KUALA LUMPUR (Jan 16): Hengyuan Refining Co Bhd has approved the full fund release amounting to US$66.4 million (about RM273 million) for the H2GEN project, which will supply its refinery with 30 tonnes/day of hydrogen.

Hengyuan said in a Bursa Malaysia filing today the project will be executed within its refining complex in Port Dickson, Negeri Sembilan.

"The H2GEN project is undertaken to supply the refinery with 30 tonnes/day of hydrogen for hydro desulfurization unit number 2 and the extractive desulfurization hydro-treating process to meet the 10 parts per million by weight (ppmw) sulphur specification.

"The refinery will be short of hydrogen upon Euro5 gas-oil specification implementation in September 2020. The H2GEN project is expected to start up in September 2020 to coincide with the Euro5 gasoil legislated date. The project will be financed using a mix of cash flow generated from operations and further drawdowns of existing loans," Hengyuan said.

In a separate statement, Hengyuan said the primary objective of the H2GEN project, which involves the construction of a hydrogen manufacturing unit (HMU), is to supply the refinery with 30 tonnes/day of hydrogen for hydro-treating processes to reduce the sulphur content in the company’s petrol and diesel products. 

Hengyuan chairman Wang YouDe said in the statement: “Hengyuan refinery currently relies solely on our platformer unit for the manufacturing of hydrogen. The installation of the HMU is crucial to expand our hydrogen-production capacity and also provides a second source of hydrogen, thus improving our resilience and reliability as a key supplier of products to the Malaysian market."

"The H2GEN project is part of our ongoing capex programme to enhance our production processes to fulfil domestic demand, while upgrading to the new product quality specifications.

"From a broader perspective, we believe that improving the reliability of our refinery and ensuring the sustainability of our refinery’s operations for the long-term, will enable Hengyuan to further enhance and sustain profitability in the future,” Wang said.