Rapid decision by end of March: Petronas

Rapid decision by end of March: Petronas
Posted on 5 March 2014 - 05:39am
Liew Jia Teng
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KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) will make a final investment decision on the Refinery and Petrochemicals Integrated Development (Rapid) project in Johor by end of this month, even though resident relocation issues remain.

"I'm not sure how far one can imagine the size of the Rapid project. This is a RM60 billion project and we got a 6,000-acre site, the challenges that we are facing is massive," Petronas president and CEO Tan Sri Shamsul Azhar Abbas told pressmen after reporting Petronas' fourth quarter financial results here yesterday.

He said the state government is taking steps in providing alternative shelters to relocate the people in Pengerang.

"We have no choice but to continue working with the state government and federal government on the alternative relocation plan as well as some possible delays that we need to manage. As far as Petronas, the project owner of Rapid is concerned, until we get the full site possession, there is no way we can start work," said Shamsul.

He did however say that they are in the midst of tender and bidding processes for the project.

Should the bidders submit their tender with high prices, Shamsul said, there will be significant impact to the viability of the project.

"Let's look at the economic environment, I don't think I can go to the board if the project is not viable. We have to work together with 22 major partners who are also interested in ensuring the viability of the project," he said.

Petronas last year announced a second delay to the project in Johor to 2018, with a final investment decision on the project to be made in the first quarter of 2014.

The Rapid refinery was initially scheduled for start-up in fourth quarter of 2017, while the remaining plants within the complex were to be commissioned in 2018.

The commissioning of the plant, by far the largest liquid-based green-field downstream undertaking in Malaysia, was pushed back due to a delay in the state government's relocation of residents.

On Petronas' move to sell its 25% stake in Canadian shale gas assets to an Indian company and an Asian gas buyer, Shamsul said the deal is "more or less concluded", but declined to reveal the buyers' name.

He however said the Indian company will take 10% stake, while another 15% stake will be sold to another Asian company.

"Hopefully we can sign the agreement (with the Asian company) by the end of this month. This is subject to various approval and I cannot mention which country the company is from," he said.

Petronas has already sold a 10% stake in the integrated shale gas development and liquefied natural gas (LNG) project, to Japan Petroleum Exploration and 3% more to Petroleum Brunei.

The divestment is for Petronas and its associate partners to share some of the costs in bringing LNG from North America to Asia.

According to Shamsul, Petroleum Brunei will be taking an additional 2% stake in the project, bringing up its total shareholding to 5%.

Petronas has previously said it wants to sell up to 50% of the Canadian project, which means it now has another 10% to offload.

"We are not in a hurry. For us, getting to 40% (divestment) is good enough," said Shamsul.

He said Petronas is in the process of doing front end engineering and design (FEED) with three companies, which should be completed by August 2014.

"Once the FEED is completed, we will be making preparation for the final investment decision of the Canada LNG plant by the end of this year," said Shamsul, adding that the Canadian LNG plant will be commisioned in 2018-2019.