14:14 PM | April 16, 2018 | Natasha Alperowicz
The state-owned oil and gas producer, Petronas (Kuala Lumpur), its chemicals arm Petronas Chemicals—which was listed on the Bursa Malaysia stock exchange in 2010—and Lotte Chemical Titan (Kuala Lumpur) are the leading Malaysia-based petchem players. All three have major investments under way to enhance their market leadership positions in Malaysia and overseas.
The biggest project under construction is the $27-billion Pengerang Integrated Complex (PIC), a huge site being developed at Pengerang, Johor State, near Singapore. The Petronas group’s $16-billion Refinery and Petrochemical Integrated Development (Rapid) project forms part of PIC, which will also include the Pengerang independent deep-water petroleum terminal with a total storage capacity of 5 million cubic meters.
PIC including the Rapid complex are located within a 22,000-acre site being developed by the government of Malaysia as a major energy and petchem hub, which will house polymer-conversion parks as well as other industries.
PIC is on track for overall start-up in the first quarter of 2019. The project falls under the government’s economic transformation program to establish new engines of growth. “PIC is one of the largest industrial developments in the region as well as Petronas’s largest downstream investment on a single site,” says Wan Zulkiflee Wan Ariffin, Petronas president and group CEO.
The Rapid project is based on a 300,000-b/d refinery that will produce petroleum products including naphtha and LPG, as well as 600,000 metric tons/year of propylene. The associated steam cracker will have a capacity of 1.3 million metric tons/year (MMt/y) of ethylene, 609,000 metric tons/year of propylene, 185,000 metric tons/year of butadiene, and 250,000 metric tons/year of raffinate-1. Downstream units owned by Petronas Chemicals will be designed to produce 900,000 metric tons/year of polypropylene (PP), 740,000 metric tons/year of ethylene glycol, 400,000 metric tons/year of flexible high-density polyethylene, and 350,000 metric tons/year of linear low-density polyethylene.
Petronas scored a major success in early 2017 when Saudi Aramco agreed to pump $7 billion into the upstream part of the Rapid project in exchange for a 50% stake in the refinery and steam cracker. Aramco will supply most of the crude oil needed by the refinery, with natural gas, power, and other utilities to be provided by Petronas.
Aramco, in a separate deal last October, agreed to acquire a 50% stake in Petronas Chemicals’ downstream polymers project for 3.8 billion Malaysian ringgit ($900 million). Aramco now owns 50% in the entire Rapid project. The first petchem production is expected to start after the refinery is completed in 2019. Sazali Hamzah, CEO of Petronas Chemicals, says PIC will provide a strong foundation for Petronas Chemicals to move into derivatives and specialty chemicals. “Beyond 2020, Petronas Chemicals will also focus on assessing opportunities in downstream derivatives and specialty chemicals at Pengerang, Kertih, Gebeng, and east Malaysia,” he says.
Lotte Chemical Titan was listed on the Bursa Malaysia last year in what was Malaysia’s largest IPO since 2012. The offering raised RM3.77 billion, which is being used to finance Lotte’s expansion in Malaysia and a new petchem complex in Indonesia. Lotte Chemical (Seoul, South Korea) owns 76.01% of Lotte Chemical Titan following the IPO .
Lotte Chemical Titan recently signed a three-year contract with Abu Dhabi National Oil Co. (Adnoc) for Adnoc to supply up to 1 MMt/y of naphtha. “Demand for petchems in Southeast Asia is expanding steadily and this three-year agreement with Adnoc will ensure security of naphtha supply,” says Lee Dong Woo, president and CEO of Lotte Chemical Titan.
Several other projects are being developed in Malaysia. The government of the state of Sarawak is studying plans for an RM8.4-billion methanol plant at Bintulu. Petronas has signed an agreement for the supply of gas feedstock to state-owned Yayasan Hartanah Bumiputera Sarawak, the company developing the methanol project.
The Sarawak government says that Bintulu has the infrastructure to become a regional hub for petchem industries. It is already home to three LNG plants as well as Shell MDS (Malaysia), a gas-to-liquids (GTL) joint venture (JV) among Shell, Mitsubishi Corp., Petronas, and the Sarawak state government. The GTL complex uses Shell technology to produce gasoline, kerosene, distillate fuel oil, and lubricants.
Overseas companies are also expanding operations in Malaysia. Arkema (Paris, France), a leading producer of specialty chemicals, plans to double methyl mercaptan capacity at Kertih, in the north of the Malaysian peninsular. The product is an intermediate to make methionine and other sulfur derivatives. The expansion, expected onstream in 2020, will support the growth of the animal-feed, petchem, and refining markets in Asia and strengthen Arkema’s position in value-added thiochemicals, the company says.
Arkema’s existing Kertih complex, commissioned in 2015, was implemented under a two-part JV with CJ CheilJedang (Seoul), a food and feed ingredients, amino-acids, and pharmaceuticals company. The first JV, owned 86% by Arkema and 14% by CJ CheilJedang, produces methyl mercaptan and dimethyl disulfide. The second, owned 86% by CJ CheilJedang and 14% by Arkema, produces biomethionine using on-site methyl mercaptan.
These units form part of a second wave of investments by BASF Petronas, which celebrated its 20th anniversary last year. The first wave includes plants producing acrylic monomers—glacial acrylic acid, butyl acrylate, and 2-ethyl hexyl acrylate—oxo alcohols, and butanediol and derivatives. BASF is also an equal partner with Toray Industries in Toray BASF PBT Resin, which produces polybutylene terephthalate resin at Gebeng.
Extensive oil palm plantations have led to the creation of a major oleochemicals industry in Malaysia, starting in the early 1980s. The country is one of the two main oleochemical producers and exporters. Products include fatty acids and alcohols, methyl esters, and glycerine. The industry, which includes local producers as well as JVs with overseas players, supplies the soaps and detergents, personal-care, lubricants, and many other industrial sectors. Malaysia has 16 companies producing basic oleochemicals and 30 companies producing oleochemical derivatives.
Emery Oleochemical (Selangor, Malaysia), a 50-50 JV between Sime Darby Plantation (Kuala Lumpur) and PTT Global Chemical (Bangkok, Thailand), is a leading player. Sime Darby Plantation is the world’s largest oil palm company with approximately 1 million hectares of land across Malaysia, Indonesia, Liberia, Papua New Guinea, and the Solomon Islands. It is also the world’s largest producer of Certified Sustainable Palm Oil with an annual production of 2.3 MMt/y. Its downstream business includes oils and fats products, oleochemicals, and palm oil-based biodiesel.
Other players include Pacific Oleochemicals Malaysia; KL-Kepong Oleomas; FPG Oleochemicals, a 50-50 JV between Felda Holdings, the world’s largest producer of palm oil and palm kernel oil, and Procter & Gamble; and IOI Oleochemical Industries Malaysia.