PetChem aims 10%-15% revenue from PIC by 2022

by SHAHEERA AZNAM SHAH / pic courtesy: PETRONAS

PETRONAS Chemicals Group Bhd (PetChem) is projecting 10% to 15% of its revenue to be derived from the Pengerang Integrated Complex (PIC) in Johor beginning 2022.

Its chairman Datuk Md Arif Mahmood said the contribution is expected to materialise once the petroleum complex reaches its full capacity of processing 1.8 million tonnes of chemicals.

“The plan is to gear up the complex to commence later in the year. Typically, the complex would not run at full capacity at the start. If we can run the facility fully stable, we will ramp it up to full capacity by next year. Depending on the current market price, we expect an additional 10% to 15% to the over-all revenue,” he told reporters yesterday.

Md Arif said PIC’s initial capacity is projected to be around 700,000 tonnes per annum once production activity at the complex commences in the second half of the year.

The petroleum complex, a joint venture between PetChem and state-controlled Saudi Arabian Oil Co (Saudi Aramco) is part of the Pengerang Integrated Petroleum Complex mega-project which began development in 2012.

The PIC has the capacity of refining 300,000 barrels per day (bpd) of crude oil and was designed to produce premium differentiated petrochemicals to meet the domestic demand and the government’s future legislative requirements on the implementation of Euro 5-grade diesel.

The completion of the refinery complex has been delayed for more than two years, partly due to the recent surge in Covid-19 clusters in Johor, versus its initial target of early 2019.

Md Arif expects an optimistic year for PetChem in the financial year 2021 (FY21) supported by improved product prices and demand coupled with continued cost optimisation efforts undertaken by the group.

“We are quite optimistic as we have seen much-improved prices and demand in the first quarter. With the rollout of the vaccination programme, this year should be a better year for the group,” he said. Md Arif, however, said reaching the record volume of 10.7 million tonnes per annum achieved in 2020 would be a “stretch” as the company is planning five major turnarounds for its plants.

“We have heavy turnarounds as five facilities are going through the process this year. So, to reach a similar level as last year would be a stretch. However, we are striving for the projected volume to be close to 2020,” he said.

PetChem CFO Mohd Azli Ishak said the bulk of the group’s RM2.6 billion capital expenditure this year will be utilised for the plants’ maintenance and turnaround activities in addition to supporting the group’s organic growth.

On the plan to expand the group’s portfolios, Mohd Azli said PetChem is currently evaluating 10 projects and aims to secure two to three projects in FY21.

PetChem’s shares were up 1.54% or 12 sen at close yesterday to RM7.91, giving the company a valuation of RM63.28 billion.