N
E
M
morning (8.00-16.00)
evening (16.00-24.00)
night (24.00 8.00)
day off
Industrial environment factors such as noise, vibration, illumination, dust and gas
levels in the air, air temperature and humidity in the working area have been
designed at the stage of equipment, instrument and design selection within
allowable limits and shall not adversely affect the human life.
To prevent potential impact of hazards on the human life at process upset, every
worker shall be equipped with adequate means of self-help and individual protection,
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namely, working clothes and shoes, gloves, eyeglasses, respirators, gas-masks,

first-aid kits, etc.
Personnel training
When buying the license, the licensor's scope of services also normally includes the
services for operating personnel training.
This is related to the engineers, administrative staff and specialists
Polypropylene Plant Manager
Heads of Section
Shifts Supervisors
This is also related to the specialists having responsible posts when the process is
carried out around the clock, i.e. Senior Operators and Control Panel Operators.
The training program for these specialists should cover not only process and control,
but also regular training prior to the beginning of the shift (2-3min.) and before the
work start after the leave (up to 1week). This training shall be provided at the special
simulator installed in the immediate vicinity of the control room. In the simulator
premises it is necessary to provide working places which duplicate operator work
stations in the control room.
It is recommended that the above mentioned management and operation personnel
be trained abroad.
Training of the lower category operators and other workers can be provided in
Vietnam.
The issue related to the selection and training of the skilled person for the work at
the plant is a very flexible issue. The development of technologies, high cost of
equipment and strict requirements of the environment protection do not actually
allow making mistakes.
The working staff shall acquire at least three main aspects of knowledge:
regulations for operation at site;
process and engineering knowledge;
safety knowledge
On the first subject. The training will be provided for personnel from the operator
level to the management level. Graduates from schools and specialized schools,
who wish to work at the Refinery at this plant, can also undergo training.
However, this training shall be primarily focused on the middle level managers, who
later on can train the remaining personnel.
On the second subject. Each newly hired specialist for operator position must
undergo training.
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On the third subject. Refinery Safety Engineer will train the operating personnel.
The essence of the training principle is to train people not only to new processes,
methods, but also to refresh their knowledge on those subjects, which are known to
them.
Therefore, the process of personnel training is continuous both for the working staff
as well as for the newly hired specialists.
This process will continue in future during the process of plant commissioning,
mastering of production and further operation.
Training shall be provided from 3 to 9 months up to 1 year.
Operating personnel training in Vietnam.
Transfer of experience at site
Training shall be provided by both the foreign teaching personnel as well as by the
experienced Vietnamese personnel, which had undergone training abroad, with the
help of Contractors representatives during the process of construction and
installation works and commissioning. Operating personnel will be practically trained
during all the stages of work under the guidance of the above-mentioned specialists.
Operating staff training in accordance with the program.
The program shall cover the principle specific features of the process, nature of the
plant, various modes of operation (continuous, discrete).
It is advisable to divide this training program into the following stages:
Prior to start-up, to check the equipment, apparatus and valves, check carefully all
the most complicated units, perform necessary control and adjustment, and check
again.
Start-up and shutdown at the normal mode.
Operation. Process monitoring. Identification of the causes of failure, deviations from
normal operation or accidents.
Methods of failure elimination for each specific case. This type of training will be
continuous during the process of plant operation and be provided at special sessions
using computer installed at the simulator room.
The strategy of approach to the training of maintenance personnel for the
Polypropylene Plant shall not be fundamentally different from the approach adopted
at PetroVietnam Refinery.
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Personnel training abroad shall be also in compliance with the level and principles
set forth by PetroVietnam Refinery.
It is recommended that the training program shall consider not only the operating
staff of the Plant for today, but also long term planning of the forecast for the
demand in personnel.
There are many reasons for the variations of the staff number at the Plant, but the
most important among them are the following:
Raising the level of personnel's skill
Replacement due to the rise of personnel professional skill
Engineers promotion
Dismissal of engineers and workers due to various reasons.
As a result of long term planning the number of newly hired personnel is identified by
position, discipline, categories which require training.
It is advisable to perform this work systematically.
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4.13
LABORATORY EQUIPMENT
List of major laboratory equipment required for polypropylene homopolymers

production is specified in the below table.
Pos.
0-01
0-02
0-10
0-20
0-21
0-22
0-23
0-24
1-01
Test Equipment
Quantity
Comment
Supplier
General Laboratory Equipment
Mettler, Sartorius
1
Analytical balance 0-200 g
/ 0,1mg
Mettler, Sartorius
1
Lab balance 0-5.000 g /
0,2g or better
Neolab, Buddeberg
1
Stop watch (0,1 s)
Mahr
1
Thickness gage 10 mm /
According to ISO
Mahr
1
10
4593 or DIN 53 370
Film thickness indicator
Heraeus
1
micrometer caliper
Vacuum drying oven incl.
W&P, Perkin Elmer,
1
vacuum pump
Shimadzu
Temperature controlled
lab plate press
Option: Injection Moulding of Test Specimens for Impact Testing et. N 37
Arburg, Boy
Option for
Option
Injection molding machine
homopolymer /
(1)
statistical
Conditioning chamber
copolymer;necessary
Option
with cooling unit
for block copolymer
(1)
Together with
injection moulding
machine
Gas Analysis of Raw
Gas Analysis of Raw
Materials
Materials
Gas chromatograph
0-20
Gas chromatograph for
for C1 C4 only if not
C1 C4 only if not
measured by
measured by Propylene
Propylene source
0-21
source
Gas chromatograph
0-22
Gas chromatograph for
for CO / CO2
0-23
CO / CO2
Automatic
0-24
Automatic hygrometer,
hygrometer, portable
portable
O2 measurement,
O2 measurement,
portable
portable
Sample bombs for
Sample bombs for gas
gas samples
samples
1-01
Melt Flow Rate Melt
Melt Flow Rate Melt
Volume Rate
N
Volume Rate
N 01/N
01/N 01 Draft/N 01-1
01 Draft/N 01-1
Melt volume index
Melt volume index
apparatus
apparatus
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Pos.
1-02
1-03
1-04
1-05
1-06
1-07
1-08
1-09
1-12
1-13
1-14
Test Equipment
PC host program for melt
indexers
Xylene Solubles
N 03
Reflux apparatus (glass)
with agitator
Rotational evaporator
Vacuum pump for rotary
evaporator
Atactic Content (NMR)
N 40
1H-Broadine NMR
Thermostat
Yellowness Index (ASTM
DIN ISO)
N 16/N
16/2
Tristimulus colorimeter
Elemental Analysis (for

Cat Residues & Polymer
Additivds) A 02-1/A 051/A 07-1/A 08-1/A 19-1/A
20/A 23-2
X-Ray fluorescence
Software
Film Quality Test
N 07/N 07-2
Film testing equipment
Moisture Content of
Polymer
N 21
Karl-Fischer coulometer
Particle Size Distribution
N 08
Mechanical sieving set
Sample divider
Comonomer Content of
Statistical Copolymers
N 28
DSC melting point
apparatus
Quantity
1-02
1-03
1-04
1-05
1-06
1-07
Comment
PC host program for
melt indexers
Xylene Solubles
N 03
Reflux apparatus
(glass) with agitator
Rotational evaporator
Vacuum pump for
rotary evaporator
Atactic Content
(NMR) N 40
1H-Broadine NMR
Thermostat
Yellowness Index
(ASTM DIN ISO)
N 16/N 16/2
1-07a) ASTM; 1-07b)
DIN;
Licensee to specify
necessary standard
1
1
1-07a) ASTM : Hunter

Lab
1-07b) DIN :
Lange/Hach, Minolta
Philips, Bruker, Oxford

Philips
Extruder + die +
winding unit +
camera
On-line installation
possible
1
Optional
(1)
1-14
Supplier
OCS
Metrohm
Retsch, Engelsmann,
Fritsch Fritsch
Comonomer Content
of Statistical
Copolymers N 28
DSC melting point
apparatus
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Pos.
1-50
1-51
1-52
Test Equipment
Pourability
N 33
Standardized funnel
Slip Agent Content
(Oleamide/Erucamide)
A 10/A 10b
FT IR spectrometer
Chemobeck extraction
apparatus
Quantity
1-50
1-51
1-52
1-53
Elemental Analysis Ca,

Mg, Al, Ti
A 023/A 08-3/A 23
Atomic absorption AAS
1-53
1-54
Elemental Analysis CI
A 19-2
Coulometric test
Haze of Films
Hazemeter
1-54
Gloss of Films
N
14
Glossmeter
Impact Testing
N
10/N 12
Impact tester charpy / izod
Cryostat
Notching equipment
Profile projector
1-56
Heptane Solubles
N 02
1-58
1-55
1-56
1-57
1-58
1-59
Soxhlet extraction
apparatus (Glass)
Stabilizer Content
A 01/A 03/A 04-a/A 04b/A 11-1/A 12-1/A 12-2/A
14/A 16/A 17/A 21
HPLC
Extraction apparatus
according to measured
components (Soxhlet,
Chemobeck etc.)
1-55
1-57
1-59
Comment
Pourability
N 33
Standardized funnel
Slip Agent Content
(Oleamide/Erucamide
)
A 10/A 10b
FT IR
spectrometer
Chemobeck
extraction apparatus
Elemental Analysis
Ca, Mg, Al, Ti
A 02-3/A 08-3/A 23
Atomic absorption
AAS
Elemental Analysis
CI
A 19-2
Coulometric test
Haze of Films
Hazemeter
Supplier
Gloss of Films
N 14
Glossmeter
Impact Testing
N 10/N 12
Impact tester charpy /
izod
Cryostat
Notching equipment
Profile projector
Heptane Solubles
N 02
Soxhlet extraction
apparatus (Glass)
Stabilizer Content
A 01/A 03/A 04-a/A
04-b/A 11-1/A 12-1/A
12-2/A 14/A 16/A
17/A 21
HPLC
Extraction apparatus
according to
measured
components (Soxhlet,
Chemobeck etc.)
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4.10
INITIAL LIST OF MAJOR EQUIPMENT AND RECOMMENDATIONS FOR

VENDORS
4.14.1
Item
No.
Preliminary List of Major Equipment

Facility
Equipment
Designation and Tag
Number
3
SPHERIPOL process
1
1
2
PP Plant
Intermediate Spheres, TK-1A/B

Propylene
Storage with
Sealed Pumps, P-1A/B
Pumps
3 Oxygen/
Nitrogen
Station with
Oxygen
Bottle Filling
4 Receivers
Firewater
Tanks and
Pump
Station
Package Unit
Number
Technical
Performance
Net capacity 1000

m3
D = 12.9 m
2 (1
Design press. 23
oper.+ 1 kg/cm2g
standby) Capacity 45 m3/hr
Differential head
520 m
1
Capacity by nitrogen
1125 nm3/hr
Capacity by oxygen
382 nm3/hr
Notes
6
Licensor to
provide
equipment
data on
engineering
phase
High-pressure Nitrogen
Receivers (200
kg/cm2g), D1A/B/C/D/E/F/G/H/I/J
Firewater Pumps:
P-2A(motor driven)
10
V = 25 m3
P-2B/C (diesel driven)
Pumps to maintain
constant pressure, P3A/B
2 (1
oper.+1
standby)
Capacity 1032
m3/hr
Head 100 m
Ditto
Capacity 60 m3/hr
Head 60 m
Firewater Tanks, TK2A/B
Package
supply
Each Tank Capacity

20000 m3
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4.14.2 Recommendations on Equipment Vendors

The Licensors and LGI propose the following companies to be vendors of major
equipment items:
Equipment designation
Propylene Spheres with each sphere
capacity of 1000 m3
Nitrogen/Oxygen Station
Reactor
Centrifugal Pumps
Axial Pumps
Metering Pumps
Centrifugal Compressors
Reciprocating Compressors
Nitrogen Compressor
Reciprocating Air Compressor

Extruder
Manufacturer
1. Toyo Kanetsu K.K.
2. Samsung Heavy Industries Co., Ltd.
3. CB&I Europe B.V.
1. DSD Saarlouis
2. JSC EMK Atommash
1. JSC Geliymash
2. Air Liquide
1. NUOVA CO MI.
2. MAG
3. Zepplin
4. Pitton Gessner landruf
1. Worthington Ingersoll Dresser
2. HMD/KONTRO SEAL/LESS PUMPS Ltd.
3. Sulzer
4. Lewa
5. KSB
6. JSC Volgogradneftemash
7. JSC Livgidromash
1. Sulzer
2. David Brown
3. Lawrence
1. Lewa
2. Bran-Luebbe
3. Hydroservice
1. Sulzer
2. KSB
3. NUOVO PIGNONE
4. JSC Kazancompressormash
5. Flowserve
6. Shin Nippon
7. Gould Pump
8. Ebara
1. Japan Steel Works
2. Sulzer Burckhardt
3. ABB Industry
4. Marubeni Corp.
5. Sundyne Corporation
6. Nikkiso Sundustrand
1. SUNDYNE
2. FIMA
3. S.I.A.D. MAC
4. Hofer
5. PPI
6. Burton
1. ATLAS COPCO
2. NUOVO PIGNONE
3. JSC Borets
1. WERNER & PFLEIDERER
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Silos (aluminum)
Fire Tanks
Pressure Vessels
2.
3.
4.
1.
2.
3.
4.
1.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Japan Steel Works

Farrel
KOBE
JANSEN & DIEPERINCK B.V.
Zeppelin
Coperion Waeschle
Motan-Fuller
JSC Koxohimmontazh
MAG
Pitton Geasner Landruf
Zeppelin
Doosan Mecatec
Daekyung Machinery
Sewon Cellontec
Sungjin Geotec
Hitachi Zosen
Smitomo Heavy
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5. PLANT SAFETY AND ENVIRONMENTAL IMPACT ASSESMENT

5.1
SAFETY
Polypropylene production is characterized by the use of fuel hydrocarbon gases and

LPG, pyrophoric aluminum alkyls (TEA) in the process and by the conditions at
which industrial accidents can occur as a result of product leakage. The probability
of such accidents depends on the equipment quality, as well as on the operation
conditions, performance of timely repair works and their quality.
Quality of the equipment at the similar plants is demonstrated by its long trouble-free
operation. At the similar type plants great attention is paid to the monitoring of the
equipment condition (rotational equipment bearing temperature monitoring, vibration
level monitoring, availability of big number of emergency interlocks and alarms, etc).
In spite of the above mentioned the presence of large volumes of fuel gas and LPG
does not allow the elimination of the possibility of an accident completely.
The most likely accident source is a hydrocarbon leak to the atmosphere, for
instance, as a result of flange leak at a rather big diameter pipeline.
Lets assume that the probability of flange leak is 8.9*10 4 and the number of
flanges at the pipeline with the diameter of 3 inches and more equals to 50 flanges.
Then the probability of leak of one of the flanges will be 4.4*10-2 per year. Such a
leak can lead to inflammation and fire and in this case the probability of such events
will be from 4.4* 10-7 to 4.4* 10-8 per year. At the same time the probability of
explosion-hazard air-gas mixture dispersion will be considerably higher.
The Polypropylene production is referred to so-called clean process, which
contaminates the environment to minimum and has no industrial nonutilizable waste.
Permanent discharge to the atmosphere due to the leak of flanges, shutoff, control
valves and equipment includes low-hazard substances for the human being health,
i.e. hydrocarbons. Periodic and emergency discharges are directed to flare for
burning. Plant environment will be monitored by fixed gas analyzers with the alarm
to the control room in case of fuel gases or vapor lower concentration inflammation
limits are reached.
The Plant fire protection is based on the assumption that one big fire source can
occur at the plant at one time which shall be eliminated by means of fixed firefighting means. In accordance with NFPA code flooding systems, fire monitors,
hydrants, gas firefighting units for electric rooms, water sprinklers, movable and
handheld fire extinguishers shall be provided for this purpose. Automatic fire-fighting
units will be activated by automatic fire detectors. Besides, electric fire alarm
transmitters will be provided at the unit.
Automatic powder extinguishing system will be provided for TEA extinguishing.
DCS will be provided for process control that will ensure safe operation and
monitoring reliability.
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ESD will be provided to prevent the Plant from emergency situations.

In accordance with API the explosion-hazard areas will be indicated in which it is
prohibited to use electrical equipment without necessary means of protection. The
level of electrical equipment protection from the explosion will be selected depending
on the explosion-hazard mixture properties.
All the equipment of the Plant will be protected from static electricity and high
potential accumulation by protective grounding.
For normal work organization and personnel evacuation in case of accident the
working, emergency working and emergency evacuation lighting will be provided.
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5.2
ENVIRONMENT IMPACT ASSESSMENT
Environment Impact Assessment (EIA) Report was performed by Vietnamese

Research and Development Center For Petroleum Safety and Environment
(RDCPSE).
In the Environment Impact Assessment (EIA) Report, the assessment of potential
environmental impacts from the implementation of the Polypropylene Project has
been made based on the project components, processes, waste discharge/emission
and environmental characteristics in the proposed project area. Impacts from project
implementation has been assessed based on the following stages:
Construction/ installation and commissioning;

Operations; and
Decommissioning (if required under Vietnamese Law).
The activities during 3 stages of project will increase solid waste, domestic waste,
etc. Wastewater includes effluents from producing area such as waste from the
process (Degassing section, Extrusion section), industrial wastewater, domestic
wastewater, rainwater run-off and fire fighting water. Gas discharges in case of
emergency are routed to the flare system, emissions resulted from leaks have also
taken place.
5.2.1. Air pollution1
The operation of the PP Complex will have an impact on air quality but the scale of
effect will depend on many factors such as the selection of technology, maintenance
of equipment, appropriate operation, etc. The main sources of air pollution during
operation will be the release from process units through the Extrusion stack,
Incinerator stack and the Refinery main flare.
Emission characteristics
Discharge from Extrusion stack is provided to be arranged via bag filters with
purification rate from polymer fines in amount of less than 20 mg/m3, that is why this
flow does not impact significantly on the environmental pollution.
PP Complex flare header purge with a flowrate of 80-100 m3/hr is the only
permanent discharge to the Refinery flare.
Table 5.2.1
STACK AND FLARE CONFIGURATION [EIA report, item IV-15]
Flare/Stack number
Discharge location X (m)
Discharge location Y (m)
Stack height (m)
1
1
588165
1698000
30
2
589156
1697644
89
Refer to Section 4 of EIA Report for details
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Stack diameter (m)

Notes:
0.6
1.371
1 Incinerator Stack
2 Refinery Main Flare
The emission characteristics of gases from incinerator stack and main flare under
normal operation, which will be utilized in the dispersion modeling of the emission
from the PP Complex, are specified in below table:
Table 5.2.2 CHARACTERISTICS OF EMISSIONS FROM PP PLANT [EIA report,
P.IV-14]
Incinerator
Stack
Exit gas temperature (0)
100
Volume flowrate (m3/h)
14976
Pollutant emissions (g/s)
SO2
0.0012
CO
0.00484
NOx
0.01935
Fines (polypropylene)
0.00212
Unburned hydrocarbons
Pollutant concentration (mg/m3)
SO2
0.28846
CO
1.1575
NOx
4.6274
Fines (polypropylene)
0.5096
Unburned hydrocarbons
-
Main Flare
Normal
Abnormal
operation
operation
of the PP
of the PP
Plant
Plant
50
50
2162589
2055379
0.0034
0.34134
0.07296
0.15
0.0034
833.63
124.96
208.53
5.66
568
121.46
249.7
0.006
1460
218
365
Vietnamese
Standard
TCVN
6991-2001
150
150
300
-
In normal operating conditions, almost all concentrations of pollutants in emissions

are under permissible discharge standards (according to TCVN 6991-2001
Standard) with the only exception for CO concentration (586.49 and 568 mg/m3 ).
In abnormal case (operation of polymerization reactor safety valves) almost all
concentrations of pollutants are under allowable discharge standards (as per the
Standard TCVN 5939-1995) with the only exception for CO concentration (1460
mg/m3). The maximum emergency discharge will occur on very rare occasions and
over a short period of time (not more than 10 minutes). Moreover, as per the
Licensors information the operation of safety valves has not occurred during over
3,500,000 hours of operation of PP Plants all over the world and this corresponds to
over 400 years of safe operation. That is why the impact on air quality from the
emergency case shall be considered as intermittent case.
Dispersion results
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The dispersion results of emitted gases from Incinerator Stack and Main Flare in
normal operating case show that all maximum predicted ground level concentrations
(GLC) of major pollutants, like SO2, NOx, CO and polypropylene fines, are rather
small compared to Vietnamese allowable concentrations for both, 1-hour and 24hour average. Maximum GLC of major pollutants are summarized in table below:
Table 5.2.3 MAXIMUM PREDICTED GROUND LEVEL CONCENTRATIONS

UNDER NORMAL OPERATION (g/Nm3) [EIA report, p.IV-16]
Pollutant
1-hr
24-hr
Annual
NOx
CO
SOx
Fines
(polypropylene)
Unburned
hydrocarbons
102.26
66.73
70.12
5.08
49.18
27.22
27.92
1.84
10.76
5.50
6.19
0.41
Vietnamese Standard
TCVN 5937-1995
1-hr
24-hr
400
100
40000
5000
500
300
300
200
2.09
0.76
0.08
300*
*The Vietnamese standard for ambient air quality (TCVN 5937-1995) does not identify criteria for
hydrocarbons. The provisional environmental criterion of 300 g/Nm3 (24-hour) set by MoSTE is used
here for comparison.
All predicted ground level concentrations of pollutants during normal operation of the
PP Plant are lower than the ambient concentration standard (TCVN 5937-1995).
Maximum hourly, 24 hourly and annual predicted GLC during abnormal operation of
the PP Plant are summarized in table below:
Table 5.2.4 MAXIMUM PREDICTED GROUND LEVEL CONCENTRATIONS
UNDER ABNORMAL OPERATION (g/Nm3) [EIA report, p.IV-17]
Pollutant
1-hr
24-hr
Annual
NOx
CO
SOx
Fines
(polypropylene)
Unburned
hydrocarbons
1738.5
11597.8
70.12
5.08
784.91
4368.26
27.92
1.81
81.34
521.76
9.19
0.41
Vietnamese Standard
TCVN 5937-1995
1-hr
24-hr
400
100
40,000
5000
500
300
300
200
2908.3
1062.11
113.61
300*
*The Vietnamese standard for ambient air quality (TCVN 5937-1995) does not identify criteria for
hydrocarbon. The provisional environmental criterion of 300 g/Nm3 (24-hour) set by MoSTE is used
here for comparison.
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The dispersion modeling predictions indicate that the maximum 1-hour and 24 hourly
GLC of NOx during abnormal operation of the PP Plant are about 4 and 8 times
(accordingly) higher than the permitted Vietnamese Limits. Similarly, maximum 24
hourly GLC of unburned hydrocarbons is about 4 times higher than the provisional
criterion. However, as it is anticipated that the emergency case will occur very rarely
and over a short period of time only (not more than 10 minutes), the impact of NOx
and unburned hydrocarbons GLC on the air quality of the area may be considered
as minor.
According to the results of dispersion modeling, the maximum predicted GLC of CO,
SOx and polypropylene fines are small and lower than permitted Vietnamese limits.
That is why they will not have a significant impact on local air quality.
5.2.2. Aquatic pollution2
When the project is being operated, wastewater from different sources inside the PP
Plant shall be collected and pre-treated appropriately.
a) Sewage from Process Area
Wastewater containing oily surface water, areas washing water and fire water (in
case of fire) from the PP Complex may come from the following sources:
Polymer Degassing Section;

Extrusion section;
Intermittent clean-up of process equipment, etc.
All these effluents will be collected at the Refinerys Effluent Treatment Plant (ETP)
for further treatment. Typical flow and quality of process wastewater after the
biological treatment facilities of the Refinery ETP are:
Flow rate
BOD5
COD
pH
Temperature
Polypropylene fines
2-4 m3/hour
50-100 ppm
150-200 ppm
7-8
45-50 0C
<100 ppm
The final discharge will be checked to satisfy environmental standards for industrial
wastewater before discharging into the Viet Thanh bay. The impact of wastewater
from the PP Plant is considered to be insignificant.
b) Rain water run-off
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Drains from drainage systems and rainwater run off from the project area with a risk
of potential oil spillage shall be collected into the second main section of Local
Wastewater Treatment and routed to the Refinery Storm Water sewage for
treatment of oily surface water that shall not be discharged directly to Viet Thanh bay.
c) Domestic Sewage
This type of wastewater will be collected and routed to the septic tank system. After
the general sewage treatment and recovery system of the project environment
impacts from domestic sewage are therefore considered to be negligible.
d) Cooling water
Cooling water supply for the PP Plant shall be provided from the Refinery cooling
water system. Freshwater cooling water will be circulated, but not disposed to
environment.
5.2.3. Soil pollution3
The proposed area for construction of the PP Plant is of 15 ha, most of which is poor
and agricultural land with low cultivation capacity. Main environmental impacts
during construction phase are to cause physical disturbance and loss of vegetation
at the project area. The clearance of project area causes not only the loss of biota
but also destroying living environment of creatures. These activities will last for full
duration of project operation, at least 30 years. However, due to the fact that the
construction site is already planned for constructing the Dung Quat industrial zone,
the impacts from these activities are not considered to have a direct effect on
environment.
Under normal operation of the PP Plant, the main sources of soil pollution are solid
process wastes:
Catalyst for propylene purification from COS (0.5 % platinum, aluminum dioxide
as base; 6.8 tones/once per 3-5 years).
Molecular sieves for propylene drying (synthetic alumosilicate; 4.6 tones/once
per 3 years).
Polymer produced during extruder start-up and off-spec polymer (61.5 tones per
year).
Catalyst will be sent to the noble metal recovery factory. After treatment molecular
sieves will be sent to an allowable landfill. Collected polymers will be sold as offspec product. The environment impacts from solid wastes on soil are therefore
considered to be negligible.
5.2.4 Solid and liquid wastes
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The sources and characteristics of process wastes are shown in below table 5.2.5:
Table 5.2.5 SOURCES AND CHARACTERISTICS OF SOLID AND LIQUID
WASTES [EIA Report, p.IV-23]
Section
Propylene
Treatment
and
Hydrogen
Recovery
Waste type and

contaminants
Catalyst for propylene
purification from COS
Production and
frequency
6.8 T/ 3-5 years
Hazard
Class
I
4.6 T / 3 years
Synthetic alumosilicate for

propylene drying
Extrusion
and
Pelletizing
Proposed
disposal route
Return to the
manufacturer for
recovery of
noble metal
Dispose to
waste yard
located ISBL
Refinery
To be sold as
off-spec product
Polymer produced during

61.5 T / year
III
start-up of the extruder
and off-spec polymer
Polymer fines recovered
0.96 T / year
III
To be sold as
from Extrusion stack
off-spec product
All sections
Waste oil
6.7 T / year
I
Incineration
Laboratory
Non-diluted lab effluents
13.2 T / year
I
Incineration
(acetone, xylene, heptane)
Note: class I hazardous waste; class II non-hazardous waste, which are biodegradable, but not
likely to cause damage to local environment; class III water insoluble inert waste.
Under normal operation of the PP Plant, the impacts from solid and liquid wastes on
the local environment are considered to be minor.
5.2.5 Emergency situations4
Accident of fire/explosion is very dangerous and easy to be happens at the
propylene storage due to evaporating, leaking (dripping) if no safe measures have
been applied.
Risk assessment for equipment and pipelines will be done by the project operator
during designing process to have efficient protection measures.
Carrying out safe working procedure, transportation procedure and storage
procedure to prevent fire/explosion accident is a part of operating plan of the project.
4
5.2.6 Environmental management system5

To manage strictly the project implementation and to minimize adverse impacts on
the environment as well as to provide the guidelines on proper applying
environmental standards and ensuring the control of waste discharge in compliance
with the environmental standards, the JVC PP Plant will establish an environmental
management system, which comprises programs on the environmental monitoring,
environmental management training as well as an emergency response plan. The
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environmental monitoring will be implemented before and after construction phase of

the project and every 3 month during project operation.
5
Refer to EIA Report in the Attachments for details
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6. BUDGET ESTIMATES AND PROJECT SCHEDULE

This Section presents a brief description of the initial data taken to perform budget
estimates and to arrange the construction.
6.1
BUDGET ESTIMATES
6.1.1 Budget Estimate Basis

PP production capital investments estimate is based on the Spheripol technology
by BASELL and capital information given to LGI by Basell Based on a recent West
Europe project.
It is standard practice in the industry to use the preliminary cost estimates and
technology selections provided in this type of study as the first step in moving a
project from the initial planning phase into the financing and construction phases.
These cost estimates and technology evaluations are by their nature preliminary and
general in nature. These estimates and evaluations do not replace the need for
more detailed engineering studies, which may have a higher level of accuracy,
before the project can be financed and constructed. Moreover, they must be verified
by more detail before embarking on financing and construction. Therefore, CMAI
does not warrant that the capital estimates and information provided in this study
can be used for any purposes other than as a planning document to support making
decisions on moving forward to the next steps in developing a project of this type.
The following investments are outside capital investments summary:
Import Tax
Value Added Tax (VAT)
Construction cost escalation because of inflation.
6.1.2 Accuracy
Capital investment costs are determined within +30% accuracy.
The Capital Investment cost supplied by LGI has several components:
ISBL In Side Battery Limits. This is the cost to engineer, procure, and construct
on plot plant and equipment to the extent that the ISBL unit is ready to commission.
ISBL costs typically account for 50 to 60% of total installed costs to construct a
facility.
OSBL Outside Battery Limits. This is the cost to engineer, procure, and construct
plant and equipment required within a complex to support the ISBL unit. This would
include roads, connecting piping, or utility systems like steam and electricity within
the complex. A good number for OSBL costs is 30% of ISBL costs and depends
somewhat on site type (brown field or green field). For the Dung Quat PP facility
LGI has estimated that there is a 10% cost saving for the OSBL requirement due to
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the high level of system integration with the refinery and the parallel construction.
This implies that OSBL is calculated as 20% of ISBL instead of 30%.
Off-Plot Costs: These include costs outside of a complex such as pipelines, tanks,
railroad track connections, schools, hospitals, etc. that would be required to service
a facility and its people. These costs can obviously range from zero to a significant
portion of total cost depending upon location and stage of infrastructure
development. For purpose of this project, LGI has not included these costs due to
the high level of integration with the refinery.
Owners Costs: Include project development costs for legal fees, basic process
engineering and design, buildings, site preparation, spare parts, licensing fees, and
project management costs. A good number for total owners costs is in the range of
10 to 15% of total installed cost and depend somewhat on site type (brown field or
green field) but also highly dependent on the technologies implemented and the cost
of a Project Management Contractor. For purpose of this project, we have assumed
10% owners costs, excluding license fees.
Up front licensing fees and basic engineering were supplied by LGI based on
information from the licensor. The final cost must be negotiated with the licensor
once selected. LGI has indicated that a payment of USD$15 million is required.
Location factors are applied to ISBL + OSBL costs, and typically a percentage of a
US Gulf Coast or West Europe capital investment cost, depending on location. LGI
has assumed that capital costs to build the plant in Vietnam are similar to the West
Europe capital cost.
Non-recurring expenditures for start-up and commissioning expenses plus preoperation staffing and training as well as operating spares. A good number for these
types of expenditures is between 5 and 10% of total installed cost, depending on
whether the site is a brown or green field. We have assumed that these items are
covered in the owners cost.
Contingency: The LGI supplied capital cost numbers are from a technology licensor
and are based on West Europe capital numbers. This project does include a
contingency which covers any cost overrun for non-EPC costs, license fees, owners
costs, as well as any unforeseen EPC cost overrun. Since the EPC cost in the
current market is the very tight among the mentioned factors, a 30% of ISBL + OSBL
(EPC cost) contingency factor was applied.
Capital estimates provided are feasibility grade, +/- 30%. Capital costs are based
on widely commercialized technology and escalated to the startup year. Total Plant
capital estimates include ISBL, OSBL and Off-Sites. Capital costs are inclusive of
the first charge of catalyst.
The capital expense profile is assumed 5, 15, 40, 40% for years one through four
respectively.
Component
US$ (Millions)
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ISBL
OSBL
Owners Costs
Technology License & Eng
Contingency
Total
92
18
18
15
32
175
This excludes working capital.

6.2
OVERALL PROJECT SCHEDULE
Based on the proposal obtained from the Licensor and on LGIs experience, LGI
estimates that the overall project schedule duration is 37 months including 24
months for EPC execution, from the time the contract is signed, up to the
Mechanical Completion. This is the best case scenario and is subject to the direct
selection of an EPC contractor without tendering. and the selected EPC contractor to
start early engineering work. (refer to attached Overall Project Schedule).
This schedule covers Implementation Planning, Licensor & EPC Contractor
Selection, Basic Engineering, EPC and Commissioning activities.
The schedule shall be further developed taking into account specific Engineering,
Procurement and Construction by EPC Contractor.
In order to achieve a start-up date of the PP plant that is in-line with the completion
schedule of the Refinery, it is crucial to fast-track the project, and the following
major contracts should be concluded as a first priority.
License Agreement
In consideration of the project schedule to complete the plant construction by the
first half of the year 2009, the Process Design Package (PDP) and the Basic
Engineering Package (BEP) shall be made available to the EPC contractor in the
second half of 2006, hence the selection of the licensor should be made by the end
of first half of 2006.
Usually, an open bidding process is used to select the licensor, and this process
takes a minimum of four to six months from the inception of bidding to the awarding
of the licensor. Thereafter, the completion of the PED & BEP takes another six
months by the licensor. This means that the normal bidding process would be too
long for the desired schedule of the project.
Under present circumstances, the project is facing an extremely tight schedule. The
selection of licensor by direct negotiation would be recommended in order to meet
the schedule. This report compares the five major technologies currently available.
The Project Owner should be able to select the most suitable technology based on
the information provided herein, and discussions with the selected vendor.
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Another critical aspect to be considered in order to meet the timeline proposed is the
ability of starting detailed engineering work by the EPC contractor, which should be
done in close cooperation with the selected licensor during the basic engineering
stage. The detailed engineering work could start within three months after the
commencement of basic engineering work and this would enable the EPC
Contractor to curtail the schedule for engineering and for placing orders for long lead
equipments. There is a potential to save a significant amount of time should this
cooperation be put into practice.
The critical issue for the implementation of a Project on a fast track schedule is the
ability of the technology and EPC contractor to closely work together during the
engineering stage, thereby saving time. If the EPC contractor does not interface
adequately during the basic engineering stage, critical time will be lost in the
transferring of critical information and long lead orders, thus extended unnecessarily
the EPC schedule.
Selection of EPC Contractor
Over the last 20~30 years, the industry has become accustomed to an excess of
EPC contractors but this situation has dramatically changed in the last few years due
to the fact that there is currently a substantial amount of investment activities
underway in the hydrocarbon processing industry in Middle East and other regions.
The combination of high refining and petrochemical margins and very high oil prices
has stimulated numerous projects in the Middle East where oil & gas, hydrocarbon
processing, power and infrastructure, and major commercial construction are
booming.
Today, all qualified EPC contractors are exceptionally busy and the pendulum has
swung to the point where contractors can be more selective about the projects they
accept to bid. The present market is facing difficulty in attracting adequate number of
EPC contractors who are willing to bid on a competitive LSTK basis and the industry
is suffering shortage of the contractors.
One of the prerequisites of this project is to complete the construction of the plant in
time to match the completion of the Dung Quat Refinery plant in order to utilize the
propylene stream from the refinery.
The completion schedule is very challenging and would not be accomplished with
the normal contracting strategy such as on an open bidding process. In order to
achieve the schedule, a different contracting strategy should be established to select
the EPC contractor in a timely manner in order to move the project onto a fast track
timeline.
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Vietnam PP Project Overall Schedule

2006
2008
2007
10
11
12
13
14
15
16
17
18
19
20
21
22
2009
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
42
43
44
45
LGI's Proposal (37 M)

MOU Signing
F/S & Government Approval
J/V Agreement
JV Agreement
License Agreement
License Quotation/Evaluation
PDP & Basic Engineering
6M
FEED / ITB Preparation
3M
EPC Pricing
3M
Evaluation & Negotiation
1M
EPC Contract
Mechanical Completion
24M
EPC Implement
2M
Commissioning & Start-up
Commerical
Operation
RFP Preparation, Banks' proposals, Evaluation, Mandate Award
Appointment of F/A
Risk Allocation, Appointment of Lenders' Advisors, PIM, MLAs' proposals, Evaluation, Mandate Award
Appointment of MLAs
Documentation, Conditions Preceedent, Signing of Financial Documents
Doc. & Financial Closing

Feedstock Supply, Offtake & Marketing, Utility Supply, Sub-usufruct Agreement, etc.
Project Agreement for Financing

0
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
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7. RISKS AND RISK MANAGEMENT

7.1
GENERAL PROVISIONS
Uncertainty associated with the potential occurrence of unfavorable situations and

consequences in the course of the project realization is characterized by a risk
notion. Project risks are a set of risks jeopardizing the investment project
implementation or being capable of reducing its efficiency.
One of the important functions of Project Management is Project Risk Management.
Problems associated with protection of the project participants against various risks
are solved when establishing financial requirements, calculating its cost-estimate
and budget, preparing and sighing contracts, and in the course of Project Control
activity. Inasmuch as risks present at all the stages and phases of project
implementation, the Project Risk Management function remains until the project
close-out.
The most modern and reliable equipment cannot assure completely industrial safety,
when the organization is weak and behavior is erroneous. Therefore, establishing a
Safety Management System is as important for an enterprise as improving safety
measures.
Taking into account that the polypropylene plant closed to Refinery Project, it would
be appropriate to develop a unified system of protection against risks.
A system designed to manage risks for complicated industrial systems is generally
called a Risk Management system. The purpose of the Risk Management is to assist
to an entity in protecting its assets against detrimental consequences of
unforeseeable events or unfavorable circumstances.
The main milestones of Risk Management activity are as follows:
Risk identification
Risk assessment
Selection of a method and tools of Risk Management
Implementation of the chosen method
4a. Risk prevention and control
4b. Risk financing
Two first stages are commonly called a Risk Analysis. Risk identification is related to
a qualitative analysis and risk assessment belongs to a quantitative analysis.
7.2 Risk Analysis
The purpose of the Risk Analysis is to provide potential project participants with
information required for making a decision of advisability of the project
implementation.
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The common practice is that all the Project Risk Management activity is coordinated
by a Project Manager.
In case of a lack of the sound methodological basis for Project Risk Management
serious problems may arise in the course of the project implementation, right up to
the project failure, even if the project management organization is efficient on the
whole.
Therefore, it is appropriate that the Project Manager resorts to the help of consulting
companies being capable of analyzing risks associated with special project activity
aspects such as financing, insurance, etc. to analyze all project risks in full.
The Project Risk Analysis should be a permanent function of Project Risk
Management, present at all the stages and phases of the project life rather than a
separate (initial) stage of it.
The risks are classified by stages and phases of project activity as follows: preinvestment risks, investment (construction) risks, pre-commissioning risks,
operational risks.
The main risks at various stages of the Polypropylene Plant Project implementation
are as follows:
Phase of Project
Implementation
Risk Type
1. Pre-investment
phase
1.1 Risk of low quality of design and

engineering documentation
1.2 Financing risk
2.
Investment
phase,
Precommissioning
Phase
2.1 Risk of low quality of works
3.
Operational
phase
3.1
2.2 Risk of going beyond the project budget

2.3 Risk of delay in commissioning
2.4 Financing risk
Operational risks
3.1.1 Engineering and process risk

3.1.2 Managerial risk
3.1.3 Risk of feed & power supply
3.1.4 Transport risk
3.2
Commercial risks: risks of sales of
products
3.3
Environmental and other civil liability
risks
3.4 Financial risks
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3.4.1 Loan risk

3.4.2 Interest change risk
3.4.3 Currency risk
3.4.4 Currency exchange risk and risk of
transferring the proceeds abroad
4.All Project life
4.1
4.2
4.3
4.4
Country risks
Administrative risks
Legal risks
Force majeur risks
Full development of the risk analysis matters is complicated and labor-consuming

work to be carried out, as a rule, by specialists of insurance companies and banks
crediting the project. The specialists assess the likelihood and consequences of
technical and other risks and define levels of comfort. The performance of this work
in full takes two or three months after receipt of detailed engineering data on the
project. It is recommended to develop the risk analysis of the Polypropylene Plant
Project in conjunction with the Dung Quat Refinery.
This Detailed Feasibility Study covers key components of the commercial risk
assessment, i.e. verification of the project stability along with a project sensitivity
analysis.
7.3 Risk Management
Taking a decision to begin the project implementation should follow a stage of
selecting Risk Management techniques and tools. As well as the Risk Analysis, the
selection of Risk Management techniques and tools cannot be considered as a
separate stage of Project Risk Management and Project Management as a whole. It
should be the permanent function thereof.
Four main methods for Risk Management were developed in theory and in practice:
Risk abrogation, i.e. a waiver of performing this activity or a significant activity
transformation to eliminate this risk;
Risk prevention and control, i.e. such activity arrangement that project participants
could influence to the greatest extent on risk factors, reduce the likelihood of
unfavorable events and limit losses in case of the occurrence of the unfavorable
event;
Risk insurance, i.e. a method for reducing damages that arise in the course of the
project implementation due to financial indemnity from insurance funds;
Risk uptake, when one of the project participants or all the participants take
damages upon themselves in the insurance event (this method is commonly used
when the likelihood of risk is low, or when potential damages exert no strong
detrimental influence on the activity participants). The use of the risk uptake method
requires the even risk distribution among the project participants, risk redistribution
and engagement of additional participants to mitigate the risk consequence.
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On the basis of recommendations of advisors analyzing the risks, Project

Management should develop Emergency Risk Management Plans enabling to
minimize the loss severity and to make the enterprise effective and profitable as
soon as possible.
The general methods of risk prevention and control are as follows:
Physical protection (e.g., safeguarding, automatic fire-fighting systems, etc.);
Organization measures (regular inspections, development of appropriate guidelines);
Personnel training, setting up the safe labor conditions;
Mitigation measures (special services and equipment for emergency response).
We recommend using one of the most effective tools of Risk Management, namely,
the Risk Based Inspection.
Inspection is an activity, which consists in examining a production facility against a
specific standard in compliance with national and regional laws and allows to:
Provide the capability to define and quantify the risk of process equipment failure;
Reduce the likelihood of failure by allocating inspection measures to high-risk
equipment;
Allow management to take substantiated decisions on scheduling equipment repair
and maintenance.
Since 1994, a sponsor group through the American Petroleum Institute (API) is
developing a Base Resource Document (BRD) for Risk Based Inspection. The
document is oriented to refinery activities.
(http:/ /www.api.org/programs services/cat/abstracts/doc0758.html)
The key to developing the inspection procedure is the ability to quantify the risk
associated with each item of equipment to determine the most effective inspection
techniques for that piece of equipment. The Inspection Plan shall be developed on
the basis of such evaluations.
Using Risk Based Inspection Methodology favors the organization of working groups
into Technology Teams, where people with the specialist backgrounds can focus
their efforts on continuously improving the reliability of the process.
Generally speaking, Risk Based Inspection Methodologies are classified in two
approaches: quantitative approach, the final result of which is a risk indicator used
for establishing priority of subsequent works rather than the evaluation of risk itself,
and qualitative approach.
The foundations for plant safety are laid still at the stage of designing process units.
At the subsequent stages of engineering, after the Feasibility Study development for
the polypropylene plant, the following engineering solutions should be used to
reduce operational risks due to:
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Selection of reliable equipment;

Reasonable equipment layout;
Using engineering means for monitoring the equipment status;
Automatic process control;
Reliable control of critical variables;
Selection of an efficient mode of operation for non-critical variables;
Using fire alarm systems;
Etc.
However, it is practically impossible to make technical risks equal to zero by using
the engineering methods only.
Risks that cannot be eliminated or reduced to an acceptable level should be
financed.
A set of risk financing measures includes all possible means of covering financial
consequences of losses. In practice this means to secure the ability of an enterprise
to withstand potential hazards and to insure non-protected risks.
The following financial measures intended for the risk event can be used:
repayment of losses as required directly from current funds;
a sum is placed annually to an internal fund. From this fund, forming capital
reserves, money for covering the losses are drawn (self-insurance);
risks are transferred to insurance companies. The insurance allows the conversion
of a risk of an indefinite amount into fixed expenses, namely, insurance premium.
Various combinations of the above-mentioned measures can assure the reliable
protection of companys assets.
The main form of risk financing is insurance.
Recommendations on setting up the insurance protection of the polypropylene plant
project are given below (ref. to para.7.1).
In many cases the risk financing method does not exclude the simultaneous
application of the risk prevention and control method. Many risk insurance
agreements contain articles stipulating the implementation of necessary preventive
actions by the insured (fire-fighting, safety, equipment maintenance, etc.).
7.4 Insurance
Every enterprise and every investment project should have a technology of setting
up the insurance protection of its facilities considering their specific character. This
technology should consider a well thought-out and worked-through scenario
developed on the basis of:
Knowledge of required components, understanding of objectives and expected
results of works in every lines;
Understanding of detail actions to be undertaken at each stage and using special
tools for achieving the objectives.
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Insurance permits to minimize the financial risk moving extraordinary expenses for
covering accident losses up to a category of planned and acceptable insurance
payments. In order to the insurance cover all extraordinary losses, it must be
integrated into an insurance protection system.
Taking into account that the polypropylene plant closed relationship to Dung Quat
Refinery Project, it would be appropriate to develop a unified insurance system for
protection against risks.
In this case PetroVietnam Insurance Company (PVIC) will become a general insurer
for the polypropylene plant project. PVIC is implementing cooperation programs with
the leading Vietnamese insurance company BaoViet .
The insurance company is preparing a reinsurance program for the project that has
to meet PP JV Companys control requirements and is oriented to the preferable use
of services provided by Vietnamese insurance companies considering their financial
status and experience in reinsurance.
An insurance agreement documenting mutual obligations of an insured (enterprise)
and an insurer (insurance company) is the outcome of works on the development of
a specific system of insurance protection.
Probably, the parties will need in services of an insurance advisor and an insurance
broker.
The insurance broker is a mediator acting as a go-between at concluding the
insurance (reinsurance) agreements. He is an agent of the insured and must be an
expert in the insurance laws and the practical insurance.
The insurance agent is not obliged to guarantee solvency of an insurer. However, if
he commits some negligence while discharging his obligations and, as a result of
this negligence, the insured suffered damages, the latter is eligible to seek damages
from the insurance agent.
The structure and terms of the insurance agreement depend greatly on the results of
a risk analysis being prepared, as a rule, jointly with the insurance company. As
regards risk components that contribute mostly in the amount of expected losses of
the enterprise, the insurance company can propose a system of organizational and
technical measures aimed at reducing the losses. It is appropriate to implement this
system before the insurance agreement is concluded, which permits to reduce
insurance payment rates to a reasonable level.
Common practice in the insurance is setting limits for a minimum amount of losses
the insurance company is liable for (deductible). The point is that extraordinary
expenses in case of small accidents (production failures) are comparable with or
less than expenses incurred by parties for experts evaluation of insured accidents
and settling possible claims. The cooperation of an enterprise and an insurance
company at this stage lies in striving for making the enterprise risk transparent.
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From the fiscal planning standpoint, it is worth to distinguish the following types of
potential losses:
Property of the enterprise (process equipment and products) demolished or
destroyed during accidents;
Third party liability (both legal and contractual liability) arising from accidents. This
type of losses has a form of compensation (indemnification) to inhabitants or
enterprise personnel dead or suffered during the accident, penalties for
environmental pollution (ecological legislation), and forfeit for incomplete product
delivery under contracts;
Business interruption due to unscheduled full or partial suspension of the production.
This type of losses is the loss of profit (lost profits) from the financial standpoint.
Section 7 classified main risks for the polypropylene plant construction in Vietnam by
individual phases of the project.
Accordingly, insurance operations can be classified as follows:
insurance of business risk at the pre-investment stage:
professional liability insurance for developers of design estimates, etc.
insurance of business risk at the investment stage:
insurance of cargo (insurance terms depend on the base terms of delivery Incoterms), insurance against various construction risks, insurance against risk of
non-payment under contractual obligations, etc.
insurance of business risk at the production stage:
various types of property insurance; insurance against ecological risks and other
types of liability insurance; insurance against downtime and suspension of
production; equipment insurance against breakage and fire; insurance against
commercial risks, against failure to deliver, against non-payment for supplied
products, etc.
The following types of insurance can be used by individual participants of the
investment project to reduce project risks:
Project Participant
(Insured)
Design
documentation
developers
Consulting
companies
Investment
commodities
suppliers
Construction
&
Insurance Type
Professional liability insurance
Professional liability insurance
Cargo insurance
1. Insurance against construction/installation risks
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installation
start-up
contractors
and
Clients
Creditors
Operators (users)
of
investment
project
2. Insurance of building equipment and other property

of Contractor
3. Insurance of performance guarantee for post startup period
4. Third party insurance during carrying out the works
5. Insurance against project work completion risks
(as alternative to bank guarantee)
1. Insurance of equipment and other investment
commodities received from vendors
2. Insurance of facilities to be commissioned before
the completion of all contractual works (if the contract
is not on the turnkey basis)
1. Export loan insurance against political risks
2. Insurance against not returning commercial loans
1. Insurance of real assets and income of project:
- Insurance against fire and natural calamities
- Equipment insurance against breakage
- Insurance against downtime
- Other
2. Civil liability insurance:
- Environmental insurance
- Product quality liability insurance
The insurance company PVIC should see to those types of insurance that are used
by contractors, see to it that contractors implement all types of insurance according
to contracts and that policy provisions, insurance terms, and limits of insurance
liabilities are checked up.
In order to obtain credit, PP JV Company must have the policy of insurance of the
construction against all risks (Construction All Risk - CAR) to the amount of a total
cost of the Plant. After putting the polypropylene Plant into operation, PP JV
Company will have to insure real assets at least for the maturity of loan.
Once the insurance agreement comes into force, the relationship between an
enterprise and an insurance company turns into a new phase, the main subject of
which is comprehensive control of enterprise risks and reduction of any
extraordinary losses.
Natural objectives of this phase are the reduction of extraordinary losses and the
increase in a degree of covering the loss at the expense of an insurance protection
system, and the establishment of a risk management system as well.
Undoubtedly, PP JV Company must have a program of training of insurance
specialists and experts in risk analysis and loss distribution to secure the effective
operation of the above-mentioned systems.
The training of experts in domestic/abroad insurance will take 2 to 6 months or over,
training for executives will require from 1 to 4 weeks with subsequent workshops.
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8. FINANCIAL AND ECONOMICAL STUDY OF THE PROJECT

8.1
PROJECT FINANCING
It is assumed to perform project financing by borrowing funds in the form of a long

term investment credit from foreign banks.
Approximate amount of credit is $123 million US dollars (based on 70% debt) in
money of the day. The credit annual interest rate of 10%. during construction will be
added to the principle. Debt repayment interest rate post start-up will be a total
percentage of LIBOR plus 3%. Debt amortization will be paid straight-line for the
period of 12 years [(construction (3 yrs) + Repayment (9 yrs)). The scrap value will
be four times the net operating cash flow at the end of the plants operating life.
Furthermore, the base case of 70% loan is taken into account. This scenario obtains
the good result in financial and economical analysis. Sensitivities of +/- 20% equity
from the base case were also conducted.
The remaining part of investments will be covered by the JVC partners.
8.2
TAXATION PRINCIPLES
This section is prepared on the basis of documents submitted by the Research &
Development Center for Petroleum Processing (RDCPP) in its Report of Vietnam
Polypropylene Market.
Description of Vietnamese Tax System
In compliance with the current Vietnamese laws, the tax system involves the
following main taxes, fees and duties:
Corporate income tax;
Dividends remittance tax;
Assignment tax;
Personal income tax (for Vietnamese individuals and foreigners);
Import and export taxes;
Value-added tax (VAT);
Special consumption tax;
Others (rent of land and water surface, insurance premium including property
insurance, social and medical insurance, etc.)
Proposed Tax Structure for the Polypropylene Plant
The Polypropylene plant under design is integral part of the refinery from
technological, organizational, territorial and legal standpoints with the respective
consequences for the implementation of the investment project as regards:
Capital construction and putting in operation
Business activities including import/export operations, land use, property
insurance, capital consumption
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Labour relations
Taxation.
In compliance with the License N2097 issued by the Planning & Investment Ministry
to establish the refinery, as well as the Charter of JVC, the enterprise shall pay taxes,
fees and duties at preferential tax rates.
The tax structure, payment terms and tax, fee and duty rates are as below.
Corporate income tax
The rate of corporate income tax shall be 10% (ten per cent) on the corporate
income earned and is valid within all the period of contractual business activity of JV,
i.e. for 25 years. JV shall be exempted from corporate income tax for a period of 4
(four) years commencing from the first profit-making year and be entitled to a 50%
(fifty per cent) reduction of corporate income tax for a period of 4 (four) successive
years.
The taxable income of JV is total revenue minus aggregate expenditures.
For this project, the income includes sales proceeds from commodity output
polypropylene to be sold at domestic and global markets, and oxygen cylinders to be
sold at domestic regional market; the aggregate expenditures include:
Expenditures for purchase of raw material (propylene), materials and utilities
for basic production
Labor costs (wages and bonuses), social and medical insurance payments
Capital consumption
Costs of purchasing or using technical documentation, licenses, know-how
and technical services
Enterprise (plant) management expenses
Paid taxes, fees, duties, and other payments of tax nature (except income
tax)
Paid interests on credit
Property insurance premium
Other expenses.
The Following is estimated based on the applicable rate for Dung Quat refinery and
in Dung QuatEconomic Zone :
Corporate Tax Rate
1st - 4th year
0%
5th - 13th year
5%
14th - 15th year
10%
28%
- From 16th year onwards
Dividends Remittance Tax

The dividends remittance tax shall be 5% (five per cent) of corporate income earned
in Vietnam and transferred abroad in respect of foreign investors contributing at least
10 (ten) million USD to the legal capital.
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Personal Income Tax

In compliance with the Income Tax Law currently in effect in Vietnam, foreign and
Vietnamese individuals working in JV must pay income tax depending on their
monthly wages and according to progressive tax rates.
In accordance to circular 81/2004/TT-BTC dated 13th, August, 2004 providing
guideline for PIT, the income is subjected to income tax at the following rates:
For Vietnamese:
Unit: 1000 VND
Level
1
2
3
4
5
Income
(Vietnamese dong per month)
Up to 5.000
Above 5.000 to 15.000
Above 15.000 to 25.000
Above 25.000 to 40.000
Above 40.000
Tax rate (%)

0
10
20
30
40
For foreigner:
Unit: 1000 VND
Lev
el
1
2
3
4
5
Income
(Vietnamese dong per month)
Up to
8.000
Above 8.000 to 20.000
Above 20.000 to 50.000
Above 50.000 to 80.000
Above 80.000
Tax rate (%)

0
10
20
30
40
Reference exchange rate: 1 USD= 16.000 VND

Investors and people working in Dungquat are entitled to a half deduction of
payment of personal high-income tax.
Import and Export Duties
The two major points pertaining the JVC and Import - Export duties are:
1. Free-duty import of materials, raw materials, accessories, semi-finished
products, which have not been manufactured domestically (in Vietnam) at
standard quality, for the first 5 years of production.
2. Free-duty import of machinery and equipment used for forming fixed assets.
Therefore machinery, process equipment, materials, and means of transportation
imported into Vietnam for the purpose of forming the fixed assets of the planned PP
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plant shall be exempted from import duty for the period of capital construction by
JVC.
It is assumed that in the course of JVC business activities after commissioning of the
PP plant the following shall be in force:
Propylene shall be exempted from import duty (if required).

Imported catalysts, chemicals, additives, stabilizers, granulated polyethylene
(for manufacturing packing film), and spare parts for the planned PP plant
may be exempted from import duty.
This assumption was made taking into account the Vietnam policy aimed at
promoting the implementation of advanced technologies including preferential
tax rates.
No export duty will be levied in case of exporting the polypropylene produced
at the JVC PP plant.
Value Added Tax (VAT)

The rate of VAT is 10 % for goods and services.
Added value of commodities and services is subjected to taxation at every stage of
production, distribution and consumption.
When purchasing equipment at domestic markets, the buyer (JVC) shall pay
for its cost including VAT. The VAT sum shall be refunded to the buyer in full
within 3 months after the purchase of equipment, i.e. the tax can be refunded
within a period of construction and installation.
When purchasing equipment abroad, the buyer (JVC) shall pay only its
contractual price, because equipment, machinery and special means of
transportation which are not produced in Vietnam yet and used for the
purpose of forming the fixed assets of the plant are exempted from both
import duty and import VAT.
Services of construction and erection companies engaged for the capital
construction shall be paid for including VAT.
The VAT sum for the construction period shall be calculated separately. It
shall not be transferred to the fixed assets of a facility under construction.
VAT shall be refunded to the tax payer within the same period.
In case of business activity VAT payable to the state budget of Vietnam shall
be calculated as VAT received from sales of finished products at domestic
market (export VAT rate is currently 0 (zero) % for every commodity) minus
VAT paid while purchasing material resources for current production needs.
The tax rate is 10 % of a price of commodity or costs of services.
The present project provides for maximum integration of the PP plant into the
Refinery. The additional VAT paid to the budget by JVC is equal to VAT received on
sales of polypropylene inside Vietnam minus VAT paid for any imported propylene,
catalysts, chemicals, additives, stabilizers, polyethylene and spare parts of
equipment designed for this plant.
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The rate of import VAT is 5 % of CIF price.

Other taxes, fees and duties
-
Rental price of land at 115 USD/hectare/year

Power price: U.S$ 0.07/Kwh on average
Industrial Water Price: US$ 0.1/m3
Portable water price: US$ 0.25/m3
Wastewater treatment fee: US$ 0.2/m3
The social and medical insurance premium shall be charged on payroll fund at
the following rates:
Social insurance
Medical insurance
15 %
2 %
Role of Taxes in Economic Analysis

All the taxes, fees and duties discussed above were taken into consideration in
preparation of DFS to perform an economic analysis of the PP plant project and
assessment of cost-performance of its realization for Vietnam as a whole.
The taxes like import and export duties, rent of land use, property insurance
premium payment, social and medical premium payments are to be included in the
production cost and, therefore, influence on the taxable profit value. Production
costs shall not be subjected to VAT.
All taxes, fees and duties except VAT, income tax and dividends remittance tax are
included in an algorithm of calculating cash flow and project economic indices,
namely, net present value (NPV), internal return rate (IRR), and investment
payback period.
VAT is not included in the algorithm of calculating the project cash flow for the
following reasons:
- VAT does not influence on profit and project economic indices.
- The project calculation assume that all taxes, fees and duties, including VAT, to
be charged and paid within a period of business activity of the planned PP plant
are equal as of the end of every year of the period under consideration.
VAT, income tax and dividends remittance tax are taken into account when
evaluating the cost-performance of the PP plant project for Vietnam as a whole.
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8.3
TECHNICAL AND ECONOMIC ANALYSIS
8.3.1 Basic Data and Provisions

Evaluation of investment effectiveness on the polypropylene plant construction
project was performed taking into account technical and economic parameters of
processes provided by the licensors, Vietnam polypropylene market study, price
forecast for polypropylene and the feedstock for its manufacturing, i.e. propylene.
Calculations were performed based on the following provisions and data:
1. General
Currency of calculation - US Dollars
Project life (calculation horizon) - 20 years
Project life start 1st half 2009
Planning interval duration - 1 year
2. Polypropylene plant capacity
The plant capacity is set at 150,000 tons per year.
3. Construction, commissioning, plant development
Construction duration: 26 months
1st half 2009
Commissioning:
Plant development
Years
%
Year 1
40
Year 2+
100
5. Capital Assumptions
Capital Investment provided by LGI has several components :
ISBL In Side Battery Limits. This is the cost to engineer, procure, and construct
on plot plant and equipment to the extent that the ISBL unit is ready to commission.
ISBL costs typically account for 50 to 60% of total installed costs to construct a
facility.
OSBL Outside Battery Limits. This is the cost to engineer, procure, and construct
plant and equipment required within a complex to support the ISBL unit. This would
include roads, connecting piping, or utility systems like steam and electricity within
the complex. A good number for OSBL costs is 30% of ISBL costs and depends
somewhat on site type (brown field or green field). For the Dung Quat PP facility
LGI has estimated that there is a 10% cost saving for the OSBL requirement due to
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the high level of system integration with the refinery and the parallel construction.
This implies that OSBL is calculated as 20% of ISBL instead of 30%.
Off-Plot Costs: These include costs outside of a complex such as pipelines, tanks,
railroad track connections, schools, hospitals, etc. that would be required to service
a facility and its people. These costs can obviously range from zero to a significant
portion of total cost depending upon location and stage of infrastructure
development. For purpose of this project, LGI has not included these costs due to
the high level of integration with the refinery.
Owners Costs: Include project development costs for legal fees, basic process
engineering and design, buildings, site preparation, spare parts, licensing fees, and
project management costs. A good number for total owners costs is in the range of
10 to 15% of total installed cost and depend somewhat on site type (brown field or
green field) but also highly dependent on the technologies implemented and the cost
of a Project Management Contractor. For purpose of this project, we have assumed
10% owners costs, excluding license fees.
Up front licensing fees and basic engineering were supplied by LGI based on
information from the licensor. The final cost must be negotiated with the licensor
once selected. LGI has indicated that a payment of USD$15 million is required.
Location factors are applied to ISBL + OSBL costs, and typically a percentage of a
US Gulf Coast or West Europe capital investment cost, depending on location. LGI
has assumed that capital costs to build the plant in Vietnam are similar to the West
Europe capital cost.
Non-recurring expenditures for start-up and commissioning expenses plus preoperation staffing and training as well as operating spares. A good number for these
types of expenditures is between 5 and 10% of total installed cost, depending on
whether the site is a brown or green field. We have assumed that these items are
covered in the owners cost.
Contingency: The LGI supplied capital cost numbers are from a technology licensor
and are based on West Europe capital numbers. This project does include a
contingency which covers any cost overrun for non-EPC costs, license fees, owners
costs, as well as any unforeseen EPC cost overrun. Since the EPC cost in the
current market is the very tight among the mentioned factors, a 30% of ISBL + OSBL
(EPC cost) contingency factor was applied.
Capital estimates provided are feasibility grade, +/- 30%. Capital costs are based
on widely commercialized technology and escalated to the startup year. Total Plant
capital estimates include ISBL, OSBL and Off-Sites. Capital costs are inclusive of
the first charge of catalyst.
The capital expense profile is assumed 5, 15, 40, 40% for years one through four
respectively.
Component
US$ (Millions)
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ISBL
OSBL
Owners Costs
Technology License & Eng
Contingency
Total
92
18
18
15
32
175
This excludes working capital.

Working Capital is defined as the cash required to run the business plus build initial
inventories plus accounts receivable less accounts payable. These factors vary
depending on marketing assumptions.
Project investment requirements are defined as the total cost for polypropylene plant
construction plus owners and royalties costs.
Financing costs in the form of credit interest accrued during the credit utilization
period are not included in the investment because the terms and conditions for credit
granting provide for delay of payment up to the end of construction period.
Initial working capital requirements are assumed as maximum annual requirements
for project current assets. However, it would not be included in the calculation for
total fixed investment. Rather, it is included as a separate segment in CMAIs
financial analysis.
The working capital is calculated based on standard inventory and standard
manufacturing expenses given a maximum propylene price, maximum charges for
depreciation, repair and maintenance of fixed assets (funds), operating personnel
numbering 80 employees with an average wage of 547 USD a month and rent for
land of USD 115 per ha, inflated for forecast years.
The calculation of maximum annual requirements for working capital would be
based on 30 days each for payables; 30 and 60 days receivables for PP delivered
domestically and exported respectively.
5. Product sales market
Polypropylene
Vietnam domestic market (which makes up 40% of the PP production):
Regions
Share , %
South
25
Center
67
North
8
The remaining 60% of PP production will be exported out of Vietnam.

6. Prices
Propylene (feedstock) and polypropylene (finished product) prices.
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The financial analysis would be based on 3 different feedstock pricing scenarios:

1. Imported Polymer Grade Propylene which is based on CMAIs price forecast
for Propylene CFR Southeast Asia, which is on a delivered basis to SEA
countries including Vietnam.
2. Propylene on a FOB basis. which is based on CMAIs price forecast for
Propylene FOB Singapore, which does not include shipping costs.
3. Propylene on a LGI-defined blend basis which is based on 30% Imported PGP
and 70% FOB Singapore. This represents the 47,000 tons of imported propylene.
The forecast prices for both Propylene and Polypropylene are based on CMAIs
consultants views on the market. Like other standard economic forecasts, CMAIs
price forecast is surprise free, meaning that it does not anticipate unknown events,
such as regional political conflicts, that may cause a sudden rise or decline in prices.
The methodology that CMAI has adopted for our price forecast will be mentioned
under the Pricing Methodology of this section of the report.
The Polypropylene price used in the economics will be a netback value , with the
transportation costs to different parts of Vietnam as follows:
North: US$ 25 / metric ton

Central US$ 5/metric ton
South US$25/metric ton
The transportation cost for exporting Polypropylene is US$20/metric ton.

Prices for utilities and fuel coming from the Refinery:
Utility
Electric power
LP steam
Demineralized water
Wastewater treatment
Cooling water (return)
Fresh and potable water
Compressed air
Fuel
USD
0.07
6.62
0.88
0.20
0.022
0.1571
0.0064
91.2
Per
kW/hr.
T
m3
m3
m3
m3
Nm3
T
7. Other
Consumption indices per year and specific indices per ton of polypropylene as per
recommended SPHERIPOL technology:
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Units
Yield/Ton PP
Feedstock
Propylene
1.02
Product
Polypropylene
1.00
Utilities
Fuel
Electricity
Fresh & potable water
Cooling water
Wastewater treatment
LP Steam
Compressed air
Nitrogen
Demineralized water
Ton/Ton
Kwh/Ton
m3/Ton
m3/Ton
m3/Ton
Ton/Ton
Nm3/Ton
MCF/Ton
m3/Ton
0.00061
438
0.04
169
0.15
0.38
47
1.23
0.08
Operating personnel and salary

The number of polypropylene plant personnel, including laboratory and oxygen &
nitrogen station personnel is 80 employees.
Working day duration on weekdays and pre-holidays
Number of working days per week
Working week duration
8 hours;
5 days;
40 hours;
The monthly wage of each personnel is taken to be 547 USD.

Depreciation
Depreciation method
% of capital depreciated each year
Straightline
15%
Occupied area
Polypropylene plant occupied area in accordance with the plot plan is 15.4 hectares
(385m 400m) . The rental charge per annum is 115 USD/ha.
Fixed Operating Costs
The elements of the fixed operating costs are a percentage of the Total Fixed
Investment and are as follows:
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Fixed Operating Costs

% of TFI
Maintenance
3%
Overhead
2%
Insurance
0.25%
Sales and Admin.
2%
Pricing Methodology
Over the long term, international commodity petrochemical prices are ultimately a
function of production costs plus some level of profitability for the high cost producer.
Three elements are therefore necessary to generate price forecasts. The first is to
generate a production cost forecast, the second a margin/profitability forecast and
the third, where applicable, a forecast of trade patterns and freight cost to insure
price linkages between regions.
To generate a forecast of production costs, one must generate a forecast of
feedstock cost and, in most cases these feedstocks are either other petrochemicals
or petrochemical feedstocks, such as naphtha, propane and ethane. It is therefore
necessary to generate a price forecast for the feedstocks first that is related to basic
energy values. For petrochemical products, a price forecast for ethylene must be
generated before generating a price forecast for polyethylene, but the polyethylene
supply/demand forecast must be done before ethylene. As a result, some iteration
is required.
The supply/demand balance is used to generate the forecast of margins and
profitability. High operating rates lead to good margins and low operating rates lead
to poor margins. Historic trends are used to derive these forecasts. The following is
a schematic representation of CMAIs forecast methodology.
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CMAI Price Forecast Methodology

Profit Margins
Trade Flows
Demand
Economy
Capacity
Operating Rates
The third element of an international price forecast is linkage between regions. The
petrochemical demand forecast provides an estimate of domestic requirements.
While cost structures are important in determining the level of domestic production,
some iteration is necessary between supply/demand analysis and price forecasting.
Ultimately, the price forecasts must support the cost of freight inherent in the
expected trade flows of the petrochemical and its derivatives and also support
regional investment economics. Forecasts of freight are important when making
price forecasts for countries that are importing or exporting products. Competitive
cost curves set the floor prices for both a world and regional basis.
Mid term forecast
CMAI generates a mid-term cyclic price forecast for one future cycle, generally 5-7
years, and then reverts to a long term trend line forecast. Petrochemical business
cycles are influenced by periods of over and under-capacity. The typical corporate
planning cycle, combined with design and construction schedules, allows for
companies to announce firm investment plans only four to five years in advance of
start up. Supply/demand pressures and cash costs can therefore be evaluated to
generate a margin forecast based on actual investment plans only five years out.
The forecast based on actual investment plans inevitably results in a cyclic forecast.
CMAI applies a cost-plus-margin methodology in order to arrive at a price. The
forecast is a combination of the supply/demand balance (generating a nameplate
operating rate forecast) and the cash cost forecast (based on the forecast of energy
and feedstocks). The forecast is reviewed between regions to assess impact on
trade flows of major derivatives, which are a key part of the supply/demand balance.
CMAI takes care to examine those products that exist as part of a chain of
products on the way to a final petrochemical. CMAI examines the profitability and
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costs of an entire chain of products to ensure that the long term pricing being
forecast results in adequate return to build all the necessary assets.
Like economic forecasts, CMAIs price forecast is surprise-free, namely it does not
anticipate unknown events, such as natural calamities or regional political conflicts
that may cause rise or decline in prices.
8.3.2. General Methodology Basis
Commonly used in the world practice criteria based on the cash flow analysis were
considered to be main indicators of the project cost efficiency within the effective tax
laws.
Project Total Net Income
This indicator describes a surplus of cash inflow from sales of products over a sum
of capital expenses and operational costs incurred by an investor, as well as taxes,
duties and other obligatory fees paid by the investor according to the existing laws
for a project life (investment and operations periods).
Discounted Cash Flow
This indicator is a time-reduced cash flow for the project life. It allows comparison of
expenses incurred at different times by means of discounting.
Payback Period
This indicator means the first year after the beginning of the project, for which the
accumulated non-discounted cash flow becomes positive for the first time.
Maximum Negative Cash Flow
This indicator characterizes requirements for equity or loan capital to be obtained for
the project implementation.
Internal Rate of Return (IRR)
This indicator is the rate of discount at which total discounted cash flow (discounted
income) becomes equal to zero. Economically, the IRR means an average annual
rate of return on invested capital (by analogy with a bank deposit rate) that is
guaranteed to the investor as a result of the project implementation. The IRR value
(in money of the day) defines also the highest interest rate on which capital can be
borrowed to finance the project and which guarantees 100% repayment of the used
credit resources.
Investors Internal Rate of Return in real terms shall be determined from the
following equation:
Investors Internal Rate of Return in money of the day shall be determined from the
following equation:
ANCFN
ANCF2
ANCFK
+ ..... +
+
.....
+
=0
DCF ( IRR) = ANCF1 +
(1 + IRR / 100)
(1 + IRR / 100) ( K 1)
(1 + IRR / 100) ( N 1)
Where
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K is a subsequent number of the year starting from the year of beginning of the
project to be defined as the 1st year;
N
is the project life in years;
ANCFK
is annual net cash flow of the investor in kth year;
I K is an integral industrial product price index for the period calculated as a product
of average annual industrial product price indices (in fractions) from the 2nd year up
to the kth year inclusive;
DCF (IRR) is a cash flow discounted at the discount rate equal to IRR.
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8.3.3. Economic Analysis of PP Plant Project

All calculations performed in this study are in USD of the day (considering inflation) and
in real terms (not considering inflation). The inflation rate is assumed the same for
expenses and income and equal to 2% per annum.
The feasibility of the PP plant operations considered for construction is conducted over
different scenarios with sensitivities related to Feedstock & Product pricing, capital,
equity and plant capacity. The three main feedstock pricing basis are as follows:
1. Imported Polymer Grade Propylene
2. Propylene on FOB basis.
3. Propylene on LGI-defined blend basis (30% Imported PGP; 70% FOB)
Technical and economic indicators were calculated for all cases under the same
financial conditions of the project implementation, i.e. prices for raw materials, products,
auxiliary materials, utilities, fuel, etc.
Direct operational costs
The structure and dynamics of operational costs were calculated on the basis of
engineering and technological solutions for the planned project.
Consumption indices, prices and standard costs have been reviewed above.
The operational costs were calculated considering the following cost fractions:
Raw materials;
Catalysts, chemicals, additives;
Utilities;
Fuel;
Labor costs;
Repair/maintenance costs;
Other expenses.
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8.3.4 Results
SUMMARY TABLE OF MAIN PROJECT COST EFFICIENCY INDICATORS FOR
THE BASE CASES (UP TILL 2028)
INDICATOR
UNITS
FOB
BLEND
Polypropylene yield
MMTA
150
150
Polypropylene sales (excluding the

1.5% product off-spec)
000s T
2,955
2,955
Total receipts from product sales

(exclusive of VAT)
Millions USD
3,151
3,151
Capital investment (exclusive of VAT )
Millions USD
175
175
Direct operational costs (exclusive of

VAT and other taxes, duties and fees)
Millions USD
2,926
2,998
Negative cash flow period from the

beginning of the project
years
12
12
Payback schedule
year
N/A
N/A
-5.7
-11.8
Millions
-81.1
-96.2
0.46
0.37
In money of the day

NPV (at 13% discount rate)
Debt Coverage Ratio (Avg to 2017)
Ratio
Debt Coverage Ratio (Avg from 201728)
Ratio
4.51
2.89
Payment for Land
Millions USD
0.041
0.041
Millions USD
7.62
7.62
Payroll deductions
Millions USD
Personal income tax
Millions USD
VAT
Millions USD
142
142
Millions USD
10
June 06
Rev.
Date

STUDY
176 of
199
SUMMARY TABLE OF MAIN PROJECT COST EFFICIENCY INDICATORS AT

16% IRR (UP TILL 2028)
UNITS
FOB
16%
BLEND
16%
Polypropylene yield
MMTA
150
150
Polypropylene sales
000s T
2,955
2,955
Total receipts from product sales

(exclusive of VAT)
Millions USD
3,151
3,151
Capital investment (exclusive of VAT )
Millions USD
175
175
Direct operational costs (exclusive of

VAT and other taxes, duties and fees)
Millions USD
2,458
2473
Negative cash flow period from the

beginning of the project
years
Payback schedule
year
16.0
16.0
Millions
17.2
13.8
Debt Coverage Ratio (Avg to 2017)
Ratio
1.24
1.27
Debt Coverage Ratio (Avg from 201728)
Ratio
15.27
14.94
Payment for Land
Millions USD
0.041
0.041
Millions USD
7.62
7.62
Payroll deductions
Millions USD
Personal income tax
Millions USD
VAT
Millions USD
142
142
Millions USD
55
54
INDICATOR
In money of the day

NPV (at 13% discount rate)
June 06
Rev.
Date

STUDY
177 of
199
8.3.5 Sensitivity Analysis

The following values are assumed to be main cost efficiency indicators:
1) Internal rate of return (IRR)
2) Net Present Value (NPV)
Single-Factor Sensitivity Analysis
The following parameters were assumed to be critical for the project cost efficiency:
Propylene price
Capital investment
Polypropylene price
Equity Stake
Propylene Price Growth Risk
The analysis was performed for potential variation in propylene prices within the range
of + 5% of base values.
A 5% increase in of the propylene price is deemed to be critical, and all feedstock
cases showed an extreme sensitivity to feedstock price.
Capital Investment Increase Risk
The analysis was performed for potential variation in capital investment within the
range of + 10 % of base values.
Polypropylene Price Reduction Risk
The analysis was performed for potential variation in polypropylene prices within the
range of + 5% of base values.
Changing the polypropylene price has a strong impact on the project cost performance.
Equity Level
The analysis was performed for potential variation in the level of debt to equity for the
project within the range of + 20% of base values.
16% IRR Sensitivity

For the FOB Singapore feedstock case and the blended feedstock case, the above
sensitivities for a relevant feedstock cost that yields 16% IRR will also be given.
June 06
Rev.
Date

STUDY
178 of
199
IRR:
NPV (13% discount rate) :
-5.7%
Feedstock at FOB price

Polypropylene production (kta)
Payback period:
-81.09
NO PAYBACK
Plant capacity: 150
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
Feedstock costs
Propylene
100
95
97
101
113
104
102
105
108
111
115
119
123
127
130
133
136
139
142
145
147
150
By products
Net Feedstock costs
0
0
0
0
0
0
0
100
0
95
0
97
0
101
0
113
0
104
0
102
0
105
0
108
0
111
0
115
0
119
0
123
0
127
0
130
0
133
0
136
0
139
0
142
0
145
0
147
0
150
Revenue from PP
128
124
131
140
162
146
140
143
147
151
156
160
165
169
173
176
180
183
187
190
194
198
Fuel
Demineralized water
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
Condensate
Electricity Firm
Cooling Water
Wastewater Treatment
LP Steam
HP Steam
Compressed air
Nitrogen
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
-0.02
4.92
0.00
0.60
0.00
0.41
0.00
0.05
0.24
-0.02
5.02
0.00
0.61
0.00
0.42
0.00
0.05
0.25
-0.02
5.12
0.00
0.62
0.00
0.42
0.00
0.05
0.26
-0.02
5.23
0.00
0.63
0.00
0.43
0.00
0.05
0.26
-0.02
5.33
0.00
0.65
0.01
0.44
0.00
0.05
0.27
-0.02
5.44
0.00
0.66
0.01
0.45
0.00
0.05
0.27
-0.02
5.54
0.00
0.67
0.01
0.46
0.00
0.05
0.28
-0.02
5.66
0.00
0.68
0.01
0.47
0.00
0.06
0.29
-0.02
5.77
0.00
0.70
0.01
0.48
0.00
0.06
0.29
-0.03
5.88
0.00
0.71
0.01
0.49
0.00
0.06
0.30
-0.03
6.00
0.00
0.73
0.01
0.50
0.00
0.06
0.31
-0.03
6.12
0.00
0.74
0.01
0.51
0.00
0.06
0.32
-0.03
6.24
0.00
0.76
0.01
0.52
0.00
0.06
0.32
-0.03
6.37
0.00
0.77
0.01
0.53
0.00
0.06
0.33
-0.03
6.50
0.00
0.79
0.01
0.54
0.00
0.06
0.34
-0.03
6.63
0.00
0.80
0.01
0.55
0.00
0.06
0.35
-0.03
6.76
0.00
0.82
0.01
0.56
0.00
0.07
0.36
-0.03
6.89
0.00
0.83
0.01
0.57
0.00
0.07
0.36
-0.03
7.03
0.00
0.85
0.01
0.58
0.00
0.07
0.37
-0.03
7.17
0.00
0.87
0.01
0.59
0.00
0.07
0.38
-0.03
7.32
0.00
0.89
0.01
0.61
0.00
0.07
0.39
-0.03
7.46
0.00
0.90
0.01
0.62
0.00
0.07
0.40
0.00
0.00
0.00
0.00
0.00
0.00
1.83
2.41
1.87
2.46
1.91
2.51
1.95
2.56
1.99
2.61
2.02
2.66
2.07
2.71
2.11
2.77
2.15
2.82
2.19
2.88
2.24
2.94
2.28
3.00
2.33
3.05
2.37
3.12
2.42
3.18
2.47
3.24
2.52
3.31
2.57
3.37
2.62
3.44
2.67
3.51
2.73
3.58
2.78
3.65
10
11
11
11
11
12
12
12
12
13
13
13
13
14
14
14
14
15
15
15
16
16
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.66
5.05
3.36
0.42
3.36
0.00
0.67
5.17
3.45
0.43
3.45
0.00
0.68
5.30
3.54
0.44
3.54
0.00
0.70
5.44
3.62
0.45
3.62
0.00
0.71
5.57
3.72
0.46
3.72
0.00
0.73
5.71
3.81
0.48
3.81
0.00
0.74
5.86
3.90
0.49
3.90
0.00
0.76
6.00
4.00
0.50
4.00
0.00
0.77
6.15
4.10
0.51
4.10
0.00
0.79
6.31
4.21
0.53
4.21
0.00
0.80
6.47
4.31
0.54
4.31
0.00
0.82
6.63
4.42
0.55
4.42
0.00
0.83
6.80
4.53
0.57
4.53
0.00
0.85
6.97
4.64
0.58
4.64
0.00
0.87
7.14
4.76
0.60
4.76
0.00
0.89
7.32
4.88
0.61
4.88
0.00
0.90
7.50
5.00
0.63
5.00
0.00
0.92
7.69
5.13
0.64
5.13
0.00
0.94
7.89
5.26
0.66
5.26
0.00
0.96
8.08
5.39
0.67
5.39
0.00
0.98
8.29
5.52
0.69
5.52
0.00
1.00
8.49
5.66
0.71
5.66
0.00
Total Fixed costs
13
13
14
14
14
15
15
15
16
16
16
17
17
18
18
19
19
20
20
20
21
22
Total Cash costs

Cash Margin (EBITDA)
123
119
121
126
138
130
129
132
136
140
144
149
154
158
162
166
169
173
177
180
184
188
14
24
16
12
12
11
11
11
11
11
11
11
11
10
10
10
10
10
10
Cash costs (USD/Ton PP)

Cash Margin (USD/Ton PP)
823
795
809
840
920
870
858
879
904
932
962
994
1024
1053
1079
1105
1129
1153
1177
1202
1227
1252
32
30
61
92
159
104
78
77
76
76
75
74
73
73
72
71
70
69
68
67
66
65
Capital Costs
175
160
164
168
172
177
181
186
190
195
200
205
210
216
221
227
232
238
244
250
256
263
269
276
283
Net Cash flow

DSCR
-3
-8
-21
-33
-23
-20
-14
-6
-9
-15
-17
-18
39
0.00
0.00
0.00
0.15
0.17
0.35
0.55
0.96
0.62
0.46
0.44
0.42
5.37
5.17
4.98
Utilities
Others
Cats & Chems
Packaging or Terminalling
Variable costs
Fixed costs
Plant site personnel
M aintenance
Overhead
Insurance
Sales and Admin.
Land Rental
May 06
Rev.
Date
179 of
199
IRR:
-11.8%
Feedstock at LGI defined blend

Payback period:
-96.20
NO PAYBACK
Plant capacity: 150
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
Feedstock costs
Propylene
103
98
100
104
116
108
105
108
111
115
119
123
127
130
134
137
140
143
146
149
152
155
By products
Net Feedstock costs
0
0
0
0
0
0
0
103
0
98
0
100
0
104
0
116
0
108
0
105
0
108
0
111
0
115
0
119
0
123
0
127
0
130
0
134
0
137
0
140
0
143
0
146
0
149
0
152
0
155
Revenue from PP
128
124
131
140
162
146
140
143
147
151
156
160
165
169
173
176
180
183
187
190
194
198
Fuel
Demineralized water
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
Condensate
Electricity Firm
Cooling Water
LP Steam
HP Steam
Compressed air
Nitrogen
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
-0.02
4.92
0.00
0.60
0.00
0.41
0.00
0.05
0.24
-0.02
5.02
0.00
0.61
0.00
0.42
0.00
0.05
0.25
-0.02
5.12
0.00
0.62
0.00
0.42
0.00
0.05
0.26
-0.02
5.23
0.00
0.63
0.00
0.43
0.00
0.05
0.26
-0.02
5.33
0.00
0.65
0.01
0.44
0.00
0.05
0.27
-0.02
5.44
0.00
0.66
0.01
0.45
0.00
0.05
0.27
-0.02
5.54
0.00
0.67
0.01
0.46
0.00
0.05
0.28
-0.02
5.66
0.00
0.68
0.01
0.47
0.00
0.06
0.29
-0.02
5.77
0.00
0.70
0.01
0.48
0.00
0.06
0.29
-0.03
5.88
0.00
0.71
0.01
0.49
0.00
0.06
0.30
-0.03
6.00
0.00
0.73
0.01
0.50
0.00
0.06
0.31
-0.03
6.12
0.00
0.74
0.01
0.51
0.00
0.06
0.32
-0.03
6.24
0.00
0.76
0.01
0.52
0.00
0.06
0.32
-0.03
6.37
0.00
0.77
0.01
0.53
0.00
0.06
0.33
-0.03
6.50
0.00
0.79
0.01
0.54
0.00
0.06
0.34
-0.03
6.63
0.00
0.80
0.01
0.55
0.00
0.06
0.35
-0.03
6.76
0.00
0.82
0.01
0.56
0.00
0.07
0.36
-0.03
6.89
0.00
0.83
0.01
0.57
0.00
0.07
0.36
-0.03
7.03
0.00
0.85
0.01
0.58
0.00
0.07
0.37
-0.03
7.17
0.00
0.87
0.01
0.59
0.00
0.07
0.38
-0.03
7.32
0.00
0.89
0.01
0.61
0.00
0.07
0.39
-0.03
7.46
0.00
0.90
0.01
0.62
0.00
0.07
0.40
0.00
0.00
0.00
0.00
0.00
0.00
1.83
2.41
1.87
2.46
1.91
2.51
1.95
2.56
1.99
2.61
2.02
2.66
2.07
2.71
2.11
2.77
2.15
2.82
2.19
2.88
2.24
2.94
2.28
3.00
2.33
3.05
2.37
3.12
2.42
3.18
2.47
3.24
2.52
3.31
2.57
3.37
2.62
3.44
2.67
3.51
2.73
3.58
2.78
3.65
10
11
11
11
11
12
12
12
12
13
13
13
13
14
14
14
14
15
15
15
16
16
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.66
5.05
3.36
0.42
3.36
0.00
0.67
5.17
3.45
0.43
3.45
0.00
0.68
5.30
3.54
0.44
3.54
0.00
0.70
5.44
3.62
0.45
3.62
0.00
0.71
5.57
3.72
0.46
3.72
0.00
0.73
5.71
3.81
0.48
3.81
0.00
0.74
5.86
3.90
0.49
3.90
0.00
0.76
6.00
4.00
0.50
4.00
0.00
0.77
6.15
4.10
0.51
4.10
0.00
0.79
6.31
4.21
0.53
4.21
0.00
0.80
6.47
4.31
0.54
4.31
0.00
0.82
6.63
4.42
0.55
4.42
0.00
0.83
6.80
4.53
0.57
4.53
0.00
0.85
6.97
4.64
0.58
4.64
0.00
0.87
7.14
4.76
0.60
4.76
0.00
0.89
7.32
4.88
0.61
4.88
0.00
0.90
7.50
5.00
0.63
5.00
0.00
0.92
7.69
5.13
0.64
5.13
0.00
0.94
7.89
5.26
0.66
5.26
0.00
0.96
8.08
5.39
0.67
5.39
0.00
0.98
8.29
5.52
0.69
5.52
0.00
1.00
8.49
5.66
0.71
5.66
0.00
Total Fixed costs
13
13
14
14
14
15
15
15
16
16
16
17
17
18
18
19
19
20
20
20
21
22
Total Cash costs

126
122
124
129
141
134
132
135
139
143
148
153
157
162
166
170
173
177
181
185
188
192
11
21
12

843
815
830
861
942
891
880
902
927
955
986
1018
1049
1078
1105
1131
1156
1181
1205
1231
1256
1282
13
10
41
71
138
83
56
55
53
52
51
50
48
47
46
44
43
41
40
38
37
35
Capital Costs
175
160
164
168
172
177
181
186
190
195
200
205
210
216
221
227
232
238
244
250
256
263
269
276
283
Net Cash flow

DSCR
-3
-8
-21
-34
-26
-23
-17
-9
-13
-18
-21
-22
25
-1
-1
0.00
0.00
0.00
0.06
0.06
0.23
0.42
0.83
0.49
0.33
0.31
0.30
3.70
3.51
3.34
Utilities
Others
Cats & Chems
Variable costs
Fixed costs
M aintenance
Overhead
Insurance
Sales and Admin.
Land Rental
May 06
Rev.
Date
180 of
199
FOB SINGAPORE PROPYLENE
Cumulative net cash flow

FOB price
0
-20
-40
-60
-80
-100
-120
-140
-160
-180
-200
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Polypropylene Unit Sensitivities

FOB price
Base IRR = -5.7%
+20%
Equity
-20%
+10%
Capital
-10%
-5%
Product
+5%
+5%
Feedstock
-12%
-10%
-8%
-6%
-4%
-2%
-5%
0%
2%
4%
6%
8%
10%
June 06
Rev.
Date

STUDY
181 of
199
Feedstock sensitivity vs IRR

IRR
40%
35%
30%
25%
20%
16% IRR hurdle

rate
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
100%
95%
80%
75%
70%
Capital sensitivity vs IRR

IRR
35%
30%
25%
20%
16% IRR hurdle

rate
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
110%
100%
90%
80%
June 06
Rev.
Date

STUDY
182 of
199
MIXED PROPYLENE SOURCE CASE: LGI DEFINED

LGI defined blend
-50
-100
-150
-200
-250
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

LGI defined blend
Base IRR = -11.8%
+20%
Equity
-20%
+10%
Capital
-10%
-5%
Product
+5%
+5%
Feedstock
-6%
-4%
-2%
-5%
0%
2%
4%
6%
8%
10%
12%
June 06
Rev.
Date

STUDY
183 of
199
Feedstock sensitivity vs IRR

IRR
40%
35%
30%
25%
20%
16% IRR hurdle

rate
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
100%
95%
80%
75%
70%
Capital sensitivity vs IRR

IRR
35%
30%
25%
20%
16% IRR hurdle

rate
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
110%
100%
90%
80%
June 06
Rev.
Date

STUDY
184 of
199
Additional Bank Loan

From the above analysis of the two base cases, it can be seen that the cash flow for
the project based on FOB Singapore feedstock price, and the blended feedstock price,
are both negative.
In this case, for the project to continue to operate and to ensure working capital is
available, the facility would be required to take out a 2nd loan after the initial loan has
reached its tenure.
The financial model has a toggle on the dashboard to initiate this 2nd loan adjustment.
However, as any positive cash flow years are removed from the base cases by taking
out a 2nd loan, the excel IRR calculation is unable to calculate the final IRR for the 2nd
bank loan case.
In this instance, the NPV can only be calculated for the second loan scenario, and the
resulting NPVs for the 2nd bank loan are compared to the base cases below:
NPV comparison with & without additional bank loan

0
-50
-100
-150
-200
-250
-300
FOB basis
Without add'l bank loan
LGI defined blend

With add'l bank loan
All four cases are destroying money, however taking out the second loan destroys
even more money as the NPV values for these cases are more negative than the base
feedstock cases without the additional bank loan.
June 06
Rev.
Date

STUDY
185 of
199
16% IRR CASES

LGI defined blend
400
350
300
250
200
150
100
50
0
-50
-100
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

FOB price
450
400
350
300
250
200
150
100
50
0
-50
-100
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
June 06
Rev.
Date

STUDY
186 of
199
IRR:
15.8%
Feedstock at LGI defined blend

Payback period:
13.83
9 years
Plant capacity: 150
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
Feedstock costs
Propylene
81
77
78
82
91
84
82
85
87
90
93
96
99
102
105
107
110
112
114
116
119
121
By products
Net Feedstock costs
0
0
0
0
0
0
0
81
0
77
0
78
0
82
0
91
0
84
0
82
0
85
0
87
0
90
0
93
0
96
0
99
0
102
0
105
0
107
0
110
0
112
0
114
0
116
0
119
0
121
Revenue from PP
128
124
131
140
162
146
140
143
147
151
156
160
165
169
173
176
180
183
187
190
194
198
Fuel
Demineralized water
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
Condensate
Electricity Firm
Cooling Water
LP Steam
HP Steam
Compressed air
Nitrogen
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
-0.02
4.92
0.00
0.60
0.00
0.41
0.00
0.05
0.24
-0.02
5.02
0.00
0.61
0.00
0.42
0.00
0.05
0.25
-0.02
5.12
0.00
0.62
0.00
0.42
0.00
0.05
0.26
-0.02
5.23
0.00
0.63
0.00
0.43
0.00
0.05
0.26
-0.02
5.33
0.00
0.65
0.01
0.44
0.00
0.05
0.27
-0.02
5.44
0.00
0.66
0.01
0.45
0.00
0.05
0.27
-0.02
5.54
0.00
0.67
0.01
0.46
0.00
0.05
0.28
-0.02
5.66
0.00
0.68
0.01
0.47
0.00
0.06
0.29
-0.02
5.77
0.00
0.70
0.01
0.48
0.00
0.06
0.29
-0.03
5.88
0.00
0.71
0.01
0.49
0.00
0.06
0.30
-0.03
6.00
0.00
0.73
0.01
0.50
0.00
0.06
0.31
-0.03
6.12
0.00
0.74
0.01
0.51
0.00
0.06
0.32
-0.03
6.24
0.00
0.76
0.01
0.52
0.00
0.06
0.32
-0.03
6.37
0.00
0.77
0.01
0.53
0.00
0.06
0.33
-0.03
6.50
0.00
0.79
0.01
0.54
0.00
0.06
0.34
-0.03
6.63
0.00
0.80
0.01
0.55
0.00
0.06
0.35
-0.03
6.76
0.00
0.82
0.01
0.56
0.00
0.07
0.36
-0.03
6.89
0.00
0.83
0.01
0.57
0.00
0.07
0.36
-0.03
7.03
0.00
0.85
0.01
0.58
0.00
0.07
0.37
-0.03
7.17
0.00
0.87
0.01
0.59
0.00
0.07
0.38
-0.03
7.32
0.00
0.89
0.01
0.61
0.00
0.07
0.39
-0.03
7.46
0.00
0.90
0.01
0.62
0.00
0.07
0.40
0.00
0.00
0.00
0.00
0.00
0.00
1.83
2.41
1.87
2.46
1.91
2.51
1.95
2.56
1.99
2.61
2.02
2.66
2.07
2.71
2.11
2.77
2.15
2.82
2.19
2.88
2.24
2.94
2.28
3.00
2.33
3.05
2.37
3.12
2.42
3.18
2.47
3.24
2.52
3.31
2.57
3.37
2.62
3.44
2.67
3.51
2.73
3.58
2.78
3.65
10
11
11
11
11
12
12
12
12
13
13
13
13
14
14
14
14
15
15
15
16
16
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.66
5.05
3.36
0.42
3.36
0.00
0.67
5.17
3.45
0.43
3.45
0.00
0.68
5.30
3.54
0.44
3.54
0.00
0.70
5.44
3.62
0.45
3.62
0.00
0.71
5.57
3.72
0.46
3.72
0.00
0.73
5.71
3.81
0.48
3.81
0.00
0.74
5.86
3.90
0.49
3.90
0.00
0.76
6.00
4.00
0.50
4.00
0.00
0.77
6.15
4.10
0.51
4.10
0.00
0.79
6.31
4.21
0.53
4.21
0.00
0.80
6.47
4.31
0.54
4.31
0.00
0.82
6.63
4.42
0.55
4.42
0.00
0.83
6.80
4.53
0.57
4.53
0.00
0.85
6.97
4.64
0.58
4.64
0.00
0.87
7.14
4.76
0.60
4.76
0.00
0.89
7.32
4.88
0.61
4.88
0.00
0.90
7.50
5.00
0.63
5.00
0.00
0.92
7.69
5.13
0.64
5.13
0.00
0.94
7.89
5.26
0.66
5.26
0.00
0.96
8.08
5.39
0.67
5.39
0.00
0.98
8.29
5.52
0.69
5.52
0.00
1.00
8.49
5.66
0.71
5.66
0.00
Total Fixed costs
13
13
14
14
14
15
15
15
16
16
16
17
17
18
18
19
19
20
20
20
21
22
Total Cash costs

104
101
103
107
116
110
109
112
115
118
122
126
130
133
137
140
143
146
149
152
155
159
24
23
28
33
46
36
31
32
32
33
33
34
35
35
36
36
37
37
38
38
39
39

693
673
685
710
774
735
727
746
766
789
814
840
865
889
911
932
953
973
994
1015
1036
1057
162
152
186
222
306
238
208
211
214
218
223
228
232
236
240
243
246
249
251
254
257
260
Capital Costs
175
160
164
168
172
177
181
186
190
195
200
205
210
216
221
227
232
238
244
250
256
263
269
276
283
Net Cash flow

DSCR
-3
-8
-21
-25
-4
-1
16
11
26
27
28
28
29
27
28
22
23
23
140
23
23
0.00
0.00
0.00
0.73
0.87
1.07
1.33
1.84
1.42
1.22
1.20
1.19
15.50
15.39
15.29
15
15
15
15
15
15
14
14
14
14
Utilities
Others
Cats & Chems
Variable costs
Fixed costs
M aintenance
Overhead
Insurance
Sales and Admin.
Land Rental
June 06
Rev.
Date
187 of
199
IRR:
16.4%
Feedstock at FOB price

Payback period:
17.17
9 years
Plant capacity: 150
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
150
Feedstock costs
Propylene
80
76
78
81
90
83
82
84
86
89
92
95
98
101
104
106
109
111
113
116
118
120
By products
Net Feedstock costs
0
0
0
0
0
0
0
80
0
76
0
78
0
81
0
90
0
83
0
82
0
84
0
86
0
89
0
92
0
95
0
98
0
101
0
104
0
106
0
109
0
111
0
113
0
116
0
118
0
120
Revenue from PP
128
124
131
140
162
146
140
143
147
151
156
160
165
169
173
176
180
183
187
190
194
198
Fuel
Demineralized water
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
0.01
0.02
Condensate
Electricity Firm
Cooling Water
LP Steam
HP Steam
Compressed air
Nitrogen
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
-0.02
4.92
0.00
0.60
0.00
0.41
0.00
0.05
0.24
-0.02
5.02
0.00
0.61
0.00
0.42
0.00
0.05
0.25
-0.02
5.12
0.00
0.62
0.00
0.42
0.00
0.05
0.26
-0.02
5.23
0.00
0.63
0.00
0.43
0.00
0.05
0.26
-0.02
5.33
0.00
0.65
0.01
0.44
0.00
0.05
0.27
-0.02
5.44
0.00
0.66
0.01
0.45
0.00
0.05
0.27
-0.02
5.54
0.00
0.67
0.01
0.46
0.00
0.05
0.28
-0.02
5.66
0.00
0.68
0.01
0.47
0.00
0.06
0.29
-0.02
5.77
0.00
0.70
0.01
0.48
0.00
0.06
0.29
-0.03
5.88
0.00
0.71
0.01
0.49
0.00
0.06
0.30
-0.03
6.00
0.00
0.73
0.01
0.50
0.00
0.06
0.31
-0.03
6.12
0.00
0.74
0.01
0.51
0.00
0.06
0.32
-0.03
6.24
0.00
0.76
0.01
0.52
0.00
0.06
0.32
-0.03
6.37
0.00
0.77
0.01
0.53
0.00
0.06
0.33
-0.03
6.50
0.00
0.79
0.01
0.54
0.00
0.06
0.34
-0.03
6.63
0.00
0.80
0.01
0.55
0.00
0.06
0.35
-0.03
6.76
0.00
0.82
0.01
0.56
0.00
0.07
0.36
-0.03
6.89
0.00
0.83
0.01
0.57
0.00
0.07
0.36
-0.03
7.03
0.00
0.85
0.01
0.58
0.00
0.07
0.37
-0.03
7.17
0.00
0.87
0.01
0.59
0.00
0.07
0.38
-0.03
7.32
0.00
0.89
0.01
0.61
0.00
0.07
0.39
-0.03
7.46
0.00
0.90
0.01
0.62
0.00
0.07
0.40
0.00
0.00
0.00
0.00
0.00
0.00
1.83
2.41
1.87
2.46
1.91
2.51
1.95
2.56
1.99
2.61
2.02
2.66
2.07
2.71
2.11
2.77
2.15
2.82
2.19
2.88
2.24
2.94
2.28
3.00
2.33
3.05
2.37
3.12
2.42
3.18
2.47
3.24
2.52
3.31
2.57
3.37
2.62
3.44
2.67
3.51
2.73
3.58
2.78
3.65
10
11
11
11
11
12
12
12
12
13
13
13
13
14
14
14
14
15
15
15
16
16
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.66
5.05
3.36
0.42
3.36
0.00
0.67
5.17
3.45
0.43
3.45
0.00
0.68
5.30
3.54
0.44
3.54
0.00
0.70
5.44
3.62
0.45
3.62
0.00
0.71
5.57
3.72
0.46
3.72
0.00
0.73
5.71
3.81
0.48
3.81
0.00
0.74
5.86
3.90
0.49
3.90
0.00
0.76
6.00
4.00
0.50
4.00
0.00
0.77
6.15
4.10
0.51
4.10
0.00
0.79
6.31
4.21
0.53
4.21
0.00
0.80
6.47
4.31
0.54
4.31
0.00
0.82
6.63
4.42
0.55
4.42
0.00
0.83
6.80
4.53
0.57
4.53
0.00
0.85
6.97
4.64
0.58
4.64
0.00
0.87
7.14
4.76
0.60
4.76
0.00
0.89
7.32
4.88
0.61
4.88
0.00
0.90
7.50
5.00
0.63
5.00
0.00
0.92
7.69
5.13
0.64
5.13
0.00
0.94
7.89
5.26
0.66
5.26
0.00
0.96
8.08
5.39
0.67
5.39
0.00
0.98
8.29
5.52
0.69
5.52
0.00
1.00
8.49
5.66
0.71
5.66
0.00
Total Fixed costs
13
13
14
14
14
15
15
15
16
16
16
17
17
18
18
19
19
20
20
20
21
22
Total Cash costs

103
100
102
106
116
110
108
111
114
118
121
125
129
133
136
139
142
145
148
151
155
158
25
24
29
34
46
37
32
32
33
34
34
35
36
36
37
37
38
38
39
39
39
40

690
668
680
706
770
730
722
740
760
784
809
835
860
884
906
927
948
968
989
1009
1030
1051
166
157
191
226
309
243
214
217
220
224
228
233
238
241
245
248
251
254
257
260
262
265
Capital Costs
175
160
164
168
172
177
181
186
190
195
200
205
210
216
221
227
232
238
244
250
256
263
269
276
283
Net Cash flow

DSCR
-3
-8
-21
-25
-4
16
11
27
28
28
29
29
28
29
23
23
23
143
24
24
0.00
0.00
0.00
0.74
0.90
1.10
1.36
1.86
1.45
1.25
1.24
1.22
15.91
15.77
15.65
16
15
15
15
15
15
15
15
15
14
Utilities
Others
Cats & Chems
Variable costs
Fixed costs
M aintenance
Overhead
Insurance
Sales and Admin.
Land Rental
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16% IRR SENSITIVITY RESULTS

The final set of sensitivity analyses were completed for the following two cases:
1) FOB Singapore feedstock price discounted in order to obtain 16% IRR
2) Blended Feedstock discounted in order to obtain 16% IRR
For both cases, a decrease of 10% in capital cost for the project results in a 6+%
increase in IRR.
For both cases, a product price increase of 5% also yields an increase in IRR of just
under 6%.
The FOB Singapore feedstock case is more sensitive to further feedstock price
reductions, as all of the feedstock volume is discounted, as opposed to the blended
feedstock case where only two thirds of the feedstock volume (that from the refinery)
would be discounted.

FOB price
Base IRR = 16.0%
Equity
-20%
+10%
Capital
-10%
-5%
Product
+5%
+5%
Feedstock
+20%
-8%
-6%
-4%
-2%
-5%
0%
2%
4%
6%
8%
10%
Required FOB feedstock disount rate to hit 16% IRR: 20
As in all the sensitivity cases, the JVC owners can only gain a significant increase in
IRR by the capital cost reduction or propylene feedstock cost reduction. Product pricing
is determined by market conditions and is not under the control of the JVC.
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LGI defined blend
Base IRR = 16.0%
Equity
-20%
+10%
Capital
-10%
-5%
Product
+5%
+5%
Feedstock
+20%
-8%
-6%
-4%
-2%
-5%
0%
2%
4%
6%
8%
10%
Required FOB feedstock disount rate to hit 16% IRR: 32
8.3.6 Analysis of Financial Modeling Results

Both of the cases analyzed displayed both negative IRR and negative NPV, and as
a result, neither could service the yearly debt repayment.
Blended Feedstock Case: (47,000 tons of imported propylene)
IRR
NPV
DSCR (from 09 to 17)
-11.8%
- $96 million
0.34
FOB Singapore Feedstock Case:

IRR
NPV
-5.7%
- $81 million
0.46
The most important factor in determining the success of the PP plant is the
propylene feedstock cost.
The feedstock case which utilizes an FOB Singapore price for the feedstock is the
best case analyzed in this study, even though the financial indicators were negative.
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In order to facilitate this project, the owners must agree on an advantaged

feedstock position. This would allow the project to accomplish two things:
3) Be financial viable and thus return a profit to the owners
4) Allow the facility to compete more effectively with imported material from
integrated facilities.
The actual reduction of feedstock cost is dependent on the quantity coming from the
refinery. If all of the PP plants propylene requirement can be met by the refinery,
then the propylene feedstock should be discounted by 20% from the FOB Singapore
price in order to achieve a 16% IRR.
If the refinery is going to supply only two thirds of the propylene requirement of the
PP plant (The remainder to be imported = Blended case), then the refinery volume
would have to be discounted from FOB Singapore by 32% in order to achieve a 16%
IRR.
An alternate way in which to price the propylene feedstock is to use a PP minus
type formula. This formula is calculated on a monthly basis and is in US$/ton:
Import Parity PP Price Conversion Cost of PP plant 16% return = Propylene Cost
The calculation is completed for the previous months production, and the actual
conversion costs and PP prices are used. Using this type of propylene price formula
allows both parties to calculate the propylene price and ensures a return on
investment for the PP facility and its owners.
16% IRR Cases
For the 16% IRR modeling, were the feedstock price for both the FOB Singapore
case and the Blended case were adjusted to give a 16% IRR, the following results
were indicated from the model.
16% IRR Blended Feedstock Case: (47,000 tons of imported propylene)
IRR
NPV
16.0%
$13 million
1.21
16% IRR FOB Singapore Feedstock Case:

IRR
NPV
16.0%
$17 million
1.24
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8.4
ECONOMIC PROFIT FOR VIETNAM
This section covers the results of calculation of the economic gains from the
polypropylene plant project realization for Vietnam in general.
The following main aspects are considered, which can be shown in cost parameter
estimate:
Additional inflow of taxes, dues, payments to SRV budget
Saving of currency at the expense of reduction of currency expenditure for
polypropylene import.
Polypropylene plant shall be operated with normal capacity of 150MTA of the
finished product
Cash Inflow to SRV Budget
Cash inflow includes:
Taxes on sales paid ultimately by the product consumer (VAT);

Dues and payments charged to the finished product prime cost (cash inflow to
personnel social and medical insurance, land lease payment, property
insurance);
Taxes charged to the financial results of the enterprise activity (corporate
income tax) ;
Other taxes (personnel income tax for Vietnamese and foreign citizens).
Cash inflow to the Government during the whole period reviewed (22 years) in
money of the day
Inflow
VAT
Dues and payments included in
the prime cost
Personnel income tax
Total:
Millions USD
142
10
60
6
218
Saving of Foreign Currency

As a result of construction and putting into operation the polypropylene plant within
the configuration of refinery it becomes possible to save foreign currency for
Vietnam. The currency saving is achieved by decreasing the foreign currency
expenditure for the polypropylene import, the decreased currency expenditure is
estimated at US$56 million per year (Based on 2009 CFR SEA PP price and 40%
domestic market sales).
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9. CONCLUSIONS AND RECOMMENDATIONS

Based on the analysis completed in this study, the following summarizes the
conclusions and recommendations:
Conclusions
1. Benefits to Vietnam
The implementation of the proposed PP plant provides a significant economic gain
to Vietnamese economy. Not only is the proposed PP plant providing permanent
employment for approximately 100 locals, but the associated business generated by
such a facility within the local economy is also substantial. In addition, the
completion of the PP plant would also reduce foreign currency outflows by
approximately US$56 million per year, based on reduced PP imports.
The proposed PP plant will enhance the economic potential of the national mega
project - Dung Quat Refinery - currently under construction, by providing an outlet for
propylene sales on a long term guaranteed basis and will ensure the safe operation
of the refinery.
The implementation of the PP plant by the JVC will play as an accelerator for
inducing further foreign investors in the petrochemical industry in Vietnam and Dung
Quat Economic Zone would benefit from new investment in a big scale.
Furthermore, the PP plant will create benefits for the national and regional economy
with the inflow of taxes, duties, fees, and creation of new jobs and related industries
in the regions, as well as reservation of hard currency out flow for purchasing
imported PP which is currently 100% being imported.
2. Market Demand
The Global demand for polypropylene is forecasted to continue to grow at a solid
pace averaging 4.0% through to 2025. The Asian region, in particular China, has the
largest projected PP demand growth globally, with NEA 4.5% and SEA 4.4%
projected demand growth through to 2025.
There is currently a significantly polypropylene demand in Vietnam which relies on
the importation of PP resin to meet the demand. Current domestic demand is
estimated at 329,000 tons. A projected demand growth rate of 5.5% through to 2025
has the domestic demand reaching 966,000 by 2015.
3. Technology & Capital
Various processes are used globally to produce the polypropylene. This feasibility
study considered 5 process technologies. Basell, Unipol, Novalen, Innovene and
Mitsui.
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The most widespread polypropylene process is Basells SPHERIPOL, with 29% of

the installed capacity between 2003 2006. It also has in-house catalyst and
technical assistance and allows for the full range of grades to be produced.
As a result of these qualities, Basells SPHERIPOL was used for financial and
economic analysis in this study.
The capital estimate for the PP facility was estimated at US$175. million, including
royalty, owners costs, and contingency. This is based on a saving of 10% of the
West Europe indicative capital given to LGI from Basell. This saving is based on the
significant integration savings assumed as a result of its parallel construction with
the refinery. A contingency of 30% was used given the low level of engineering
completed to date
4. Production Capacity
The production capacity of PP plant currently being built in the world scale plant is in
the range of 300,000 to 400,000 ton per year and the largest single train is 450,000
tons per year. Over time the unit capacity for polypropylene plants trends higher in
order to achieve a lower fixed cost per ton cost.
This is evident in the Middle East, where the gas based feedstock/utilities at very low
cost are combined with larger capacity to enhance the project economics and to
produce some of the lowest cash cost of production for polymers in the market.
In contrast, the capacity of the proposed JVC PP plant is comparatively small
compared to the global average, and it is therefore going to have a higher
conversion cost per ton of product than many of the producers exporting to Vietnam.
This fundamental disadvantage in plant capacity results in low rate of return on the
investment cost, and it reduces the overall project attractiveness. In order to offset
this capacity handicap and to help make the project financially viable, other aspects
such as the feedstock cost and utilities costs could be adjusted.
5. Project Economic & Cost Competitiveness
The base case IRR based on the cost factors of feedstock price forecasts supplied
by CMAI, and utility costs provided by PetroVietnam shows the project not financially
viable for either feedstock case.:
Blended Feedstock Case: (47,000 tons of imported propylene)
IRR
NPV
-11.8%
- $96 million
0.34
FOB Singapore Feedstock Case:

IRR
-5.7%
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NPV
- $81 million
0.46
In terms of competitiveness, the polypropylene production cash cost of the proposed

JVC facility, based on the blended feedstock case and the FOB feedstock case
would be one of the higher cost production facilities when compared to imported
material on a Delivered South Vietnam basis.
For the purpose of determining how to improve the project economics with various
factors, CMAI modeled the optimum case which provided an IRR of 16% by
discounting the feedstock price from the refinery.
16% IRR Blended Feedstock Case: (47,000 tons of imported propylene)
IRR
NPV
16.0%
$13 million
1.21
16% IRR FOB Singapore Feedstock Case:

IRR
NPV
16.0%
$17 million
1.24
6. Implementation schedule
The proposed PP Plant is planned to be fed with propylene from the Dung Quat
Refinery which is under construction due to be completed by Feb., 2009. The
targeted time for completion of the proposed PP plant is to match the completion of
the Refinery plant. This is very critical task to must be achieved from the standpoints
of both of proposed PP plant and Dung Quat Refinery for the following reasons.
The trading market for non-polymer grade propylene is not well established in Asia.
Though the Refinery plant is designed to handle 11 days of propylene storage and
has export facilities, the propylene from the Dung Quat Refinery plant is too high in
saturated water ethane, CO and COS content. This would mean that the propylene
is not as saleable as polymer grade propylene.
In this case, if the proposed PP plant was not completed on time, then the refinery
must find an outlet for this non-polymer grade propylene. This is assuming that the
refinery has not internal use for the propylene. As a last resort the refinery may have
to flare this product stream if the propylene storage reaches tank top. Flaring
propylene is both financially and environmentally negative.
Therefore the implementation & construction of the proposed PP plant is the time
critical task.
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The proposed PP plant is given 33 months only from now for the total
implementation time. (June 2006 to the targeted completion time of the Refinery
plant, Feb 2009). The normal time span for the execution via the bidding process
requires a minimum of 1.5 years for the licensor selection, PDP/Basic Engineering
and EPC bidding & selection. This is will not allow the targeted schedule for the
project to be met.
In order to meet the targeted schedule, the major contracts including the License
and EPC and the execution of related activities should be fast-tracked in any way
possible in order to meet the desired startup date.
Recommendations
In order to implement the proposed PP plant project to international standards and
with a structured financing some beneficial adjustments need to be made in order to
secure the financial viability of the project. To this end, to achieve an IRR of 16%,
the following factors need to be considered.
1. Feedstock
The IRR of the facility is most sensitive to the capital cost, and the product and
feedstock price. Most PP plants being built are integrated. That is they are integrated
physically to either a refinery or olefins unit, and they are also integrated on a
business level as well. This allows the PP plants to secure the feedstock at a
discount. thus enhancing the economics and competitiveness of the project.
The product price during the project life is dependent on the market ad is beyond the
control of the project owners. Therefore the adjustment by the propylene price is the
mostly used tool to improve the economic once the plant is built.
In order to meet the targeted IRR 16%, the propylene would have to be supplied to
the PP Plant at the price discounted by 32% from the FOB Singapore price for the
minimum guaranteed quantity of 107,000 tons per year from the Dung Quat Refinery
(based on the minimum propylene production quantity from refinery plant under
diesel maximized mode)
If the entire PP plant requirement is to be supplied by the refinery, then the
propylene price would only have to be discounted by 20% from the FOB Singapore
price.
Alternatively the owners of the PP facility could utilize a PP minus propylene
pricing formula. This formula is calculated on a monthly basis and is in US$/ton:
Import Parity PP Price Conversion Cost of PP plant 16% return = Propylene Cost
The calculation is completed for the previous months production, and the actual
conversion costs and PP prices are used. Using this type of propylene price formula
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allows both parties to calculate the propylene price and ensures a return on
investment for the PP facility and its owners.
2. Utilities
High utility cost could have a detrimental effect on the PP plant financials. The
utilities for the proposed PP plant are designed to be supplied by the Dung Quat
Refinery. These utilities should be supplied at the reasonable cost to the PP plant.
The utility costs used in the financial modeling are based on information obtained
from PetroVietnam, however any further discount could help the PP financials,
although to a much lesser extent than a propylene feedstock discount. A comparison
to Middle East average costs is also given.
Utility
Electricity
LP Steam
Vietnam PP Project
US$0.07/kwh
US$7 /metric ton
Typical Middle East

US$0.03/kwh
US$5 /metric ton
3. EPC Cost
The current EPC market is very tight resulting in a cost escalation over the last few
years. This situation is expected to continue for the next several years as the
number of projects in the Middle East and China continue to draw away EPC
resources from other regions. Most projects currently under construction are facing
budget overruns due to the drastically increased EPC costs from those original
budgeted for. Under this current EPC market situation, it is risky to estimate the EPC
cost by taking the reference EPC cost of similar projects recently completed.
Therefore it is recommended that the estimated EPC cost shall be taken with a
certain level of contingency as indicated.
4. Implementation Strategy
With 33 months remaining (from June 2006) for the engineering and design and
commissioning to be completed for the PP plant, the following activities should be
undertaken with a level of urgency in order to achieve the desired commissioning
date:
License Agreement - Considering the tight schedule for both PDP & Basic
Engineering Package, in order to make available both of these items in the 2nd half
of 2006 the Licensor should be selected within the next month to allow the
commencement of both the PDP & BEP work. The selection by the JVC among the
listed licensors in this report should also be fast-tracked.
EPC Contract - The early possible start to the EPC work is necessary in order to
meet the targeted completion schedule by the first half of 2009. The time required for
the EPC work to commence and for the contractor to interface with Licensor and
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Dung Quat Refinery during PDP & Basic Engineering period suggests that the EPC
contract should be established at the very latest by the 3rd quarter of 2006.
The normal bidding process for the EPC contract however would not be able to meet
this deadline. As an alternative, the JVC could nominate the EPC contractor by
direct negotiations in order to reduce the schedule.
The EPC contractor shall be retained on the basis of experience and strong
guarantee to cover the completion and cost overrun risk. In addition the EPC
contractor should meet the required standards of potential lenders, and would be
able to prepare a lump sum EPC cost estimate within the limited timeframe given.
Special attention to the above issues is required by the JVC in order to meet the
tight commissioning deadline.
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ATTACHMENTS
Attachment 1 CMAI Contract
Attachment 2 Environmental Impact Assessment by PetroVietnam Research +
Development Centre for Petroleum Safety and Environment
Attachment 3 Market Survey for Polypropylene in Vietnam by Vietnam Oil + Gas
Corporation Research + Development Centre for Petroleum
Processing
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FS PP Dung Quat

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Houston - London Singapore - Dubai

Chemical Market Associates, Inc.

Feasibility Study of a Polypropylene Facility at Dung

CMAI New York

CMAI Middle East

Excellence and Experience in Petrochemical Consulting Since 1979.

Project Purposes And Configuration

Legal structure & Legal nature

Worldwide polypropylene market and the feedstock for its production

Vietnam Polypropylene Market

Cost competitiveness ANALYSIS

Licensor Offers. Polypropylene Technology Description

Polypropylene Technology Selection

Site Plot Plan

Civil and Architectural Concept

Basic Principles of Process Control

Basic Provisions for Fire Fighting System

Basic Provisions for Telecommunication and Alarm Systems

Basic Provisions for Security System

Recommended Production Organization Chart and Personnel Requirements 124

Initial List Of Major Equipment And Recommendations For Vendors

5. PLANT SAFETY AND ENVIRONMENTAL IMPACT ASSESMENT

Environment Impact Assessment

VIETNAM PP PLANT FEASIBILITY

6. Budget Estimates and Project Schedule

Overall Project Schedule

7. RISKS AND RISK MANAGEMENT

8. FINANCIAL AND ECONOMICAL STUDY OF THE PROJECT

Technical and Economic Analysis

Economic Profit for Vietnam

9. CONCLUSIONS AND RECOMMENDATIONS

Attachment 1 CMAI Contract

Attachment 2 Environmental Impact Assessment by PetroVietnam Research + Development

VIETNAM PP PLANT FEASIBILITY

WARRANTY & DISCLAIMER

VIETNAM PP PLANT FEASIBILITY

VIETNAM PP PLANT FEASIBILITY

PROJECT PURPOSES AND CONFIGURATION

Power supply system

VIETNAM PP PLANT FEASIBILITY

The following Refinery facilities are provided to be used as well

VIETNAM PP PLANT FEASIBILITY

LEGAL STRUCTURE & LEGAL NATURE

VIETNAM PP PLANT FEASIBILITY

VIETNAM PP PLANT FEASIBILITY

Uniform approach to design and engineering

VIETNAM PP PLANT FEASIBILITY

Agreement on land allocation (long-term is desirable)

Catalyst development for the production of propylene polymers is on-going and

VIETNAM PP PLANT FEASIBILITY

WORLDWIDE POLYPROPYLENE MARKET AND THE FEEDSTOCK FOR

Film & Sheet

2005 Demand = 40.7 Million Metric Tons

VIETNAM PP PLANT FEASIBILITY

World Polypropylene Supply and Demand

%AAGR (00-05, 05-20)

Nameplate Capacity (4.2 / 2.2)

Hypo. Add'l Capacity (4.2 / 4.4)

Polypropylene Demand Growth by Regions

NE Asia excl. China

Currently there is a great deal of activity globally in terms of capacity additions. By

VIETNAM PP PLANT FEASIBILITY

VIETNAM PP PLANT FEASIBILITY

VIETNAM PP PLANT FEASIBILITY