BASF sees PetChem JV driving growth

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KUALA LUMPUR: BASF Malaysia Sdn Bhd, a wholly-owned subsidiary of Germany’s chemical giant BASF SE, sees its joint venture (JV) with Petronas Chemicals Group Bhd (PetChem) a key growth driver for the group in Malaysia, said managing director Daniel Loh.

“We have a very successful JV with PetChem, and our focus would be to extend that partnership and to utilise the [existing joint chemical production facility at] Gebeng site [in Kuantan, Pahang] as much as possible,” he told The Edge Financial Daily in an interview.

“We see that that [JV] has got the highest potential. We think that JVs should be done for very unique and strategic reasons. In the case of Malaysia, the success of the JV with PetChem is a key driver for us to move forward,” he said, adding that BASF Malaysia is not exploring other JVs.

The 60:40 JV between BASF and PetChem, known as BASF Petronas Chemicals Sdn Bhd, is investing US$500 million (RM1.62 billion) in a new integrated aroma chemical complex in Gebeng to produce ingredients for fragrances and pharmaceutical products.

The development of the new complex is divided into phases, with the first plant to be operational in 2016.  Loh said the plant is on track for completion.

“Only about 23% of the [Gebeng] land is being used at the moment [for the petrochemical complex], but once the aroma chemical complex becomes operational, the land use would come up to about 40% to 50%,” he added.

Loh said the Gebeng site is one of the group’s two verbund sites in the Asia-Pacific region. Verbund is a German word which stands for integration and networking, and Loh said it was BASF’s long-term intention to gradually fill up the rest of the 150ha site.

“We will fill up the space to make the site as integrated as possible, but that is still quite far ahead. There’s nothing in the pipeline currently, since our focus is to get the aroma chemical complex up and running,” he said.

In Malaysia, BASF has three wholly-owned subsidiaries — namely BASF Malaysia, BASF Services Malaysia Sdn Bhd and BASF Asia-Pacific Service Centre Sdn Bhd.

BASF is celebrating its 25th anniversary in Malaysia this year, having established presence here in 1989.

This article first appeared in The Edge Financial Daily, on September 17, 2014.