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Wednesday, August 22, 2018

PetChem eyes acquisitions to boost specialty business

Wednesday, 22 Aug 2018

KUALA LUMPUR: The chemical manufacturing unit of Petroliam Nasional Bhd (Petronas) is actively looking to acquire companies to expand its specialty chemical business, its chief executive officer said.

Petronas Chemicals Group Bhd
image: (PetChem) is looking to grow aggressively in specialty chemicals, which are raw materials used to manufacture consumer products such as high-performance tyres and LCD televisions.

CEO Sazali Hamzah said acquisitions would be a key step towards expanding the higher-margin specialty chemicals business.

“We have already targeted a few. When we acquire, it’s not only for technology but also for market penetration,” Sazali told Reuters, adding that PetChem was looking at companies in Europe, the United States and India.

Sazali also said the acquisition market was competitive as a lot of companies are looking to expand into petrochemicals.

The hunt for acquisitions comes as parent company Petronas, relies more on its downstream business to boost revenue amid analyst estimates that it will produce less oil in the future.

Much of Petronas’ capital expenditures in the last few years has been spent on its downstream business, particularly the

Refinery and Petrochemical Integrated Development (Rapid) project in Johor. Rapid is part of the Pengerang Integrated Complex that includes a 300,000 barrel-per-day oil refinery and a petrochemical complex with a production capacity of 7.7 million tonnes and an oil storage site. Companies such as Saudi Aramco,

Exxon Mobil Corp and Royal Dutch Shell Plc have all been expanding into petrochemicals in recent years to diversify their businesses from crude oil production.

Last year, Aramco inked a deal to invest US$7bil in Rapid. It later bought a US$900mil stake in petrochemical projects in the Rapid complex.

Petronas Chemicals is spearheading the petrochemicals component of Rapid, which is Petronas’ largest downstream project with an estimated US$27bil of total investment. — Reuters


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