Following last month’s North Pacific analysis, gasworld gets a tropical taste of the gases market in the South Pacific Rim.

Synonymous with golden sands, tropical palms and welcoming relaxation, this region is perhaps thought of as the land of the great getaway, a tourism haven for the discovery of distant shores.

The South Pacific prospers beyond this however, and is certainly no economic or industrial backwater.

The region consists of a cluster of countries rich in both resources and potential, and a market largely dominated by The Linde Group and Air Liquide – though both Air Products and Praxair are notable by their presence in Singapore, Thailand and Malaysia.

Establishing a strong position in the region appears an obvious strategy for the industrial gas majors, as the market continues to grow at a healthy pace and builds upon its market share of 5.1% in 2006/7. Spiritus Consulting estimates this to be the 5th largest industrial gases market and forecasts further revenue rises in the years to come, growing from revenues of $2.44bn in 2005, $2.7bn in 2006 and an anticipated $2.9bn in 2007 to reach around $3.2bn in 2008 and potentially, $3.5bn in 2009.

This steady margin of increases looks likely to prevail beyond 2009 too, with revenues of $3.8bn predicted for 2010 and just over $4.2bn expected in 2011.

A steady South Pacific Rim beckons then, as Spiritus’ predicted CAGR of 11.6% for the period 2001-2006 slows ever so slightly to 9.5% for the following five years of 2006-2011. This is still one of the higher CAGR’s forecast of all the regions comprising the global market.

So if Spiritus’ figures forecast a steady though healthy future for the South Pacific Rim gases market, what does the news stream suggest?

Developing trends
Much of the news to have emerged from the region of late seems to have focused on energy alternatives and new energy project developments.

In April, Australia began its testing of carbon storage and is pumping 100,000 tonnes of carbon ioxide underground, while a number of high profile LNG projects are in varying stages of development ‘Down Under’ and LNG is also of significance to Brunei – where the sultanate hopes to gain from the rising demand for this commodity.

A focus towards LNG is considered in Thailand, with reduced CO2 emissions also on the agenda for the new Thai government, and a long-term contract for hydrogen supply in Singapore signals a determination to impose process efficiencies and environmental responsibilities in the country.

Arguably one of the biggest energy news items to have emerged from Australia of late is that of the aformentioned carbon storage programme. The $36m project is one of only a handful of such schemes around the world and with the intention of developing into a carbon capture & storage project (capturing from coal-fired power stations), is seen as a significant signal of environmental intent.

Other notable developments are underway in Australia however, as the steadily growing market consolidates on its region-leading position.

In a regional market with such promising growth rates expected, Australia is again the market leader as it occupies a 32% share and has revenues of around $938m for 2007 – up from approx. $860m in 2006. This is by far the market-dominating country as it boasts almost double the share of second-largest Singapore at 18.4% in 2007.

Coregas, born out of the takeover of Linde’s Australian business Linde Gas Pty Kt by Wesfarmers in early 2007, recently held the opening of its new nitrogen liquefier in Port Kembla, New South Wales.

A major participant in the Australian gas market, Coregas produces oxygen, nitrogen, argon, and hydrogen at its Port Kembla facility and the opening of the new nitrogen liquefier is a sign of the company’s continually expanding operations. The gases produced and distributed are utilised for industrial, medical and specialty gas applications.

The developing trend for LNG produces perhaps the most persistent news stream from Oz, as a number of key projects reach advanced stages.

BOC, through the takeover of which Linde further strengthened its leading position in the country, revealed plans in October 2007 to upgrade its Dandenong LNG facility on Australia’s East Coast – to triple its supply output from 50 tpd to 150 tpd.

Elsewhere, a handful of other LNG projects have been gaining attention – a prominent one being the Pluto LNG scheme in Western Australia.
Located in the Burrup Peninsula, the Woodside Burrup Pty-operated project is a liquefaction facility set to be completed by 2010, with a proposed production of 4.8 million tpy.

A number of differing contracts have been awarded for the scheme, while another Western Australian facility has been in the headlines recently as a design concept is pondered for the Browse LNG Development.

Work is also underway on another significant project in the country, though of a comparitively greater immediate impact.

Construction commenced recently on The Linde Group’s BOC helium plant in Darwin, Australia’s first such plant and potentially a contributor to the global helium supply & demand challenge.

The project is intended to boast capacity enough to meet the entire nation’s needs as well as supplying export markets. The significance of the facility is explained by BOC South Pacific Managing Director Colin Isaac as he said, “At a construction cost of $41.3m, this will be the first helium plant in the southern hemisphere and will supply around 3% of the world’s helium.”

“The opportunity to extract helium from the Darwin LNG plant will see Australia self-sufficient in helium supply...there will be additional capacity available for export to other world markets from Darwin.”

There’s clearly much going on in the Australian gas and energy market, so much activity that it can’t all be explored here. But what of the future for the market?

Resources and raw materials are abundant while there is evidently a strong investment climate too. The optimism for the country’s industrial gas future is shared by native equipment producer CEFRANK Engineering. CEFRANK specialises in industrial gas equipment such as gas bundles, pallets and filling systems and has recently received its certificate renewal for approval under the European Standard EN13769.

Speaking of the market’s prospects, Director Frank Cetinich commented, “Yes there is a lot of activity in the Australian market, especially for special and mixed gases. Growing sectors like the computer, technology, electric and hospitality industries create a higher demand for these special gases.”

“I also see signficant growth for the Australian industrial gas market in the future. Australia is very rich in natural resources and raw material and right now we export mostly raw material.”

Manufacturing as an end-use industry has traditionally represented a strong industrial gas growth driver and in Australia, Cetinich believes this will be a prominent industrial sector in future years. He explained, “I believe, that due to rising oil costs, we will minimise the export of raw materials and increase the export of semi product. This will lead to growth in the manufacturing industry and hand-in-hand, comes growth in the gas industry.”

New Zealand
The Messer Group announced in July that it had that month signed a contract of purchase to take over the 51% majority share of Asco Carbon Dioxide Ltd. in New Zealand, building on its already strong interest in the Asco businesses.

In a move that shows the group’s ambition for the South Pacific market, Messer has acquired a company that constructs CO2 production plants in New Zealand primarily for markets in which carbon dioxide cannot be obtained as a by-product from industrial plants or agriculture. Messer took over the majority share in Asco Kohlensäure AG from previous sole owner Thomas Trachsel in June 2007 and has now acquired the majority share in Asco Carbon Dioxide in New Zealand.

“In future, Asco in New Zealand will focus on delivering to locations where, for logistical reasons, carbon dioxide needs to be produced on site for use in all sectors, above all in food processing and industry,” commented Hans-Gerd Wienands, CFO of the Messer Group.

The quietly developing Vietnamese market has received an injection of investment in the past six to twelve months, perhaps most notably the announcement from Messer that it is to construct the largest and most modern ASU in the country.

Vietnam holds an estimated 2.3% share of the South Pacific industrial gas market and Messer is clearly keen to expand upon its existing presence n the region, as Tony Rivera, General Manager of Messer in Vietnam, exclusively told gasworld in November.

“Messer considers this area as important for future development. Haiphong continues to be the major port of the northern area. The northern area is also rich in mineral resources like iron ore and other non-ferrous metal ores,” Rivera said.

“It is also very near to China. These and other factors make the north one of the fastest growing regions in Vietnam.”

According to Spiritus estimates, Messer occupies just a 1% share of the South Pacific gases market but the company is evidently ready to build on this. Its ten years of activity in Vietnam is to be boosted by plans to build an ASU at the heart of the country with shipbuilding subsidiary Shinimex, and further expanded by the largest ASU project in partnership with steel producer Hoa Phat Group.

The gases group will supply Hoa Phat with oxygen, nitrogen and argon over a 25-year contract and at an investment of around €13m.

The deal exemplifies the desire to capitalise on both the South Pacific CAGR of 9.5% for the period 2006-2011, and the booming steel industry – which Spiritus anticipates will grow at around 11.2% for the same period.

Looking ahead toward the future of the Vietnamese and South Pacific market, Rivera commented, “Yes the gas demand in the area is expected to continue to grow. There’s still much room for development in the region.

For example, in Vietnam alone the per capita consumption of steel is less than 0.1 tpy. This is a very low figure compared to developed countries. Then you have countries like Cambodia and Laos that are not yet even at par with Vietnam when it comes to economic development.”

Malaysia, Brunei, and Thailand
Evolving energy dynamics are providing a wealth of business in Brunei and Thailand as the area invests in LNG developments, while in Malaysia an assertive strategy has been revealed for Malaysia Oxygen (MOX).

The Linde Group is believed to dominate in the South Pacific gases market, boasting a share of around 47% and with the company’s bulk gas business expected to experience a CAGR of approx. 10.7% during 2006-2011 (Spiritus).

Linde-owned MOX brought on stream two plants since the close of 2007, adding 400 tonnes per day capacity, while further investment is mooted in the country as the company revealed RM250m of funding for capacity expansion over the next two years.

MOX’s newly appointed Country Head for Malaysia, Wong Siew Yap, declared this summer, “This will be one of the largest investment tranche seen in the 48-year history of MOX. Included are investments that will meet the increased needs of long term electronics and glass customers in the east coast and the Klang Valley. The plants are scheduled to be completed by early 2009.”

For Thailand and Brunei, LNG has offered a steady stream of news.

A new government in Thailand is targeting a 15-20% reduction in CO2 emissions too, while the sultanate of Brunei has intimated it intends to further its foray into the LNG market in the coming years.

As an LNG exporter of more than 35 years, Brunei suggested it wishes to continue such business beyond 2013, when current supply contracts with Japan and South Korea expire.

Singapore and Philippines
A wholly-owned subsidiary of Taiyo Nippon Sanso Corporation (TNSC), Singapore-based National Oxygen is a single source provider of bulk and specialty gases and other related services, and has this year been recognised for its supply service with an award from Chartered Semiconductor.

Rewarding its outstanding materials supply service, Chartered Semiconductor honoured National Oxygen with an accolade at its 2007 best supplier awards.

Another award achieved in 2008, though this time a contract award, was announced by Singapore Oxygen Air Liquide Pte Ltd (SOXAL) as the subsidiary secured a deal to supply hydrogen to Neste Oil’s Renewable Diesel Plant in Singapore.

Investing around €125m, SOXAL will build, own and operate a new world-scale Steam Methane Reformer (SMR) on Jurong Island, expected to start-up in 2010 and produce around 100, 000 Nm3 per hour of hydrogen.

The new hydrogen unit represents SOXAL’s fifth and biggest investment into the gas infrastructure of Jurong Island, serving existing and future petrochemical customers in the area. It is also indicative of the strength of Air Liquide’s presence in Singapore and the wider South Pacific market, of which it occupies a 21.2% stake – second only to Linde.

Linde is reinforcing this leading position in many of the region’s countries, including the Philippines, where the group has recently committed to invest an additional PHP3.5bn in new projects.

As the majority owner of Consolidated Industrial Gases Inc. (CIGI) and Southern Industrial Gases Philippines Inc, Linde has a leading position in the country and is striving to meet increased demand with further project funding over the next five years.

Sanjiv Lamba, Managing Director for South and Southeast Asia of Linde Gas Pte. Ltd, explained, “The Philippines is a substantial business for Linde. A lot of the growth in Asia is coming from the Philippines.”