Malaysia's state-owned Petronas is poised to resume test runs at its polymer units in Pengerang in the coming weeks ahead of a planned start-up in the fourth quarter.
The Pengerang complex in southern Malaysia, a joint venture between Petronas and Saudi Arabia's state-owned Saudi Aramco, will be able to produce 900,000 t/yr of polypropylene (PP), 400,000 t/yr of high-density polyethylene (HDPE) and 350,000 t/yr of linear low-density PE (LLDPE).
Petronas subsidiaries currently operate two polymer plants elsewhere in Malaysia — a 255,000 t/y low-density polyethylene (LDPE) plant and a 250,000 t/y LLDPE/HDPE swing plant at Kerteh.
The Malaysian company is likely start its LLDPE test runs at Pengerang from next week, followed by PP test runs in August.
Petronas previously conducted trial runs at the Pengerang polymer complex in March and April, but production activity slowed ahead of the Muslim fasting month of Ramadan in May.
Petronas is now in the market to purchase spot olefins as it gradually ramps up its polymer production at Pengerang. The company is likely to source feedstock either from southeast Asia or the Middle East for the latest slate of trial runs.
Petronas and Aramco are also expected to start cracker operations at Pengerang in the coming weeks. Petronas will be able to access its own feedstock for polymers once its cracker is fully operational.
The cracker, linked to petrochemical units, can produce 1mn t/yr of ethylene, 1.37mn t/yr of propylene, 180,000 t/yr of butadiene and 165,000 t/yr of benzene.
Pengerang's 300,000 b/d refinery is still not operational as repair works continue at its crude distillation unit. The refinery was hit by an explosion at its 140,000 b/d atmospheric residue desulphurisation unit on 12 April.
Tax breaks
Petronas is in the process of ensuring the PP and PE produced in Pengerang can qualify for import tax exemptions under the free-trade agreement between the Association of Southeast Asian Nations (Asean) and China.
Other key target markets include southeast Asia and Turkey, where Malaysian-origin polymers can be sold at limited or zero duties. Petronas is likely to transport Pengerang's PE and PP output to Port Klang, a major shipping hub on the west coast of peninsular Malaysia, before shipping it to key export destinations.
Petronas is also likely to increase its focus on the key domestic Malaysian market, where it aims to tighten its market share amid threats from Asean competitors.
Petronas and Aramco are likely to market the Pengerang polymers themselves and through channel partners. Aramco currently handles sales and distribution of polymers produced by its other joint ventures, which include Saudi-based PetroRabigh and South Korea's S-Oil.
The Pengerang start-up is likely to further intensify competition in the southeast Asian polymer market this year.
Philippine petrochemical producer JG Summit is due to start debottlenecking its 190,000 t/yr PP unit at Batangas in the coming months. And Indonesia's Chandra Asri is expected to start up its 400,000 t/yr LLDPE/HDPE plant sometime this year.
