The Asian Pacific region has experienced some of the fastest industrial gas growth rates in the world this year. The growth has been driven by a combination
of factors including a strong electronics industry and high steel and petrochemicals output, leading to a boost in on-site and bulk volumes. In November we addressed the North Pacific Rim region and this special feature looks at the fast growing South East Asian and South Pacific Region.

For the purposes of this feature, the South Pacific Rim includes Thailand, Malaysia, Singapore, Indonesia, the Philippines, Vietnam and Australia. The region has seen significant investment over the past 15 years and although attention has been recently focused on its neighbours in the north (namely China, South Korea and Taiwan) important investments continue to be made \\$quot;“ driving up demand for gases.

According to Spiritus Consulting, the South Pacific industrial gases business was worth $2.3bn in 2005 and has been growing at a healthy eight per cent per year over the past five years. Leading the pack for growth are Singapore and Thailand.

Singapore - growth story continues
Singapore, which represents the biggest market after Australia, is believed to have had a gases industry worth 550 million Singapore dollars (SGD) in 2005,
is the stage of four international gas companies. The biggest company is SOXAL, a joint venture between Air Liquide and BOC, with 65 per cent market share.
Second is Air Products Singapore with 20 per cent market share and third National Oxygen (NOX), a Taiyo Nippon Sanso subsidiary, with 15 per cent. The
fourth player in the country is Linde; however, the gas giant is mainly involved in the on-site business.

The Singaporean market is currently driven by bulk supply. According to NOX\\$quot;s managing director, Mr Umatani, Singapore has been enjoying strong economic growth since 2004, which has had a positive impact on the market.

He said: "Singapore\\$quot;s economy has been growing at a five to seven per cent pace and this has had an impact on gas demand, which has grown around 10 to 15 per cent. The economic climate is very good in the country and I expect this to continue far into the future."

According to Umatani, the main industries behind the growth in Singapore are electronics, semiconductor, petrochemical and pharmaceutical. He continued:
"Singapore is experiencing heavy investment from the petrochemical and electronics industries.

"Shell, for example, has announced it will proceed with the construction of a new world-scale ethylene cracker on Bukom Island, due to start up in 2010, which will have oxygen requirement of 1,100tpd of GOX. ExxonMobil is another major player which has a project starting in the country but this project\\$quot;s schedule is not yet confirmed."

Umatani also says the electronics industry alone is investing four billion Singapore dollars in the country. The companies leading the investment spree are Samsung and Soitec, which have all announced business development plans associated to 350mm semiconductor wafer fabs.

Singapore\\$quot;s economy has been growing at a five to seven per cent pace and this has had an impact on gas demand. The economic climate is very good in the country and I expect this to continue far into the future.
Mr Umatani Managing Director NOX

At the moment the country is enjoying good growth from hard disk driver sales. According to Umatani, Singapore has also experienced growth from liquid
nitrogen sales to the marine sector due to the high oil price. "In the future I believe the growth may come from biotech and electronics."

The short-term future structure of the Singapore market promises some interesting changes. Firstly NOX, the oldest subsidiary in the Singaporean market, is expanding its market share, through its parent company TNSC and sister company Matheson Tri Gas\\$quot;s support. Umatani believes that through NOX\\$quot;s
new plant, which is due to go on-stream in June 2007, NOX will increase its liquid business sector\\$quot;s market share from 13 per cent to 25 per cent. "Additionally economic growth will support our efforts to expand our market share.

"We are also interested to see the outcome of any shareholder changes within SOXAL, following the recent Linde/BOC deal. Linde is not currently serving the merchant market so I am interested to see if there will be any strategic changes to this position."

Gas company projects in Singapore
In addition to the investment by the petrochemical and electronic enterprises, some hydrogen innovations have taken place in Singapore. Last year Air Liquide
opened a new hydrogen fuelling station, supporting the Singaporean government\\$quot;s plan to develop alternative energy.

In 2005, SOXAL, the joint venture between BOC(now Linde) and Air Liquide, signed a bulk gas contract with Chartered Semiconductor Manufacturing, one of the world\\$quot;s top semiconductor foundries, for the supply of nitrogen to Chartered\\$quot;s 300 mm facility, Fab 7.

Under the agreement, SOXAL expanded the customised tank farm for Fab 7 to include a dedicated nitrogen plant for producing ultra-pure nitrogen, compressed dry air and compressed dry air stepper. The expansion of the tank farm was scheduled to be
completed in June this year.

In 2004, Linde and ChevronTexaco Worldwide Gasification Technology also announced the sale of Singapore Syngas, a ChevronTexaco company, to Linde AG, a move that significantly strengthened Linde\\$quot;s position in Southeast Asia.

While the market is relatively small and under-developed, the potential in Vietnam has attracted some major gas companies in recent years \\$quot;“ including TNSC, Messer and BOC/Air Liquide through their joint venture NVIG.

Singapore Syngas operates one of the world\\$quot;s largest gasification plants for generating hydrogen and carbon monoxide, as well as a high performance air
separation unit. In 2003, the company achieved sales of €64 million.

CEO Dr. Wolfgang Reitzle said at the time: "This investment is a component of our growth strategy in the Asian market and it will also strengthen our overall
international gas business.

"This plant will make us a one-stop supplier in a dynamically growing region. This way, we will be able to supply our customers in Singapore, Malaysia, Thailand, and Indonesia with a full range of industrial gases."

The Thai market, which is valued at SGD$350m, is again dominated by four global gas companies; Thailand Industrial Gases Company or TIG (formerly BOC
subsidiary now owned by Linde), Bangkok Industrial Gases Company or BIG (Air Products subsidiary), Air Products Industries or API (a 32% NOX subsidiary) and Air Liquide Thailand.

TIG dominates the market with 55 per cent market share followed by BIG\\$quot;s 30 per cent and API\\$quot;s 15 per cent.

Although gas companies experienced strong sales in Thailand through demand from electronics, manufacturing and food freezing, there hasn\\$quot;t been any major investment in the country since 2005.

Last year, however, Linde won a multi-year liquid carbon dioxide (CO2) supply contract worth some $2 million with the poultry-processing arm of the GFPT
Group. Prior to this BOC had successfully installed a newly developed proprietary freezer at a seafood processing plant in and constructed the region\\$quot;s
first International Society of Beverage Technologists(ISBT).

Going back to 2004 Linde also strengthened its position in Thailand by acquiring a liquefaction plant for the production of carbon dioxide (CO2) in the east
coast from the Norwegian gas and fertilizer group, Yara International.

The Malaysian industrial gases market, valued at SGD$400m, is the fourth largest gas market in the South Pacific Rim region. The country\\$quot;s industrial gas
industry is dominated by Malaysian Oxygen Berhad (MOX) \\$quot;“ an Air Liquide and BOC jv, which has 75 per cent market share. The other significant player is Air
Products, which has 20 per cent market share followed by a growing presence from Praxair and Linde. The remaining five per cent comprises a group of small
local businesses.

The industrial gas community\\$quot;s only investment took place in 2004 when Linde acquired Hydrogas Malaysia from Norwegian Yara. The company was, in 2004,
the largest provider of liquid carbon dioxide and dry ice for the food and drinks industry in Malaysia and Singapore.

Until recently, this was Linde\\$quot;s main activity in the country. However, the recent acquisition of BOC by Linde means that Linde has a stake in the major player in Malaysia \\$quot;“ MOX, formerly managed by BOC.

While the market is relatively small and under-developed, the potential in Vietnam has attracted some major gas companies in recent years \\$quot;“ including TNSC, Messer and BOC/Air Liquide (through their jv NVIG).

Taiyo Nippon Sanso completed a new plant in Vietnam in 2005. The plant, an expansion on their first investment in the late 1990s, was constructed for TNS
and Tomoe Shokai\\$quot;s joint venture, Vietnam Japan Gas, in order to respond to Vietnam\\$quot;s rapid GDP growth and continued steady growth anticipated into the future

Messer has also a presence in the country, which it expanded in 2005 with the construction of a new $6m plant at Binh Duong.

On July 1 2006, BOC and Air Liquide announced that they were renaming NVIG to Vietnam Industrial Gases.

The Australian market, valued at SGD1bn, is the largest market in the region by far.

The only major announcement made this year was by the Linde Group in which the company announced it would construct a LNG plant for Wesfarmers in
Western Australia in October. This small-scale plant represents an important step for Linde in taking part in the growth market of small-scale LNG plants. It was valued at €40 million, and will produce 60,000tpy of LNG.

Prior to this only BOC, now part of the Linde Group, announced plans to build a new liquid helium plant at Darwin in northern Australia in 2005. The new facility
will be the first helium plant in Australia and it is due to commence production next year. As per our article last month on Helium, this may be delayed due the current plant position in the Middle East.

As a final comment on the region, Umatani believes that industrial gas demand will continue to grow in the South East Asia. He added: "This region is a good
market for industrial gas companies\\$quot; businesses and it is supported by the healthy economic growth and overseas investment."