is wooing Japanese investors as it develops a huge multi-billion dollar petrochemical complex, focusing on downstream operations, in a bid to become
next oil hub.
A mission from
on Jan. 20-23 to attract Japanese companies to set up operations in a sprawling petrochemical complex, in
southernmost state of
, which could rival some of the world's biggest refineries, such as those in
Johor Petroleum Development Corp., the master planner for the project, is organizing for the first time the mission to
, which will involve 26 officials including the chief minister of
state, Mohamed Khaled Nordin
, who is also co-chairman of JPDC.
"Our main focus is to seek investors for the integrated downstream oil and gas refinery and petrochemicals complex, and its supply chains," said Norlida Manaf, JPDC's senior manager for strategic communications, in a recent interview.
Called the "Pengerang Integrated Petroleum Complex", it is currently the single biggest national project in
and an offshoot of the Malaysian government's "Economic Transformation Program".
That program was launched in 2010 to elevate
to developed-nation status by 2020 by targeting 12 key economic sectors, one of them being the oil and gas sector.
"We need to increase the petrochemical output and to create a regional hub. It is the first in
and it is going to be the first in
which is this big," said Norlida.
Pengerang, the focus of
ambition to be an Asian oil hub, is a sleepy fishing village in southeastern
Some 20,000 acres of land in the area has been earmarked for the gargantuan project, with the hope of attracting 170 billion ringgit ($39 billion) worth of investments and create more than 8,000 skilled jobs.
Pengerang boasts a strategic location along the Strait of Malacca, one of the world's busiest shipping lanes, just a few kilometers from
where there is already an established petrochemical hub. Its waters have a depth of 24 meters, making it accessible to ultra large crude carriers, and it has abundant land.
By its sheer size alone the planned facility would dwarf
Jurong island petrochemical complex, which is facing the challenge of a chronic shortage of land for further expansion and high business costs.
Pengerang will have a total storage capacity of 5 million cubic meters by 2020, while its refinery, expected to be completed by 2019, will have the capability to refine 300,000 barrels per day.
hub, which covers some 3,000 hectares, currently has a storage capacity of about 1.5 million cubic meters and a refining capacity of about 1.4 million barrels per day.
In a bid to overcome its space limitations,
came up with the idea of developing the "Jurong Rock Caverns" -- the first underground storage facility for liquid hydrocarbons in
. Under the first phase, the underground storage galleries will add 1.47 million cubic meters of storage.
Pengerang is already stirring with activity. Land has been cleared, the first batch of 900 families have been moved from their village homes to new modern housing estates, and hundreds more are expected to be resettled to make way for the project. Bigger roads have been built and thousands of construction workers have started to descend on the once quiet village.
Petronas, currently the complex's biggest investor, has acquired some 6,200 acres of land there to develop an oil refinery with an estimated investment of 89 billion ringgit ($20 billion). Petronas expects the project to be commissioned in 2019.
Dialog group has acquired 1,300 acres and is developing the "Pengerang Deepwater Terminal," which, according to its website, "has the potential to transform Pengerang into
It has teamed up with Dutch firm Royal VOPAK for the project.
"We are actually looking out for potential investors to fill up the land parcels. One of the initiatives is to look at all Asian investors. Right now we are looking at
," Norlida said.
The focus is on bigger players who can take up at least 500 acres of land.
For this purpose, the delegation plans to meet about 20 companies during the trip to
later this month, including Idemitsu Kosan Co.
, Itochu Corp.
, Nippon Ekitan Corp.
, Taiyo Oil Co.
, and Japan Chemical Engineering & Machinery Co.
The program includes a site visit to the
industrial zone, Norlida said.
In particular the developers are eyeing Japanese petrochemical companies that are already operating in
and are seeking to expand.
"Jurong started a long time ago, that's why we know that some of the investors who already invested in Jurong are looking to expand their investment," Norlida said.
"We are not competing, we are basically complementing
," she added. "In
, the concept is more like plug and play -- very small. We are looking at the same players, basically."
Some 100 petroleum and chemical companies from across the world have pumped more than $32 billion into Jurong in investments there, including such petrochemical giants as ExxonMobil Corp. and Royal Dutch Shell Plc, and Japanese companies Asahi Kasei Corp., Mitsui Chemicals Inc. and Sumitomo Chemical Co.
Japanese chemical company Teijin Ltd. closed down its polycarbonate resin plant in
late last year to focus on its highly competitive subsidiary in
and its Matsuyama plant in
Norlida said the downstream oil and gas business has not been hurt by the current phenomenally low crude oil process. In fact, she said "this is the best time for investors" as the downstream business is a more booming activity compared to upstream.
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