MOU on feasibility study by Petronas and BASF inked for specialty chemical production in Malaysia

08-Dec-10

BASF and Petronas have inked a Memorandum of Understanding to undertake a joint feasibility study to produce specialty chemicals in Malaysia, in a move that will extend their existing business collaboration. The partners are considering a potential joint investment sum of approximately MYR 4.0 bln. Under the terms of the MoU, the two parties will evaluate the technical, commercial and economic viability of jointly owning and operating world-scale facilities for the production of specialty chemicals including non-ionic surfactants, methanesulfonic acid, iso-nonanol as well as other C4-based specialty chemical products. The final scope of the investments will be determined following the outcome of the joint feasibility study which is targeted to be completed in 2011. Executive Vice President of Downstream Business, Datuk Wan Zulkiflee Wan Ariffin said, “The development of a new specialty chemical products portfolio is an important component of PETRONAS' plan to further grow the downstream petrochemical business as part of its integrated plan to be a key player in the region as well as to spur domestic investment in the oil, gas and petrochemical industries.” Dr. Martin Brudermüller said, "With the rapid growth of chemical markets in Asia Pacific, we are further expanding our specialty chemical business. Our joint venture with PETRONAS, based on a long-standing and successful partnership, is an excellent, well-established and competitive production platform in Asia. By expanding our local production base in Malaysia, we can further improve our ability to supply our customers in Asia, from Asia." According to its Asia Pacific Strategy 2020, BASF intends to produce 70% of Asia Pacific sales in the region, with investments of € 2.0 billion between 2009 and 2013. The proposed move by PETRONAS and BASF will build on their successful strategic partnership in the country, established in 1997. The partnership, via BASF PETRONAS Chemicals Sdn Bhd (of which BASF owns 60% shares) , currently own and operate an integrated complex in Gebeng, Pahang, Kuantan that produces acrylic monomers, oxo products and butanediol. As for the subsequent phase of the collaboration, Petronas Chemicals Group and BASF will jointly evaluate the outcome of the joint feasibility study and will adopt it as part of their strategic growth plans, if technically and commercially viable.