Petronas to decide on US$20b refinery project mid-2013
UPDATED @ 01:07:49 PM 08-06-2012
SINGAPORE, June 8 — Malaysia’s state energy firm Petronas is expected to make a final investment decision on its US$20 billion (RM60 billion) refinery project in Johor by the middle of next year, a senior executive told Reuters today.
The refinery could start commissioning activities at the end of 2016, Wan Zulkiflee Wan Ariffin, Petronas’s chief operating officer and executive vice president of downstream, said.
The Malaysian project is aimed at creating a trading hub in Southeast Asian nation’s south, although Asian refining margins have come under pressure from new refining capacity and the global economic slowdown.
“Refining margins will be under a lot of challenges, but as long as we’re doing better than our peers, that’s what we’re targeting,” Wan Zulkiflee said.
Petronas first unveiled the Refinery and Petrochemicals Integrated Development (RAPID) project in May and it has signed a heads of agreement with Itochu Corporation and Thailand’s PTT Global Chemical Pcl to build two separate petrochemical complexes.
Vopak is building a US$620 million storage terminal close to the refinery project.
Petronas has another refinery in nearby Malacca, which a company official said has halted Iranian crude imports ahead of Western sanctions that will start later this month.
“We’ve got our sources. As long as we can get the right quality, the right type of oil for our refineries we’re okay,” Wan Zulkiflee said.
Petronas used to import some 50,000-60,000 bpd of Iranian crude for its Malacca refinery and its majority-owned Engen refinery in South Africa.
Plentiful supply and faltering global growth have pushed international Brent crude prices down to around US$100 a barrel, from a March peak of US$128, making it less costly for buyers to find alternatives.
“I think the prices will weaken. We’re not as bullish in the coming quarters,” Wan Zulkiflee said, adding that this was fuelled by global economic uncertainty. — Reuters