Pengerang Integrated Petroleum Complex shaping global energy markets
29 Feb 2024
Under the leadership of JPDC, the PIPC has been meticulously planned and executed, with a focus on sustainability, innovation and operational excellence
The Pengerang Integrated Petroleum Complex (PIPC) stands as a significant oil and gas (O&G) development initiative situated in Pengerang, Johor, spearheaded by Johor Petroleum Development Corp Bhd ( JPDC).
The complex is strategically designed to become a world-class integrated refinery and petrochemical hub, to propel Malaysia’s downstream O&G sector while solidifying its position as a regional industry hub.
For the record, JPDC is a federal agency reporting to the Economy Ministry and a subsidiary of Malaysia Petroleum Resources Corp (MPRC).
Spanning a vast area in Pengerang, the PIPC is designed to encompass various facilities, including refineries, petrochemical plants, storage terminals and supporting infrastructure.
This comprehensive approach underscores the complex’s ambition to emerge as a world-class integrated hub for O&G activities, serving as a catalyst for industrial development and job creation.
Under the leadership of JPDC, the PIPC has been meticulously planned and executed, with a focus on sustainability, innovation and operational excellence.
Leveraging Malaysia’s strategic geographical location and abundant natural resources, the complex is poised to attract significant investments and propel the country’s energy sector into a new era of growth and prosperity.
Moreover, the development of the PIPC is not merely confined to economic considerations.
Environmental sustainability and safety remain paramount priorities, with stringent measures in place to minimise ecological impact and ensure the well-being of local communities.
Through collaborative efforts with government agencies, industry stakeholders, and the community, JPDC is committed to fostering responsible and sustainable development practices within the complex.
According to a statement from the Malaysian Investment Development Authority (MIDA), JPDC has achieved success in securing committed investments exceeding RM5 billion for the second phase of the PIPC.
This achievement signifies a resurgence in investments following the Covid-19 pandemic.
As of April 6, 2023, investments in the second phase of PIPC totalled RM5.05 billion, surpassing JPDC’s 2021 target of RM5 billion for investments spanning 2020 to 2025.
JPDC acting CEO Izhar Hifnei Ismail highlighted the agency’s efforts in facilitating and supporting prospective investors in their feasibility studies for establishing downstream O&G and petrochemical businesses within PIPC.
In this phase, the focus has shifted towards the development of new industrial areas like the Pengerang Industrial Park by Johor Corp (JCorp).
Additionally, collaborations with international players such as LG Chem Ltd from South Korea, in a joint venture (JV) with Petroliam Nasional Bhd (Petronas), are being pursued.
Completion of Phase 1
The PIPC, scheduled for a 25-year development between 2013 and 2037 in four phases, witnessed the completion of phase one (2013-2019) which included two catalytic projects.
These projects include the Pengerang Deepwater Terminals (PDT), a storage facility for oil and petroleum products with a capacity of up to five million cu m, developed by Dialog Group Bhd, and the Pengerang Integrated Complex (PIC) consisting of refinery and petrochemical facilities developed by Petronas.
Critical infrastructure and social amenities worth over RM3 billion have been developed by the federal and Johor state governments to support industrial growth within PIPC.
JPDC is now emphasising sustainability in the second phase, urging new investments to have robust sustainability plans, in line with the growing focus on green technology.
Investments are expected to adhere to environmental, social and governance (ESG) standards, with financiers scrutinising project proposals accordingly.
The majority of new investments originate from Europe and Asia, reflecting a global interest in the development of PIPC with a sustainability-driven approach.
In a recent interview with The Malaysian Reserve (TMR), Izhar shed light on the current status and future prospects of the PIPC.
Development of PIPC began in 2013, guided by the PIPC Development Master Plan 2013-2037, he shared.
On Oct 13, 2023, Prime Minister cum Finance Minister Datuk Seri Anwar Ibrahim announced that the PIPC is designated as a hub for petrochemical and chemical activities, to be supported by incentives for investments in selected activities and for the development of industrial parks.
Izhar unveiled that the PIPC has made significant strides in its development, as of Dec 31, 2023.
As an overview of the progress achieved, he said a total of 22,904ha have been designated for industry development.
“Of this, 10,415ha, accounting for 45.5% of the total land area, have been committed to industry development.
“Notably, development has already been completed on 6,256ha, representing 60% of the committed area,” he elaborated.
In terms of investments, he said the targeted total investments in PIPC by 2037 amount to RM330.6 billion and as of Dec 31, 2023, he declared that committed investments have reached RM139.66 billion, constituting 42.2% of the targeted total investments.
Job Creation and Refining Capacity
On job creation, PIPC aims to create a total of 30,095 direct and indirect jobs by 2037.
As of Dec 31, 2023, 7,549 jobs have been generated, marking 25% of the targeted total. “The planned total liquid storage capacity from 2013 to 2037 is set at five million cu m. “Currently, as of Dec 31, 2023, the available liquid storage capacity stands at 4.1 million cu m, achieving 82% of the planned total,” he disclosed.By 2037, he shared that the planned total refining capacity is projected to reach one million barrels per day.
“As of Dec 31, the available refining capacity is at 300,000 barrels per day, reaching 30% of the planned total capacity,” he told TMR.
Moreover, the planned total petrochemical production capacity by 2037 is aimed at 11.3 million tonnes per annum.
At the end of last year, he revealed the petrochemical production capacity stands at 3.6 million tonnes per annum, achieving 31.9% of the planned total production capacity.
“In 2022 and 2023, the government introduced several economic development policies, ranging from macroeconomic policies to sector- and industry-specific policies, including those on energy, manufacturing and chemical industries that have bearing on the activities that are being promoted in PIPC,” he noted.
Meanwhile, the current PIPC Development Master Plan emphasises on preparing an integrated downstream O&G environment, and for the past 10 years, the two key investors in PIPC have been diligently developing facilities that serve as the backbones for the industry to grow.
Dialog Group Bhd has developed deep water jetties for the transportation of crude oil and liquid petroleum products as well as liquid natural gas, together with more than three million cu m of liquid storage capacity in Pengerang Deepwater Terminals (PDT), he commented.
He also pointed out that Petronas has developed oil refineries, petrochemical processing plants, a regasification facility and other supporting facilities within its PIPC, the biggest such industrial complex in Malaysia.
However, the development policies and plans launched in 2022 and 2023 have introduced new dynamics, as well as set new economic aspirations and targets.
For example, Izhar said the Ekonomi Madani plan calls for the creation of new economic opportunities through strategic industries, to improve the economic wellbeing of Malaysians through high-paying jobs and business participation.
“The National Energy Policy 2022-2040 and the National Energy Transition Roadmap set targets for a sustainable energy sector, including increasing use of renewable energy and managing the levels of greenhouse gas emissions into the environment,” he said.
On top of it, the New Industrial Master Plan 2030 and the Chemical Industry Roadmap 2030 chart the paths of promoting petrochemical- and chemical-related manufacturing activities in Malaysia without compromising on the sustainability agenda.
Key Priorities
On key priorities and objectives for JPDC regarding the future phases of the PIPC, its development is guided by the PIPC Development Master Plan 2013-2037, which is divided into four phases, namely Phase 1 (2013-2019), Phase 2 (2020-2025), Phase 3 (2026-2031) and Phase 4 (2032-2037).
In Phase 1, the main activities were the construction of PDT Phase 1 and Phase 2, and the PIPC from 2015 to 2019, with a total committed investment of RM120.67 billion.
In Phase 2, two industrial parks were opened in PIPC, namely OASIS@Pengerang (developed by Perisind Samudra Sdn Bhd) and Pengerang Industrial Park (developed by JCorp), offering site options for companies involved in downstream O&G, petrochemical and chemical activities.
“JPDC is currently reviewing the PIPC Development Master Plan to ensure that Phases 3 and 4 can accommodate and support industrial activities that need to comply with sustainable development objectives and net-zero goals,” Izhar said.
These include aligning the PIPC master plan with the country’s sustainable economic development plans, especially those relating to the future growth of the energy and manufacturing sectors.
With Pengerang being designated as a hub for petrochemical and chemical activities, supported by a set of investment incentives, as announced by Anwar in the 2024 Budget, the JPDC CEO said the company will be emphasising inbound investments in petrochemicals and chemicals.
“We have also gained immense experience and know-how in facilitating and guiding industry growth in PIPC, and we believe that we can share and apply that knowledge at the national level, by advising and assisting government, business and community stakeholders in managing similar activities in their respective areas,” he explained.
He also shared that since the beginning of PIPC development in 2013, JPDC has been focusing on three main mandates, which are to plan and coordinate the physical development of PIPC, including public infrastructures and industrial plants and facilities; to promote and facilitate investments in downstream O&G, petrochemical and chemical activities in PIPC; and to facilitate and guide members of the local communities to participate in the economic growth taking place in PIPC.
The construction of new highways and upgrading of roads have allowed for improved traffic access into and from Pengerang, and opened up new areas of development, including commercial and residential areas.
The increased presence of industry personnel also contributed to higher levels of commercial activities in Pengerang.
For example, in a joint study conducted by JPDC and Petronas Refinery and Petrochemical Corp Sdn Bhd (PRPC) in 2019, commercial and retail activities in areas surrounding the PIPC construction were found to have increased fivefold in terms of value during the project construction period from 2014 to 2018.
Furthermore, the main beneficiaries were food and beverage outlets, hotels, retail shops and supermarkets.
Also in 2013, JPDC organised training programmes for local manpower, enabling them to gain certification in skillsets and job competencies required by the downstream O&G industry. and secure employment with companies or contractors serving the industry in Pengerang.
These cover the construction and operational phases of the industrial facilities, as well as the plant turnaround and maintenance jobs.
From 2013 to Dec 31, 2023, JPDC trained 6,898 Malaysian workers in new skills or to upgrade their current skill sets, with 95% of the trainees able to secure jobs with employers in the industry right after completing their training.
This contributes towards the setting up of a community of highly paid skilled and competent industrial manpower in Pengerang, ready to serve the industry.
In 2024, JPDC has embarked on a Contractors Development Programme, aimed at facilitating and supporting competent and qualified local contractors to enhance their business scale, capabilities and readiness to serve the downstream O&G, petrochemical and chemical industry. However, to reiterate, land area development has fallen slightly behind, achieving only 45% of the targeted projection, with 10,415ha currently utilised out of the planned 22,904ha.
Core Activities and Development Areas
To reflect, PIPC’s core activities revolve around six key components, which are oil refinery, naphtha cracker, petrochemical, liquid storage, deepwater terminal and specialty chemical.
The development areas identified by JPDC are the PDT, Pengerang Industrial Park (PIP), and OASIS@Pengerang, in addition to PIPC.
There is also PIC, occupying 6,242ha and it is an integrated refinery and petrochemical complex featuring a cogeneration power plant, air separation unit, dedicated water supply, and common utilities. It is operated by PRefChem, a JV with Saudi Aramco.
PDT, spanning 1,200ha, includes storage terminals with a total capacity of five million cu m, supporting the efficient handling of O&G products while the PIP is a 786ha integrated industrial park connected to PIPC and PDT, targeting heavy, medium and light industries.
OASIS@Pengerang encompasses 678ha and it is a mixed development featuring commercial and industrial spaces, including ready facilities and a resource recovery complex for scheduled waste.
Lastly, Pengerang Deepwater Terminal 2 (PDT2) is under development, including storage capacity of 1.3 million cu m and a liquefied natural gas (LNG) regasification terminal owned by Petronas Gas Bhd, Dialog LNG Sdn Bhd and Permodalan Darul Ta’zim Sdn Bhd.
PIPC’s Vision for the Future
PIPC Phase 2 is poised to focus on strategic investments to further enhance its position in the downstream O&G sector.
Key focus areas include completing the product chain by producing final products from intermediate products, such as plastics and synthetic fibres.
Additionally, the company is focusing on new integrated projects with enhanced technology, embracing technologies like crude oil to chemical (COTC), plastic waste to chemicals and methanol to olefins (MTO) to improve competitiveness, efficiency and sustainability.
There will also be initiatives toward a low-carbon energy system, including accelerating the solar energy industry, leveraging bio-energy resources, exploring full hydrogen potential, and developing new energy technologies.
Lastly, JPDC is utilising the industrial land available for downstream oil, gas and energy hub development.
Investment Opportunities and Support Services
JPDC offers a range of investment facilitation services, including pre-investment consultation, investment execution assistance, and post-investment support.
PIPC also presents investment opportunities in integrated logistic facilities, waste management centres and maintenance repair overhaul and support services.
As PIPC continues to evolve, it not only contributes significantly to the economic landscape but also becomes a beacon of innovation and sustainable development in the downstream O&G industry.
Source: The Malaysian Reserve
