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Huge opportunities in petrochemical sector

Huge opportunities in petrochemical sector

14 Feb 2022

Sarawak offers some US$25bil (RM104.74bil) in investment opportunities in downstream petrochemical industries to the private sector, according to Chief Minister Datuk Patinggi Abang Johari Tun Openg.

He said the development of midstream petrochemical industries, such as methanol, ammonia, hydrogen and polyethylene would further enhance the state’s existing downstream manufacturing ecosystem and create more business opportunities.

State-owned Sarawak Petchem Sdn Bhd is currently constructing a mega-methanol plant in Bintulu, which is scheduled to come on stream next year.

The plant, which has a production capacity of 1.7 million tonnes per annum, will receive 160 million standard cubic feet per day of natural gas feedstock from Petroliam Nasional Bhd (Petronas).

Next on the drawing board is a green hydrogen and ammonia project, also in Bintulu.

The project will involve South Korea’s Samsung Engineering Co Ltd, Lotte Chemical, POSCO and SEDC Energy Sdn Bhd, a subsidiary of Sarawak Economic Development Corp (SEDC).

The parties inked a memorandum of understanding (MoU) on the project last month.

Dubbed Sarawak H2biscus green hydrogen/ammonia project, it will convert hydropower and natural gas to green hydrogen/methanol and blue hydrogen, and convert hydrogen to ammonia.

The project’s feasibility study is to be verified this month.

Johari said there was a pressing need to intensify localisation of gas supply and utilisation to further industrialise Sarawak in the next five to 10 years in order for the state to increase high-value downstream economic activities.

“We are also exploring new oil and gas blocks onshore and offshore to ensure volumes are available for Sarawak’s journey towards industrialisation,” he added.

He said this when launching the Action and Implementation Plan for the Post Covid-19 Development Strategy 2030 here last week.

Johari said currently, 70% of the liquified natural gas (LNG) supplies in Malaysia came from Sarawak.

And yet, Sarawak consumed less than 5% of the country’s total production.

“The Sarawak government has established the Sarawak Gas Roadmap or SGR 2030 with the aim of localising 1,200 million standard cubic feet per day by 2030.

“There are US$25bil (RM104.74bil) investment opportunities for the private sector to catalyse on our economy through various petrochemical downstream industries.

“Midstream petrochemical industries such as methanol, ammonia, hydrogen and polyethylene will further enhance our existing downstream manufacturing ecosystem and create more business opportunities.

“Once implemented, Sarawak will create an additional 15,000 jobs in the oil and gas sector by 2030.

“Having petrochemical derivative capacities also position Sarawak in the global manufacturing supply chain ecosystem,” said Johari.

He said the commercial settlement agreement signed by the Sarawak government with Petronas in late 2020 provided Sarawak with a greater share of revenue from the oil and gas found in the state.

“It also provides for a more active involvement by Sarawak in the oil and gas industry by creating and maintaining a stable, conducive business and investment environment for the sustainable growth of the oil and gas industry, both upstream and downstream in Sarawak.

“Moving forward, we should emphasise on developing business models that focus on harnessing the value of our natural resources.

“The development of the industries shall be planned based on its upstream opportunities as well as its midstream and downstream productions and exportability.

“Hence, we invite private players and conglomerates to collaborate with us to unlock such opportunities,” said the chief minister.

The SEDC had recently acquired 432ha of land in Tanjong Kidurong to be developed into a petrochemical and medical hub.

The site has access to feedstock, being the landing point of offshore gas-field activities and its proximity to existing gas pipelines.

Johari said the Sarawak government will collaborate with credible private sectors to capitalise on the carbon market potential, including payment for ecosystem services within the legal framework to ensure transparency and accountability.

“The average carbon sequestration of tropical forest, such as forests in Sarawak, is approximately 11 tonnes of carbon dioxide equivalent per ha.

“Based on one million ha of high-yield and sustainable industrial forest plantation (to be established in Sarawak), the target for carbon trading potential is approximately RM140mil to RM230mil based on the current average price of carbon.

“This is an immediately implementable initiative which represents only 10% of the forestry sector under the Green Economy initiatives in Sarawak.”

Noting that Sarawak’s sustainable management and conservation of the forestry sector had received worldwide recognition, Johari said the state had set aside and maintained more than 50% of forest and tree cover, which include national parks, nature reserves and wildlife sanctuaries.

Source: The Star