Malaysia’s PETRONAS Chemicals to build $1.5bn urea plant in Sabah

01 July 2011 08:38  [Source: ICIS news]

SINGAPORE (ICIS)--PETRONAS Chemicals expects to become one of the top urea producers in southeast (SE) Asia, with its plan to build a 1.2m tonne/year plant at Sabah, Malaysia, a company official said on Friday.

Construction of the $1.5bn (€1.04bn) plant at Sipitang, Sabah, will begin in the second quarter of 2012, with the start-up targeted in 2015, the company said in a statement released to Bursa Malaysia on Thursday.

"The completion of the new plant will potentially make Petronas Chemicals the second largest urea producer in SE Asia," the official told ICIS.

Upon completion of the new project, dubbed Sabah Ammonia-Urea plant project (Samur), PETRONAS Chemicals’ total urea capacity will be 2.6m tonnes/year, it said.

PETRONAS Chemicals currently runs two urea plants – a 750,000 tonnes/year unit at Bintulu, Sarawak; and a 683,000 tonnes/year unit at Gurun, Kedah.

Its Gurun plant suffered a minor production hiccup due to gas supply problems and was shut down for one and a half days last week, but is currently running at full rates, company sources said separately.

Urea prices in Asia jumped to $540/tonne FOB (free on board) Indonesia levels in end-June from $410/tonne in early, on the back of tight supply and healthy demand, according to ICIS data.

Latest transactions in Indonesia, involving 55,000 tonnes of granular urea, were at $542.50/tonne FOB.

Buying ideas across the region are generally around $510-520/tonne CFR (cost and freight), which is deemed unworkable considering current Middle East and Indonesian price levels. 

Additional reporting by Gabriela Wheeler

($1 = 0.69)

By: Monica Lesmana

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