SINGAPORE - Shell broke ground on Tuesday (Nov 23) on a new plant on Pulau Bukom that will turn hard-to-recycle plastic waste into a feedstock chemical that can be used to make everyday products, from tyres to mattresses.

Slated to start production in 2023, Shell's pyrolysis oil upgrader unit is the first project in step with the planned sustainable energy and chemicals park and will also be the first such plant globally for the Dutch oil major.

It will also be the largest plant of its kind in Asia, with a capacity to produce 50,000 tonnes of pyrolysis oil a year.

The ground-breaking ceremony was officiated by Singapore's Minister for Trade and Industry Gan Kim Yong.

Mr Gan said climate change has been identified as the single biggest threat to humanity, while consumers and investors are also increasingly placing emphasis on sustainability. That has put the energy and chemicals sector under the spotlight, because of its high carbon footprint.

"But the good news is that the sector is not standing still. It has recognised the existential impact of climate change on its future and has started to respond proactively," he said.

Ms Aw Kah Peng, chairman of Shell Companies in Singapore, said Shell's energy and chemicals park in Singapore is "a key driver in our strategy to transform our business, reduce our own emissions and those of our customers as we move to a low-carbon economy".

"The transformation that we are embarking on is unprecedented for the industry here," she added.

Shell will use pyrolysis oil to produce circular chemicals that are used to make foams used in bedding, furniture and cars, and can be recycled back into their liquid form ready to be used for another cycle.

It has already signed its first circular chemicals agreement in Asia with Asahi Kasei, a multinational Japanese chemical company.

Last year, Shell announced a plan to cut back its refinery portfolio from 14 sites to six energy and chemicals parks. One of them is the Shell Energy and Chemicals Park Singapore.