MOBIL PLANS ASIAN FACILITY AMID REGIONAL CHALLENGES

MOBIL PLANS ASIAN FACILITY AMID REGIONAL CHALLENGES

Conferees at a meeting here announced new investment to take advantage of the growth in the region's oil and petrochemical business, and at the same time warned that a regional oversupply situation will present serious challenges for all.

The local unit of Mobil Corp. will soon invest in a continuous reformer and aromatics facility to enhance its competitive position in the region, a company executive said Tuesday.The decision is part of a commitment to participate in the growth of the region's petroleum business and to maintain strong growth in the Singapore market, according to Jennings Allen, president of Mobil Sales & Supply Corp.

Mobil's manufacturing base has already been enhanced by the addition of a hydrocracker due to come into operation this summer, he told the closing day of the Oil and Money Conference.

The next phase will be in engineering phase with the continuous reformer and aromatics facility, Mr. Allen told the meeting, sponsored by the International Herald Tribune and Oil Daily newspapers.

Mobil Sales & Supply is continuing to strengthen its trading and sales presence in Singapore and those operations will lead growth in the company's regional oil trading activities, he added.

He forecast that base demand for petroleum products in the region will continue to show significant increases over the next five years, as much as 5 percent annually on average.

Imports of crude oil into the region will increase by about 2 million barrels a day to 6.5 million b/d from the current 4.5 million, he said.

At the same meeting, a top Amoco Chemical Co. executive told conferees that Asia would face some serious challenges on the road to becoming a major player in the world petrochemical market.

"The challenges facing the petrochemical industry in Asia are similar to those faced by the industry in Europe and North America at various times in the past," said Kevin Lynch, president of Amoco Chemicals Far East Ltd.

"As the history of the petrochemical industry demonstrates," he said, ''technological innovations have led manufacturers almost invariably through a cycle of rapid growth, overcapacity and rationalization."

While the United States built its petrochemical industry primarily to

serve the domestic market, many countries - including those in Asia - don't have the luxury of domestic markets where strong local demand already exists, Mr. Lynch said.

"Thus, we see countries that possess crude oil building world-scale petrochemical manufacturing capacity for export markets which are already in a state of oversupply," he said.

That oversupply situation, Mr. Lynch said, would lead to stiff competition among entrenched producers and Southeast Asian manufacturers hoping to export to areas that are already oversupplied.

"For example, within Asia," he said, "entrenched producers in Japan, Taiwan and Korea are unlikely to allow new producers in Southeast Asia to displace them as suppliers to traditional export markets."

Another challenge facing the Asian petrochemical industry is the growing concern for the global environment.

Mr. Lynch said environmental pressures could affect the availability and costs of feedstocks for petrochemicals and raise production costs for all manufacturers.

"Because environmental protection now extends to nearly every country on earth, no competitive advantage accrues to manufacturers who fail to conduct their operations responsibly," he said.

Pei-Tse Wu in New York contributed to this story.