Thursday 28 Mar 2024
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KUALA LUMPUR (Feb 23): Petronas Chemicals Group Bhd (PetChem) has teamed up with German chemical firm BASF SE to build a new production plant for 2-Ethylhexanoic Acid (2-EHAcid), at the site of their existing joint venture BASF Petronas Chemicals Sdn Bhd in Kuantan, Pahang.

In a joint statement today, BASF and PetChem (fundamental:2.7; valuation: 1.2) said the construction of the plant, which will be the first of its kind in Asean, is expected to commence in the second quarter of this year.

The plant, which has a total annual capacity of 30,000 tonnes of 2-EHAcid, is expected to start production in the fourth quarter of 2016, and will benefit from backward integration into the site, allowing high delivery reliability and maximising efficient use of energy and feedstock.

“With this project, PetChem and BASF are fully utilising our combined strengths in the areas of skill resources, technology and overall molecules integration, thus further optimising the value chains,” said PetChem president and chief executive officer Datuk Sazali Hamzah.

2-EHAcid is a chemical intermediate used as a compound, for example in the production of synthetic lubricants, as well as oil additives. It is also used for functional fluids like automotive coolants, metal salts for paint dryers, plasticisers, stabilisers, catalysts and other applications in various industries.

BASF currently operates a 2-EHAacid production plant at its Verbund system site in Ludwigshafen, Germany.

“With this new plant [in Kuantan], we are responding to our customers’ growing demands in Asia-Pacific… and through this additional capacity, BASF will become one of the leading suppliers for high purity 2-EHAcid in the region,” said BASF Intermediates division president Stefan Blank.

In addition to the proposed plant, BASF Petronas is building an integrated aroma ingredients complex at its Kuantan site for the manufacturing of citronellol, L-menthol, as well as citral and its precursors which are widely used in flavour and fragrance industry.

Groundbreaking for the US$500 million (RM 1.82 billion) integrated aroma ingredients complex was done in April 2014, and the first plant is scheduled to come onstream in 2016.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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