The petrochemical arm of Malaysia's state oil firm Petronas plans to discontinue its vinyl business as it looks to streamline its assets and focus on higher value products, as per Reuters. As per a statement, Petronas Chemicals Group Berhad announced plans to stop operations at its two Malaysian plants from Jan 2013 and begin a sales process for its interest in a plant in Vietnam.
Petronas Chemicals will take a 560 million ringgit charge in Q4-13 after making provision for decommissioning the plants, site remediation expenses, contract termination dues and impairment charges. "We made this hard call after due consideration of the inherent limitation within our vinyl business and its relative performance against other businesses within the group," as per Petronas Chemicals Chairman Wan Zulkiflee Wan Ariffin. Our decision today allows us to focus our resources on higher value products and our growth projects in the pipeline.
Petronas Chemicals said its vinyl business is not as closely integrated within its product value chain since it obtains its ethylene di-chloride raw material feedstock on the open market. Also vinyl plants are expensive to run and maintain. The firm will now be able to divert ethylene committed to its Malaysian plants towards the production of higher-margin products. PCG currently operates three vinyl plants: two in Kertih Integrated Petrochemical Complex, which are owned by Vinyl Chloride (Malaysia), and one in Vung Tau, Vietnam -- owned by Phu My Plastics and Chemical Co Ltd. PCG said the two plants in Malaysia will continue its operations until Dec 31 this year to fulfill existing contractual obligations with its customers, following which decommissioning activities are to take place over the next two to three years.The group will also initiate a divestment process for the sale of its 93.1% interest in Phu My Plastics and Chemical Co.