In the past three years, SCI has invested extensively in several water-recycling and water treatment projects in China, the Middle East and in Singapore. With the recent launch of the group’s S$180mn (design,build, own and operate (DBOO) Changi NeWater plant in late June, the group’s water investments have become even more significant.

When completed in 2010, this facility will be one of the world’s largest water recycling plants, producing 50mn gallons of reclaimed water per day (268,000m3/day). Capacity take-up is secured by a 25-year DBOO contract with Singapore’s Public Utilities Board. We expect increasing earnings contribution toward end-2010F and into 2011F.

While the project is being marketed as an initial showcase facility, the group has said its broadened capabilities in reclaimed water segment have met keen interest from the group’s existing and new utilities customers, particularly in China and the Middle East.

SCI’s Jurong Island industrial wastewater treatment facility also has seen significant expansion, with hydraulic treatment capacity raised by 120m3/day to 7,992m3/day, based on increased customer demand.

The group’s wastewater treatment capacity also includes organic treatment capacity of 57,284kg COD/day. Sembcorp Utilities provides wastewater treatment to some 40 multi-national petrochemicals and chemical companies on Jurong Island. On Jurong Island and in China’s Zhangjiagang free trade zone, SCI treats and recycles wastewater in a closed loop, which according to the group, makes water a sustainable resource.

In 1Q09, Singapore utilities contributed net profit of S$31.5mn (+13% y-y) or 26% of SCI group’s profit of S$133.6mn. Significant and key expansion plans on Jurong Island into 2010-11F, with ExxonMobil’s new US$4bn petrochemicals cracker complex and Shell’s US$3bn cracker facility, will likely raise the level of investments on the island over the next three to five years, once the nascent market recovery gains momentum. Other projects, such as Mitsui’s S$230mn TAFMER plant, also are scheduled to start up by 2010F.

With the conclusion of its gas sales agreement with Premier Oil, KufPEC, Hess and Petronas to import an additional 90mn BTU per day of natural gas from the West Natuna Sea for delivery in 2010-11F, gas supply capacity will likely increase 26% to 431bn BTU per day, for both process use and to produce steam to meet expected increase in demand at the Jurong Island petrochemicals complex.