PIPC remains on track despite oil refinery explosion

The fire had affected the refinery’s ARDS unit but it will not disrupt PIPC’s operational schedule

By ALIFAH ZAINUDDIN / Pic By MUHD AMIN NAHARUL

The commissioning of the US$27 billion (RM111.78 billion) Pengerang Integrated Petroleum Complex (PIPC) in Johor remains on track for completion in the fourth quarter (4Q) this year despite an explosion occurred at the oil refinery complex earlier this month.

Petronas Chemicals Group Bhd (PetChem) chairman Datuk Md Arif Mahmood said the fire had affected the refinery’s atmospheric residue desulphurisation (ARDS) unit. However, it will not disrupt PIPC’s operational schedule as the commercial operations can commence without the unit.

“What we will do, the part that is affected, we will isolate it, but the commissioning will still continue on the part that is not affected. So, we will still look at getting to commercial operations without the ARDS unit by 4Q of this year,” Md Ariff told reporters after the company’s AGM in Kuala Lumpur yesterday.

The completion of PIPC is expected to boost PetChem’s refining capacity by an additional 3.3 million tonnes from its current output of 12.8 million tonnes. However, Md Ariff said he would not “commit” on how much PetChem will gain from the operations at PIPC once it commences operations.

“Typically, when we start up, with or without the unit, we do not forecast to have full production of that new unit.

“We will not commit to full production (yet) because we would like to see how it would actually perform, especially in the first-year operations,” he said.

PetChem has allocated a capital expenditure of up to RM2.7 billion in 2019, of which about RM500 million will be used for turnaround activities at six of its plants.

Md Ariff said he is optimistic about the growth of the industry as global indicators pointed to a 2.2% growth for the year.

Responding to concerns on how the war against plastic materials is affecting the company’s operations, Md Ariff said there have been “no real impact” to the business so far.

“We are also working through research and development to see whether we can make our operations more environmental-friendly. But as far as the business is concerned, what we’ve seen so far, there is no real impact to the business,” he said.

The company recently announced its highest dividend payout at a cumulative dividend of 32 sen per share, after its earnings per share hit an all-time high since its listing at 62.2 sen last year.

PetChem registered a revenue growth of 12.5% for its financial year ended Dec 31, 2018, from RM17.4 billion to RM19.6 billion, on higher sales volumes which benefitted from increased production and improved average product prices, despite the strengthening of the ringgit against the US dollar.

The company’s net profit for the year also grew by 14.6% to RM5.1 billion against RM4.4 billion reported in the previous year.