By Lawrence Yong
Malaysia’s state oil major Petronas has delayed its plan to build the RM60 billion oil refinery and petrochemical integrated development (RAPID) in Pengerang, Johor due to government-related infrastructural issues.
Petronas would now only make a final investment decision (FID) on the project, which was a key catalyst for the development of Johor under the government’s economic transformation programme (ETP), by the first quarter of 2014 (1Q14). Previously, it was reported that Petronas would make a FID in 3Q13.
“The postponement is because of a delay in government infrastructure, not because of Petronas as a group. Safe to say, the RAPID may come up only in early 2017,” Petronas president and CEO Shamsul Azhar Abbas told a press conference.
Shamsul explained that the Johor state government needed time to build the structures which included state housing to resettle villagers displaced by the project.
“Without the new houses, we cannot move out the residents. There have been delays in terms of moving Muslim cemeteries, Chinese cemeteries and all sorts of cemeteries,” Shamsul said.
The RAPID project, which includes a plan to build a 300,000 barrels-per-day oil refinery complex, firstly needs to secure a sufficient water supply. On this front, Petronas said that it has taken over the water project from the government.
“We reckon that by doing it ourselves, it will be faster,” Shamsul said.
Establishing an Asian oil and gas trading hub has been part of Malaysia’s Performance Management Delivery Unit (PEMANDU) proposal to help fastrack Malaysia to developed status by 2020 and RAPID has a key role. Dialog Group Bhd was one of the beneficiaries of the project as it was building oil and gas storages and a deepwater port in Pengerang under a RM5 billion project to match.
On paper, the Pengerang project covers 8,900 hectares, three times the size of Singapore’s Jurong Island, Asia’s oil and gas trading hub, which it hopes to mimic. But the project faces some setbacks. About 17 villages in the area are complaining that they are being offered unfair compensation to relocate and have raised a protest.
Based on past reports, overseas investors may include Japan’s Itochu, Italy’s Versalis, German’s Evonik, Thailand’s PTT Group and a Qatari sovereign wealth fund. World’s biggest chemical company, BASF, had dropped plans to invest in Pengerang earlier this year after studying for less than a year.
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