KUALA LUMPUR (April 14): Petronas Chemicals Group Bhd (PetChem) has cancelled a proposed elastomers project at the Refinery and Petrochemicals Integrated Development (Rapid) project in Johor.

The cancellation of the project followed a review which was conducted on various key aspects of the elastomers project, including the product’s market outlook and project return on investment, PetChem told Bursa Malaysia in a filing today.

It expects the project cancellation to improve its overall returns of investments.

Recall on Nov 3, 2015, PetChem announced its acquisition of three companies from Petronas Refinery and Petrochemical Corp Sdn Bhd (PRPC), a wholly-owned subsidiary of Petroliam Nasional Bhd (Petronas).

PetChem acquired the entire equity in PRPC Glycols Sdn Bhd, PRPC Polymers Sdn Bhd and PRPC Elastomers Sdn Bhd, which are part of the Rapid project, for RM13,000.

The initial total projected investment cost for the polymers, glycols and elastomers segments was approximately US$3.9 billion, with a combined capacity of 3.5 million metric tons per annum (mtpa).

“The cancellation of the elastomers project will result in capacity reduction of 0.35 million mtpa (metric tons per annum) and projected investment cost by US$1.3 billion,” it said today.

PetChem said it remained committed to the rest of the petrochemical projects it had undertaken, namely the polymers and glycols projects.

“The cancellation of the elastomers project is not expected to have any impact on the commencement date for PRPC Polymers and PRPC Glycols, which is scheduled to start in 2019,” it added.

At closing, PetChem dipped two sen or 0.3% to RM6.74, for a market capitalisation of RM54 billion.