Petronas: Rapid on track for Q1 2019 start

MILAN: Petroliam Nasional Bhd (Petronas) is on track to get its US$27 billion (RM110 billion) refining and petrochemical complex in Pengerang, Johor, up and running in 2019, the head of the group’s downstream operations told Reuters.
Malaysia’s state-owned oil and gas company has earmarked heavy spending cuts to contend with low oil prices that have sent profit tumbling, but it remains committed to the Refinery and Petrochemical Integrated Development (Rapid) project it aims to turn into a regional oil and gas hub by 2035.
“By the end of the year we should have completed more than 50% of the complex and we’re on track to start operations in the first quarter of 2019,” said Md Arif Mahmood (pix), Petronas’ downstream CEO and group executive vice-president.
The project, launched in 2012, will consist of a 300,000-barrel per day refinery and petrochemical complex with combined annual chemical output capacity of 7.7 million tonnes. Other facilities include a liquefied natural gas (LNG) regasification terminal.
“There are four billion people in southern Asia and future growth will be there as the number of middle-class income makers grows,” Arif said.
Like other energy companies, Petronas has cut costs, laid off workers and deferred investments to offset the slide in crude prices. It has earmarked more than €10 billion (RM45 billion) of capital expenditure cuts over the next three to four years and is looking to maximise other revenue streams outside upstream exploration.
“With the new norm for crude at US$40 to US$50 (RM163 to RM204) a barrel, downstream has become a critical component, it flies the flag of the company,”Arif said.
In Italy to attend the Formula 1 Grand Prix at Monza (Petronas is sponsor of the Mercedes F1 team), Arif said the company’s growth in Europe would be focused on expansion of its lubricants business. “We have an aggressive plan to grow in Germany, the UK, Ireland and Italy,” he said.
Europe is one of the company’s main lubricants markets, generating 28% of the group’s total volumes. Italy is the biggest market, accounting for 48% of European sales.
In chemicals, Arif said the group would maximise benefits from its partnership with Germany’s BASF, though a planned joint venture in synthetic rubber with Italian oil major Eni’s Versalis has been abandoned.
“We’ve both decided not to go ahead because of market conditions,” Arif said.
Besides Rapid, Petronas has ambitious plans in LNG and Arif said it hopes to gain long-awaited environmental clearance for a US$35 billion LNG export terminal in western Canada by the end of the year.
Petronas has been waiting more than three years for a permit to start building the Pacific NorthWest terminal and some analysts have said that LNG oversupply and lower oil and gas prices now threaten to make the project unattractive.
“We are committed at the moment, but first we need to see what the conditions of approval are,” Arif said.
The company, which is one of the world’s largest LNG producers, is also on track with construction of a US$12 billion offshore LNG plant that it touts as the world’s first floating liquefaction facility.
“You’ll see production at the end this year or early next,” Arif said, adding that commissioning is also under way for a ninth production line at the group’s Bintulu LNG complex.