PetChem sets 85% target


KUALA LUMPUR: After a year of improving its operational efficiency, Petronas Chemicals Group Bhd (PetChem) targets to increase the utilisation rate of its plants to about 85% this year.

In 2013, its utilisation rate was 78%, 5% lower than in 2012 amid major statutory turnarounds and maintenance activities at its primary cracker, related downstream facilities and its second methanol plant in Labuan.

Chairman Datuk Wan Zulkiflee Wan Ariffin said the group would continue to undertake some statutory maintenance works this year but at its second, smaller cracker, related polymer facility and fertiliser plants and smaller methanol facility.

“Last year was challenging for us as we did some major turnarounds and maintenance but we tried to minimise the impact on our production. We hope to achieve a mid-80% utilisation rate this year,” he told reporters after the group’s AGM.

PetChem has set a capex of RM2.3bil for 2014, about half of which will be channelled into its Sabah Ammonia Urea (Samur) project.

Wan Zulkiflee said RM1.2bil would be pumped into the fertiliser plant which had progressed beyond its halfway mark.

“The balance of the capex will be for continued turnaround activities and smaller projects at our other plants,” he said.

Completion of the urea plant, however, may be delayed for six months due to the fire on a South Korean vessel that was shipping equipment for the plant. The original completion date was August 2015. The plant is supposed to double the group’s urea production capacity and strengthen its position as a key regional fertiliser supplier.

“These include steel pipes and pumps and the fire may have affected them. We are sorting out the issues now with the contractors,” he said.

Wan Zulkiflee said that incident might cause the cost of the US$1.5bil (RM4.9bil) Samur project to rise but noted that the affected equipment were insured.

PetChem’s business outlook for the year was generally positive, as olefins and urea prices were estimated to remain at healthy levels. Coupled with its increased utilisation rate, the group was encouraged by the outlook for the year.

PetChem has also a new business stream in the flavour and fragrance markets through its joint specialty chemicals project with BASF to build a US$500mil (RM1.6bil) integrated citral and aroma ingredients complex in Gebeng, Kuantan.

The group has also hived off its vinyl business in Vietnam, in an effort to improve the group’s business focus. It has ceased operations and is in the midst of decommissioning its vinyl chloride monomer and polyvinyl cholirde plants in Terengganu as well.

The group also announced the retirement of president and chief executive officer Datuk Dr Abdul Hapiz Abdullah who will not extend his contract with PetChem.

On its involvement with the Refinery and Petrochemical Integrated Development project, Wan Zulkiflee did not discount the possibility of having an equity interest in the project.

Current managing director and chief executive of the group’s Malacca refinery Sazali Hamzah will assume Hapiz’s position on May 1.

Hapiz will remain on the board of PetChem unit Petronas Chemicals Methanol Sdn Bhd.

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