Petronas Looks to Boost Specialty Chemicals Sales

A view of one of the Petronas Towers in Kuala Lumpur is seen from a window of its twin building. (Reuters Photo/Jorge Silva)

By : A. Ananthalakshmi | on 8:00 PM May 17, 2017
Category : International, SE Asia

Kuala Lumpur. The chemical manufacturing unit of Malaysia's state energy firm Petronas is looking to grow "aggressively" in specialty chemicals to meet demand in new regional markets and profit from higher margins, its chief executive told Reuters on Tuesday (16/05).

Petronas Chemicals Group, a subsidiary of Petroliam Nasional (Petronas), currently sees only 0.2 percent of its total sales volumes come from specialty chemicals but the company is aiming for 15 percent in the next 20 years, chief executive Sazali Hamzah said in an interview.

"Our game plan is to aggressively pursue it beyond 2020. We may partner, buy over companies or even do direct licensing," he said.

The affordability of specialty chemicals in its key markets Southeast Asia, China and India is increasing as those economies expand, creating new demand opportunities, Sazali said.

Specialty chemicals are high-value raw materials used in the manufacture of consumer products such as high-performance tires and LCD televisions.

Last month, Petronas Chemicals said it plans to set up a plant to produce specialty chemical isononanol in the Pengerang Integrated Complex (PIC) in the southern Malaysian state of Johor with a total investment cost of $442 million.

Sazali said there could be more specialty chemicals plants in PIC as well. Isononanol is a building block for chemicals used in the auto, cable and construction sectors.

The company is spearheading the petrochemicals component of PIC, which is Petronas' largest downstream project in Malaysia with an estimated $27 billion total investment.

Malaysia's Pengerang peninsula lies between the South China Sea and the Malacca Strait, through which almost all Middle East oil and gas bound for North Asia's industrial powerhouses China, Japan and South Korea is shipped.

Earlier this year, Middle East oil major Saudi Aramco agreed to invest $7 billion in PIC's refinery and cracker project.

Last week, officials from Petronas Chemicals and Aramco said they were also exploring options to build more petrochemical plants in PIC.

Sazali on Tuesday said the talks between the two companies were in early stages and any deal, if finalized, would be announced early next year.

The companies are in talks for partnership on petrochemical plants with an investment of $3 billion that have already been finalized for PIC, he said, adding that new plants could also involve other partners.

Petronas Chemicals on Monday reported a doubling in quarterly profit, helped by higher prices and sales volumes, but was cautious about recovery in petrochemicals due to volatile oil prices and soft demand in some markets.


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