Petronas approves new USD27 billion Malaysia project for refining and chemicals

MOSCOW (MRC) -- Petroliam Nasional Bhd., Malaysia’s state oil and gas company, will proceed with a plan to invest in a USD27 billion refining and petrochemicals project in the southern Johor state bordering Singapore, as per Hydrocarbonprocessing.

The proposed Pengerang Integrated Complex will comprise of a refinery and petrochemical development and other associated facilities, Petronas said after its board approved the investment decision. The project is poised for its refinery startup by early 2019, it said.

The latest decision may help a push by Malaysia to turn the fishing town of Pengerang into an oil and gas hub. It comes after Taiwan’s Kuokuang Petrochemical Technology Co. in December ended a plan to build a USD12 billion petrochemicals project in the same area.

"Petronas undertook a rigorous review of the project, including independent third-party assessments to ensure it meets our criteria for long-term profitable and sustainable growth," CEO Shamsul Azhar Abbas said. "This decision is in line with our commitment to capital discipline."

The refinery and petrochemical integrated development is estimated to cost about USD16 billion, Petronas said. Associated facilities including raw-water supply and power co-generation plants, and a liquefied natural gas regasification terminal, will involve an investment of about USD11 billion, it said.

The Petronas project, announced by Prime Minister Najib Razak in 2011 and initially scheduled for 2016 completion, has encountered problems acquiring land and relocating residents. The Malaysian company was reviewing the costs and potential returns of the development as Kuokuang, a unit of Taiwanese state-run refiner CPC Corp., dropped plans for its project.

Kuokuang said in December its plan to build a refinery, naphtha cracker and other plants in Pengerang was no longer competitive as a shale gas boom drove down the production cost of petrochemicals in the US and expansion in China had led to an oversupply.

Petronas may not proceed with the investment in Pengerang if the costs and returns prove unfavorable, Shamsul said Aug. 26.

BASF also ended plans last year to jointly develop specialty chemicals manufacturing facilities with Petronas in the same area after both companies disagreed on terms. Petronas later signed a letter of intent with Germany’s Evonik Industries for a similar partnership.

As MRC informed previously, in July 2013, Petronas signed an agreement with Eni-controlled Versalis to jointly own, develop, construct and operate elastomer plants within Petronas' proposed refinery and petrochemical integrated development (RAPID) complex in Pengerang, Johor. The agreement signed with Versalis is the fourth-such arrangement secured by Petronas for RAPID. Prior to this, Petronas inked similar agreements with Germany-based BASF, ITOCHU Corp. of Japan and Thailand's PTT for various high value-added downstream chemicals.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.
MRC

MOSCOW (MRC) -- Sinopec Sabic Tianjin is in plans to shut a polypropylene (PP) plant for maintenance turnaround, reported Apic-online.

A Polymerupdate source in China informed that the plant is likely to be shut on May 7, 2014. It is planned to remain off-stream for around one month.

Located in Tianjin city, China, the plant has a production capacity of 450,000 mt/year.

As MRC wrote previously, in November 2013, top Asian refiner Sinopec Corp won initial approval from China's top economic planner for a plan to build a USD10-billion refinery and petrochemical complex in Shanghai. China, the world's largest net importer of oil, is likely to add 3 million barrels per day, or a quarter of new refining capacity, between 2013 and 2015 to fuel economic growth, industry officials and Chinese media estimate.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group's key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC

MOSCOW (MRC) -- Kem One, Europe’s third-largest producer of polyvinyl chloride (PVC), will maintain a strict price policy in April in order to recover the margins, deteriorated by the weakness of the market for caustic soda, reported the company in its press release.

No concession will be made with respect to the movement of the "feedstock", and price increases will be applied.

As MRC informed previously, Kem One increased its February prices of suspension PVC (SPVC) grades and mass PVC (MPVC) grades, given the weakness of the market for caustic soda and margin erosion. The increase for the products stated above was EUR25/tonne. In January 2014, Kem One already raised PVC prices by EUR50/tonne.

Kem One, a fully integrated vinyl production company, was established mid-2012 following the acquisition of Arkema's vinyl products division by the Klesch Group. The company employs 2,600 people at 22 manufacturing sites, primarily in Europe but also in Asia and North America. Europe’s third-largest producer of PVC with revenues in excess of one billion euros, KEM ONE continues to grow and build on its numerous strengths with a view to becoming market leader for integrated vinyl solutions.
MRC

MOSCOW (MRC) - Russia's production of polycarbonate (PC) was 18,330 tonnes in Q1 2014, up 3% from the same period in 2013, according to MRC ScanPlast.

Monthly PC capacity at Kazanorgsintez is 5,900 tonnes. The producer's PC capacities have been loaded more than by 100% over the reported period. Kazanorgsintez produces injection moulding and extrusion grade PC.

The producer's output over the three months of the year accounted for 70% of extrusion grade PC and 30% injection moulding grade PC.
Kazanorgsintez produced 12,800 tonnes of sheet extrusion PC and 5,500 tonnes of injection moulding PC in Q1 2014.
The producer has increased PC shipment to the domestic market over the reported period, reducing exports. The producer's PC exports in Q1 2014 was 2,600 tonnes.

The structure of Kazanorgsintez's PC exports over the reported period was as follows. Production of injection moulding PC be the producer was 2,200 tonnes in Q1 2014, which made 86% from the total producer's exports over the reported period. Its exports of extrusion PC was 373 tonnes in Q1 2014, which made 14% of the total producer's exports.

Kazanorgsintez is focused on the saturation of domestic market with extrusion PC on the back of seasonally stronger demand for this material.

The devaluation of the Russian rouble and higher prices for imports also contributed to stronger demand for the Russian material.

MRC