Petronas Reaches FID for $16b Refinery & Petrochemical Project

Source: 4/3/2014, Location: Asia

The PETRONAS Board of Directors has approved the Final Investment Decision (FID) for the development of the Pengerang Integrated Complex (PIC) in Southern Johor, Malaysia.

The FID, approved today, marks a significant milestone in the progress of the proposed PIC, which comprisesa world scale Refinery and Petrochemical Integrated Development (RAPID) and other associated facilities. RAPID is estimated to cost about US$16 billion while the associated facilities will involve an investment of about US$11 billion.

PETRONAS’ President & Group CEO Tan Sri Dato' Shamsul Azhar Abbas said: “The FID is a critical stage gate in our decision making process. 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. This decision is in line with our commitment to capital discipline, and with the Board’s approval we look forward to progressing the development of the project as planned.”

“We will continue to work closely with the Federal and Johor State governments to ensure the project’s smooth implementation. In a relatively condensed period of time, we have accomplished a lot of work in establishing an excellent base to move forward with confidence to implement our plans.”

Subsequent to PETRONAS’ decision, the partners’ respective FIDs will be announced in due course upon the approval of their respective boards.

The PIC is scheduled to commence construction upon the full hand-over of the project site to PETRONAS by the State Government. Based on the current progress, the project is poised for its refinery start-up by early 2019. The projectwill further strengthen PETRONAS’ position as a key playerin the Asian chemicals market, focusing on key growth areas of differentiated and specialty chemicals and capturing the growing automotive, pharmaceutical and consumer products sectors. Domestically, the PIC will contribute towards meeting the growing demands for petroleum products and Euro 4M and Euro 5 specification fuels.

Developed within a 6,242-acre site, the PIC will consist of a 300,000 bpd refinery and apetrochemical complex with a combined capacity of producing 7.7 mtpa of various grades of products including differentiated and specialty chemicals products such as synthetic rubbers and high grade polymers. The project will also see the development ofa host of associated facilities i.e. theraw water supply facility, power co-generation plant, LNG regasification terminal and other ancillary facilities.

At the peak of its construction, the PIC Project is expected to have a workforce of about 70,000 people with varying skills and disciplines. In its operational stage, the PIC will require over 4,000 employees.

The PIC is part of the larger Pengerang Integrated Petroleum Complex (PIPC) proposed and promoted by the Johor State Government. With its strategic location along one of the world’s busiest shipping lanes and its proximity to international trading hub, the PIPC is well positioned to be the next regional downstream oil and gas industrial hub.

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Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

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