Exclusive: Petronas to delay $19 billion petrochemicals project to 2018

Tue Jul 30, 2013 5:05am EDT
 
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By Niluksi Koswanage and Yantoultra Ngui

KUALA LUMPUR (Reuters) - State oil firm Petronas PETR.UL will start up its $19 billion petrochemicals complex in Malaysia in 2018, the company told Reuters on Tuesday, signaling a further delay in the country's largest-ever infrastructure project.

A delay to the project in southern Johor state could deal a potential blow to the economy of the Southeast Asian nation as well as local oil and gas services firms hoping for work on the massive complex.

A source familiar with Petronas' business strategy told Reuters the project had been complicated by a need to secure water supplies as well as cater for proposed international partners.

Petronas had already put back the project from late 2016 to early 2017 in June and revised the final investment decision (FID) to the first quarter next year, citing state government problems in relocating villages and graves from the 2,000 hectare-site, five times the size of New York's Central Park.

"As a result of the revised FID date, the RAPID refinery is scheduled to be ready for start-up in Q4 2017 and the remaining plants within the complex is scheduled to be commissioned in 2018," Petronas said in a statement to Reuters on Tuesday.

This is at least six months later than market expectations after local media had cited Petronas CEO Shamsul Azhar Abbas in June as saying the start date for phase one of the RAPID project had been pushed back to early 2017.

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Delays in the project - a cornerstone of Prime Minister Najib Razak's Economic Transformation Programme aimed at doubling Malaysians' incomes by 2020 - could slow an economy whose oil and gas sector makes up a fifth of GDP.   Continued...

 
Motorists queue to fill up on natural gas at a Petronas station, with the company's headquarters at the landmark Petronas Twin Towers visible in the background, in Kuala Lumpur July 30, 2013. REUTERS/Bazuki