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PCG—growing into a dynamic future

PCG charts future growth through petrochemical projects in PIC

The story of PETRONAS Chemicals Group Berhad (PCG) has always been anchored on growth. Having grown from its first plant in 1987 to the current level of combined production capacity—an impressive 10.8m tonnes per year—the petrochemical entity of Petronas expects to be at 16.1m t/y by 2020. Involved primarily in manufacturing, marketing and selling a diversified range of chemical products (olefins, polymers, fertilisers, methanol and other basic chemicals and derivative products); specialty chemicals is the next frontier for PCG.

"We have a dedicated team that looks into growth strategy and evaluates the route to market.

We are also recruiting engineers and technicians to serve our growth projects, while marking our foray into the specialty chemicals area," says PGC chief executive Datuk Sazali Hamzah. "We are looking at various other options in the specialty area beyond 2020 too, including possible acquisitions."

Unlocking Potential

PCG has firmly positioned itself to become the "preferred chemical company providing innovative customer solutions". This means focusing on value creation through a two-pronged strategy: one, strengthening its petrochemical base and two, diversifying into selective derivatives, specialty and solutions. Strengthening petrochemical basic (commoditised chemicals) will increase its volume-play advantage as a competitive regional player, while diversifying into selective derivatives, specialty and solutions will allow PCG to harness value-play from higher margin products, which also enhance resilience against market volatility.

96% - PGC's plant utilisation record

In order to successfully navigate through challenging times, PCG's refined strategic direction focuses on three core capabilities, which are operational excellence, commercial excellence, and innovation technology & growth. Needless to say, PCG is on the right track as it now holds 96% plant utilisation record, far surpassing world-class benchmark.

With this, PCG is set to strengthen its basic petrochemicals, mainly in ammonia and urea through its Sabah Ammonia Urea project, as well as adding speciality chemicals in its portfolio such as aroma ingredients, 2-Ethylhexanoic acid (2-EHAcid) and Highly Reactive Polyisobutene (HR-PIB). By having the said three projects undertaken through its subsidiary via a joint venture with BASF in Gebeng, Pahang, PCG has taken its first step towards gradually tapping into specialty chemicals.

The strategic fit

Given the strong fit of the Pengerang Integrated Complex (PIC) with PCG's vision and strategy, upon acquisition of PRPC Polymers Sdn Bhd and PRPC Glycols Sdn Bhd in November 2015, PCG became part of the PIC in Pengerang, Johor.

The PIC development is PETRONAS' largest investment in Malaysia, and forming part of the Malaysian Government's 22,000-acre Pengerang Integrated Petroleum Complex (PIPC). The Refinery and Petrochemical Integrated Development (RAPID) is one of the many projects currently taking place within PETRONAS' PIC development.

Through the two plants, PCG will spearhead the petrochemicals component of PIC, enjoying the benefits of integrated feedstock supply from PRPC's refinery and cracker located within the same complex.

This project is progressing well whereby to date, the overall linear low density polyethylene, polypropylene and glycols projects have reached more than 30% progress and slightly ahead of schedule. The overall flexible high-density polyethylene project has just started and is at very early detailed engineering stage.

As of end-March 2017, the PIC development is at about 62% overall project progress and the first petrochemical production is expected to commence after the completion of the refinery, which is scheduled in 2019. In April 2017, PCG marked yet another milestone when it approved the Final Investment Decision for an isononanol plant at PIC.

Future towards specialty

"We are putting in a lot of efforts in PIC readiness. By 2020, our petrochemicals projects will be under PIC. This will provide a good foundation for us in the future to move towards derivatives and specialty chemicals. It is therefore very crucial for us to focus on the delivery of all these mega projects", Sazali said.

Beyond 2020, PCG will be putting a lot more effort in assessing its opportunities in downstream derivatives and specialty chemicals at Pengerang, Kertih, Gebeng and East Malaysia. The completion of PIC, as well as PCG's current plants, will provide a lot more opportunities to grow in the area of chemicals, derivatives and specialty.

While all indicators point towards a challenging industry, PCG is set to stay at the forefront of the industry with the ability, resilience and determination to overcome challenges.

Its strategic location in the fast-growing region of Southeast Asia, as well as world-class operational and commercial excellence, will stand PCG on a strong footing towards focusing on growth via PIC. This and the many more growth opportunities ahead will be the driving forces behind PCG's delivery of projects at Malaysia's engineering marvel, the PIC.

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