By Malini Hariharan
How many projects is Petronas Chemical planning?
Last week the blog had covered an ICIS news report which referred to a study on 1m tonnes/year ethane cracker and derivative units at Kerteh.
Now a report from UBS says Petronas Chemical is looking at making operational improvements at its two existing crackers at Kerteh and building an integrated refinery-petrochemical complex with international partners.
"Petronas Group is taking the lead in evaluating the project, and Petronas Chemical should be more closely involved in examining the project at a suitable juncture. If this project were to proceed and be completed, Petronas Chemical would be able to further diversify its feedstock source and expand its production capacity. We estimate this project has the potential to add 1mtpa cracker, with downstream PE and PP capacity of around 400ktpa," says UBS.
The blog has heard from other sources that a feasibility study on the refinery-petrochemical project has started and that it would be located in southern Malaysia. If the project is approved this year completion is likely in 2015-16.
The naphtha cracker would also provide the feedstocks to support an investment in speciality chemicals that is being studied by Petronas Chemical and BASF.
It is difficult to see Petronas Chemical pursuing two cracker projects simultaneously as this would place a huge demand on the company especially in terms of manpower resources. Then there are doubts on whether sufficient ethane is available. The existing crackers at Kerteh are reported to be facing a shortfall in ethane supplies.
And if the Petronas Group makes investments in upstream gas facilities to improve ethane availability it make more more sense to expand the existing crackers rather than build a new one, points out one source.
Besides new projects Petronas Chemical is also looking at acquisitions, says UBS in its report.
"The company has indicated that it might consider selective opportunities to expand both domestically and overseas through strategic acquisitions that are consistent with its core petrochemical activities or that help Petronas Chemical to gain a foothold in markets where the Petronas Group already has oil and gas operations."
This would allow Petronas Chemical to develop vertically integrated operations.