Malaysia’s PCG to fully start up PIC petrochemical units by H2 2021

SINGAPORE (ICIS)–PETRONAS Chemicals Group (PCG) aims to start full operations at its petrochemical units at the Pengerang Integrated Complex (PIC) in southern Johor, Malaysia by the second half of 2021, but they are not expected to achieve full production capacity this year, senior company executives said on Thursday.

“We are gearing for full start-up in the second half of 2021. With PIC, we expect to increase our [overall] production capacity from 12.8m up to 14.6m tonnes per annum,” said PCG director/CEO Sazali Hamzah.

The company’s plants at the PIC include a 350,000 tonne/year linear low density polyethylene (LLDPE) unit, which is also capable of producing metallocene LLDPE (MLLDPE) grades; a 400,000 tonne/year high density PE (HDPE) plant; and a 900,000 tonne/year polypropylene (PP) unit.

The site also houses an ethylene glycol plant which will be able to produce 800,000 tonnes/year of monoethylene glycol (MEG) as well as a 250,000 tonne/year isononanol (INA) unit.

Additionally, PCG and South Korean producer LG Chem last year signed a deal to build a 200,000 tonne/year nitrile butadiene latex (NBL) plant at the PIC, which is expected to start production in 2023.

The company plans to ramp up production at the PIC units towards full capacity from next year, PCG Chairman Md Arif Mahmood said at a virtual press conference following the company’s 23rd annual general meeting.

Revenue contributions from the production units at the PIC “will not be significant” in 2021 as they are still in the start-up phase, Mahmood said, adding that they will make up about 10-15% of the company’s overall sales once fully commercially operational.

Elaborating on PCG’s growth strategy, Sazali said “We are focused on pursuing our two-pronged strategy, namely, to sustain our strength in basic petrochemicals and diversify into derivatives, specialty chemicals and solutions.”

This includes expansions by subsidiary Da Vinci Group (DVG) – acquired in 2019 – to build a new silicone blending plant in Gebeng, Pahang, and a new facility for lubricant additives and chemicals in Echt, Netherlands, Sazali said.

“Upon completion of these facilities, PCG will have wider access to high-growth end markets such as personal care, automotive, and healthcare,” he said.

“Our growth will also include green initiatives such as investment in the world’s first bio-monoethylene glycol (MEG) pilot plant via direct conversion from palm biomass utilising in-house technology,” Sazali said.

The company is currently studying about 10 additional projects as future investments “which are at different stages,” he said.

PCG could make a final investment decision (FID) on two or three of these projects this year, according to PCG chairman Mahmood.

The company also targets to add more specialty chemical projects to its portfolio, either through acquisitions or via expansions, he said.

In the near term, the company is not expected to exceed its record-breaking production volume of 10.7m tonnes achieved last year due to a heavy turnaround schedule, Mahmood said.

“As of now, the market has started to recover, although its stability remains uncertain. While we are optimistic of the future, we remain cautious of potential disruptions,” Hamzah added.

Focus article by Nurluqman Suratman