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Petronas delays RM60 billion petrochemical project to 2018

Petronas will start up a refinery within its $19 billion (about RM60 billion) petrochemical complex in Malaysia at end 2017, the company told Reuters today, signalling a delay in the country's largest-ever infrastructure project.

Petronas said in a statement that the remaining plants within the Refinery and Petrochemical Integrated Development (RAPID) complex will be commissioned in 2018.

Previously local media had cited Petronas CEO Shamsul Azhar Abbas as saying the start date for phase one of the RAPID project had been pushed back to early 2017.

"The Final Investment Decision (FID) date for RAPID project has been rescheduled to March 2014 from June 2013," Petronas said in a statement released to Reuters, citing external factors beyond its control.

"As a result of the revised FID date, the RAPID refinery is scheduled to be ready for start-up in Q4 2017 and the remaining plants within the complex is scheduled to be commissioned in 2018," it said.

The decision to postpone the FID date to March 2014 hit the shares of local mid-sized oil and gas services companies, and analysts said the latest delay could weigh on firms like SapuraKencana and Wah Seong.

With oil and gas making up a fifth of GDP, this latest delay in the project - one of the main thrusts of Prime Minister Datuk Seri Najib Razak's Economic Transformation Programme aimed at doubling Malaysians' incomes by 2020 - could slow down the economy.

Petronas unveiled the RAPID project in May last year. The plan was to construct a 300,000 barrel per day refinery, which would supply naptha and liquid petroluem gas to the chemical plants and produce gasoline and diesel for European markets.

France's Technip was awarded the front end engineering and design (FEED) contract, which was slated for completion in the second quarter of 2013. The financial value of the job was never disclosed.

Contracts for the engineering, procurement and construction jobs have yet to be awarded, although preparation work for the site started on Oct 18.

The contracts for the refinery are expected to be awarded by end of this year. - July 30, 2013

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