THE agency managing the development of a massive new oil and gas hub in Johor, Malaysia has said it is struggling to secure downstream investment in the multi-billion dollar project.
Speaking at an event hosted yesterday by the Malaysian Industrial Development Finance Bank, the agency’s CEO explained that the drop in oil prices had cooled interest.
“Under the current environment, investors are holding back their investments. It is very tough to find the ‘second’ Petronas to come in to invest more than RM100bn (US$23bn) in the Pengerang Integrated Petroleum Complex (PIPC),” said Johor Petroleum Development Corp (JPDC) CEO Mohd Yazid Ja’afar, as reported in The Star.
Yazid said PIPC projects with committed investments – including a terminal being constructed by DIALOG Group to import crude and Petronas’ RM60bn integrated refinery and petrochemical (RAPID) project to process the feedstock – have not been disrupted.
“The first phases by Petronas and DIALOG Group are within schedule and these projects are expected to be fully completed by 2019,” Yazid said.
Major projects worth US$380bn had already been shelved by the global oil industry following the price slump according to a report from Wood Mackenzie earlier this year. Petronas CEO Datuk Wan Zulkiflee Wan Ariffin said that Petronas will cut RM50bn in expenditure over the next four years and that “we are going to have to defer some projects” according to an internal memo seen by the Wall Street Journal.
Petronas has not told JPDC of ay plans to slow investment at PIPC, Yazid said. On a positive note he added that PIPC was focussed downstream, whose players benefit from lower oil prices, The Star reports.
Yazid said the masterplan for the site will be updated next year and that the target to make PIPC a regional oil and gas hub by 2035 could be postponed.
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