This article first appeared in The Edge Financial Daily on April 30, 2019

KUALA LUMPUR: Petronas Chemicals Group Bhd’s (PetChem) petrochemical plants at the Pengerang Integrated Complex (PIC) in Johor — 97.7% completed as of March — remain on track to commence commercial operations by the fourth quarter (4Q) of the year despite a recent fire incident.

PetChem chairman Datuk Md Arif Mahmood said the fire only affected the Atmospheric Residue Desulphurisation unit, used to produce low-sulphur fuel oil and hydrotreated feedstocks, at the complex. PIC’s petrochemical plants, producing products such as polymers, glycol and isononanol, are unaffected.

“We will isolate the affected part and continue commissioning the parts unaffected [by the fire],” Md Arif told reporters after the group’s annual general meeting yesterday. “So, we’re still looking at commercial operations without the [affected] unit by the fourth quarter of this year.”

Md Arif said the petrochemical plants at PIC are expected to add 3.3 million tonnes to its 12.8 million-tonne petrochemical portfolio.

“Typically, we will not commit to full production because we would like to see how [the plants] perform, especially in the first year of operations.

“Next year, if the plants run well as we commissioned and started, we will ramp it (production) up. Hopefully, we can get to full production.”

PetChem has allocated about RM2.7 billion for capital expenditure this year, of which RM500 million will be used for plant turnaround.

Md Arif said the group has scheduled major turnaround plans for its plants this year, covering maintenance works. “We will have six turnarounds for plants this year. So far, one is completed. We ensure the remaining plants are running well [while any one plant undergoes a turnaround], and customers are well-served.”

In a bid to spur growth further, Md Arif said PetChem is looking at plans such as extending value to its existing basic chemicals through downstream investments in derivatives and specialty chemicals.

It is also considering building new derivatives and specialty chemicals platform focusing on technology and market access. This can be achieved via mergers and acquisitions, among others.

PetChem is looking at seeding innovation and emerging technologies as well, via internal research and development and investments through corporate venture capital, said Md Arif.

PetChem’s net profit for the year ended Dec 31, 2018 rose 19.14% to RM4.98 billion, from RM4.18 billion a year earlier, as revenue increased to RM19.58 billion from RM17.41 billion. PetChem shares fell 10 sen or 1.1% to RM9 yesterday, valuing the group at RM72 billion.