Malaysia's Sarawak state government has agreed an initial deal with two Chinese firms for a $5bn export-oriented refinery and petrochemical complex at Lawas.
The engineering arm of China's biggest refiner state-controlled Sinopec and private-sector firm Beijing Beca Sci-Tech will carry out a feasibility study on the project, which will include a 200,000 b/d refinery and 1.2mn t/yr ethylene unit. Construction could start as early as the fourth quarter of this year and production is targeted for 2022.
The refinery will use crude from the Middle East and export its output to regional consumers, the state government said. The petrochemical plant will produce downstream products including polyethylene and polypropylene.
Sinopec may only provide engineering services, leaving it unclear how little-known Beijing Beca will fund the project.
Lawas is close to a port and crude terminal at Labuan, where state-owned Petronas operates a methanol unit. It is also less than 20km from Brunei, where Chinese firm Hengyi is poised to start up its 175,000 b/d refinery in the coming weeks.
The Lawas project could become Malaysia's second China-owned refinery, adding to the 156,000 b/d Port Dickson plant that independent Hengyuan Refining bought from Shell in 2016. It would be the country's second-biggest refinery behind the new 300,000 b/d Pengerang complex, a joint venture between Petronas and state-owned Saudi Aramco.
