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Interview

Mark Tinkler, Global Head of Trading, Fortrec, Singapore

19.06.2014 / Energyboardroom

Mark Tinkler, Global Head of Trading at Fortrec, describes the company’s broad spectrum of services that go beyond simple trading of petrochemical products, Fortrec’s commitment to partners and not products, and its integrated system projects that aim to involve the entire value chain and skillfully include local content. The company’s strong international presence in the distribution, consumption, & trading of heavy aromatics is discussed, as well as expansion plans in the Middle East and Africa.

As Global Head of Trading, can you begin by introducing Fortrec?

Fortrec is Singaporean privately held company founded in 1999. Having expanded our geographical presence, we have offices in Thailand, South Korea, Taiwan, the Philippines, Malaysia, China and India as well as representatives in the UK and the US. More recently we have also established a presence in Turkey as well as in South Africa.

Fortrec is effectively situated somewhere between the petroleum and petrochemical markets. Our organizational focus is centered primarily on aromatics and intermediates but also petroleum, olefins and polymers products. We take into consideration the value of various products and their potential as a feedstock for the petrochemical market, or for the petroleum blending market.

Moreover, under our framework business model that shapes Fortrec as a one-stop partner, we offer a range of engineering expertise designed to maximize the efficiency of refining petrochemical production plants, as well as integrated financing solutions, raw materials sourcing, marketing and advanced logistics. We therefore have a presence across all of elements of the petrochemical value chain.

Throughout the company’s 15 year history, what have been some of Fortrec Chemicals and Petroleum’s milestone developments or achievements that have helped and shape what it is today?

A key service Fortrec provides falls under what we call the Asset Utilization Program (AUP) and Asset Enhancement Program (AEP). In short, these are designed to help our clients transform their facilities into highly efficient and profitable plants. AUP primarily address underperforming assets, whereas AEPs help assets achieve their maximum potential and efficiency through bespoke fine tuning and upgrading.

These two programs ultimately represent the core of our organization across all our principles and business. In fact, these led to our venture into petrochemical asset ownership through our Sino-Singaporean joint venture (Jiangsu Hualun-Fortrec Chemical Industry Co. Ltd) between the largest solvent producer in China and Fortrec. Dialogue with Jiangsu Hualun initially began in 2004 in the form of a business partnership which in due course evolved into an investment co-venture by 2008. This denotes our approach to business; starting with a partnership but with a long term view towards potentially developing or investing in a physical asset base. In the case of the Jiangsu Hualun-Fortrec Chemical Industry venture, we developed it from a plant with 150,000 ton per annum capacity, to 350,000 tons today for heavy aromatics feedstock where we produce solvents C9, C10 and C12 used in agrichemicals and coatings.

Across your different services lines, does Fortrec always offer these in an integrated manner?

We do if need be but this is not always the case. This essentially boils down to the clients’ requirements. Different projects might require different elements of our expertise. For instance some of our projects might be centered purely on financing, while others might demand an analysis of the marketing and logistics aspects.

In India for example, we worked with a gas producing client whose business plan had only focused on serving the domestic market and therefore lacked any exporting facilities for their product. However, the circumstances implied that there were opportunities to export the gas abroad and we helped them develop and apply the blueprint for transporting and marketing that gas. In this case, this touch upon our advanced logistics, market and engineering capabilities.

In terms of growth, what strategy is Fortrec Chemicals and Petroleum adopting in terms of geographical or business line expansion?

The growth in the end-users aromatics business with agrichemicals, solvents and coatings resin represent great opportunities for us. Asia is a significant market for these products and some of the key markets within that include India and China. Having said that, we are well positioned to accommodate that growth considering that our plant in China is now the largest solvent extraction plant in China.

The Middle East is also a key market that has exhibited steady growth over recent years as a result of the drive to lock in a greater share of the value derived from oil and gas based products. As such, we are exploring opportunities there to support their ambitions to put in place the infrastructure that enables the development and production of solvents.

Ultimately, our vision in that region is to be involved in every step of the value chain, from the crude oil in the ground and the production of petrochemicals to the manufacture of fibers and the weaving of the garments at local cooperatives that would contribute to the development local content.

To what extent do you view the Middle East’s ambitions to lock in greater value in its downstream as a challenge or opportunity?

The developments in the Middle East are bound to have an effect on Asia’s petrochemical industry. The opportunities in the Middle East are present across the full value chain. For one, the region possess an abundance of cheap feedstock. Whereas we are seeing countries like South Korea and Japan increase certain petrochemical capacities despite the general lack of easily accessible and inexpensive feedstock. This represents a whole different set of challenges for the industry. Nevertheless, challenges de become opportunities and as global dynamics continue to change, a host of new opportunities will present themselves. These will be unique to each region and each country within that.

Broadly speaking, the general theme in Asia will revolve around competing feedstocks whereas in the Middle East, it will be one of penetrating the global downstream markets and adding value to their supply chain.

In light of these global developments, will Singapore’s role in the petrochemicals business be impacted?

Unlike Singapore’s status as a financing, bunkering or refining hub in the oil and gas industry, petrochemicals is not a key component of the city-state’s industrial or economic base. This holds especially true on the physical side but there is indeed a fair deal of activity on the paper trading side of petrochemicals in Singapore. In this regard, I believe Singapore’s presence on the marketing side will only benefit from the changing and expanding global dynamics of the petrochemicals industry. They certainly have the reputation of strength in paper trading and possess a highly conducive business environment that protects intellectual property rights. There are new developments in R&D in Singapore on Fine Chemicals. This is another growth area.

In 2013, Fortrec Singapore was be awarded the “Global Trader Programme” status by Singapore’s International Enterprise (IE), and has been ranked as one of the Top 1000 companies. To what characteristics do you attribute the company’s success?

Our approach has always been to work with partners rather than products. We have a firm focus on the partner and seek to help them resolve whatever issues they might have and free up any bottlenecks they might have in their business. This approach has helped to craft Fortrec as a unique product and service provider in our industry. We are far more than traders of petrochemical and petroleum products. We like to examine the values of different assets and seek to improve the value of those distressed assets while optimizing the performance of successful assets. In addition to this, we also help to manage the price risks between consumers and producers.

Our philosophy is more about understanding the people, products and dynamics of the industry we are in and using that to address the challenges that may arise.

In addition to this, we are also a highly flexible organization. We are happy to work on a short term joint venture type project that would last no longer than 12 months, for instance. At the same time, we are also equally happy to work in close collaboration with partners on a longer term basis with some sort of asset base as was demonstrated by our Jiangsu Hualun-Fortrec Chemical Industry joint venture. We can assist our partners in branding their products or equally comfortable using our own name in the market. We understand that brand is important to certain government or business entities and we are happy to accommodate that by being active in the background. Similarly, we also understand the need for local content development and the improvement of local skill sets as well. This is what we are implementing now in Saudi Arabia as well as the Southern African region, from Namibia and Mozambique, to Madagascar.

With Singapore constantly looking towards the horizon to maintain its leadership in the sector, what role is and will Fortrec playing in this regional growth story and what are your priorities?

One of the major areas we look to address going forward is price risk management in the petrochemical sector which is still per se in its infancy. The petroleum market by comparison is rather well established in this regard. However, the volatility we are observing in the markets for crude to naphtha and gasoline, which was traditionally not so prevalent, is now impacting the petrochemical end of the market to a greater extent. As a result, we see a great opportunity to help producers and end users better manage these price risks in these products which are not necessarily very transparent or liquid.

End user markets such as textile and plastic bottle manufacturers are becoming increasingly exposed to price risks (in their raw material costs) and we intend to help them mitigate these and control their cost structures. As a key manufacturer and therefore significant end user of such products, we see great opportunities in the Asian region and are highly optimistic about Fortrec’s future prospects.

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