Petronas Chemicals Group Bhd chairman Md Arif Mahmood (centre) flanked by managing director/CEO Datuk Sazali Hamzah and chief financial officer Rashidah Alias at the post-AGM press conference.
KUALA LUMPUR: Petronas Chemicals Group Bhd
(PetChem) expects to grow its production capacity by 49% or an increase of 5.3 million tonnes by year 2020 from 10.8 million tonnes currently.
Managing director and chief executive officer Datuk Sazali Hamzah said this would be contributed mostly by the group’s Pengerang Integrated Complex (PIC) which was scheduled to be operational in 2019.
“As at end-March, the facility (PIC) is currently 62% complete and once it begins operations, PetChem’s capacity growth is expected to be twice the growth of its peers by 2020,” he told reporters after the company’s AGM in Kuala Lumpur on Thursday. - Bernama
In a press statement, PetChem said that last year, it achieved its highest plant utilisation rate ever recorded since listing in November 2010.
“The group’s plant utilisation rate of 96% far surpasses world class standards and is the result of its continuous efforts in reaching sustainable outstanding plant performance,” Sazali said.
Production volume grew by 11% to 9.2 million metric tonnes from 8.3 million metric tonnes, the highest level ever recorded since listing.
PetChem attributed this achievement to the reliable plant operation of its top-notch facilities.
PetChem’s revenue for 2016 rose by RM324mil or 2% to RM13.9bil amidst challenging market conditions, due to a higher sales volume and complimentary foreign exchange.
Its earnings before interest, taxes, depreciaton and amortisation (Ebitda) rose to RM5.3bil from RM4.7bil in 2015, while the group’s Ebitda margin remained strong at 38%.
“This is due to PetChem’s well diversified portfolio of products and competitive feedstock advantage that was further supported by the favourable effects of a strengthening US dollar,” the company said.
Below is the progress of PetChem’s five key projects.
1. Sabah Ammonia Urea (Samur) Project
Project Update: Currently, both ammonia and urea plants are running at 100% full capacity.
As of April 2017, a total of 148,813 tonnes of ammonia and 187,300 tonnes of urea had been produced. Majority of Samur products are exported to Thailand (51%), Australia (25%) and to other Asean countries.
Background: The Samur Project represents PetChem’s continuous effort to meet market demands for urea, especially in the South-East Asia region. The project will add 1.2 million metric tons per annum (mtpa) of urea production to PetChem’s existing 1.4 million mtpa capacity, positioning it as the second largest urea producer in South-East Asia.
2. Integrated Aroma Ingredients Complex
Project Update: The commissioning and start-up process of the integrated aroma ingredients complex is progressing well to meet the range of 2017 start-up schedule.
Background: The Integrated Aroma Ingredients Complex in Gebeng, Pahang, is a joint venture project undertaken together with BASF through our associate company, BASF Petronas Chemicals Sdn Bhd. Citral, citronellol and L-menthol, are aroma ingredients, to meet the high demand from the rapidly growing fragrance and flavour industries.
This project, that is first to use BASF’s technology outside Europe, marks PetChem’s foray into the highly attractive niche and specialty play, which are less affected by cyclicality compared to commodity chemicals. Aroma ingredients are sold to the flavour and fragrance industry, mainly in home and personal care products and in the food industry as well as pharmaceutical applications.
3. 2-Ethylhexanoic Acid (2-EHAcid) Project
Project Update: On specification 2-EHAcid was successfully produced and delivered to overseas customers in late 2016
Background: The 2-EHAcid plant in Gebeng Pahang, undertaken together with BASF through our associate company, BASF Petronas Chemicals Sdn Bhd is the first of its kind in South-East Asia and will benefit from the integration with its current facilities in Gebeng. Product application include as a chemical compound in the production of synthetic lubricants, as well as oil additives and functional fluids like automotive coolants, and other uses in various industries.
4. Highly Reactive Polyisobutene (HR-PIB) Project
Project Update: HR-PIB is expected to be commissioned in the fourth quarter of 2017 as planned.
Background: PetChem has sanctioned the development and construction of a new world-scale HR-PIB plant at its associate company, BASF Petronas Chemicals Sdn Bhd, to add further value to its existing business at Petronas Chemicals MTBE Sdn Bhd in Gebeng, Pahang. Product functions include as intermediate product for the manufacturing of high-performance fuel and lubricant additives.
5. Pengerang Integrated Complex (PIC) Project
Project Update: As at end March 2017, the Pengerang Integrated Complex (PIC) development is around 62% overall project progress. This project is progressing well whereby to date the overall petchem project for polymer and glycol is more than 30% and slightly ahead of schedule.
On April 18, 2017, PCG approved the final investment decision for an isononanol plant at Pengerang Integrated Complex. This is yet another strategy of PCG to grow further in specialty chemicals.
Background: The petrochemical projects in PIC, which are scheduled to be operationalised in 2019, are significant growth projects for PetChem to broaden its product portfolio and further diversify into derivatives, specialty chemicals and solutions, while expanding PetChem’s existing production capacity.
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