APIC '18: Malaysia’s PCG bullish on specialty chemicals

21 August 2018 11:36 Source:ICIS News

KUALA LUMPUR (ICIS)--PETRONAS Chemicals Group (PCG) expects to grow the share of specialty chemicals to overall operating earnings to around 25% over the next 15 years, the company’s managing director and CEO said on Tuesday.

Going forward, PCG will not be looking at revenue as a metric to measure the contributions from specialty chemicals and will use its EBIT (earnings before interest and tax), or operating earnings, instead, Sazali Hamzah told ICIS on the sidelines of the 2018 Asia Petrochemical Industry Conference (APIC).

“Specialty chemicals are typically not measured by volumes but by margins,” he said.

The company’s specialty chemicals business currently makes up about 1% of PCG’s overall revenue. Its share to total is expected to increase to about 5% in the near term with the start-up of PCG’s 250,000 tonne/year isononanol (INA) plant in Johor towards the end of next year, Sazali said.

The company is now set to diversify its specialty chemicals portfolio even further past 2020 and is conducting feasibility studies for new products, he said.

“At this moment we are studying more than 20 over options, and out of this 20, there are nine high-priority [derivatives and specialty] projects that we are evaluating,” Sazali said.

“These nine projects - we are now at the study stage... we will only announce them after we make the final investment decision (FID) on them. Sometime in 2019, one or two projects will be announced…subsequently, there will be a lot more projects over the next 15 years,” he added.

In the long term, Sazali said that the trade war between US and China might dampen overall global economic growth and could have knock-on effects on the petrochemicals industry.

However, the company has yet to feel any effects of the ongoing tariff war between the two economic giants, he said.

“As of now we don’t see anything yet. It’s business as usual,” Sazali said.

“That can be an opportunity but at the same time that can be a threat because once China impose certain taxes on US material they also impose on other countries as well,” he said.

Interview article by Nurluqman Suratman

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By Nurluqman Suratman