Methanol plant to turn Bintulu into major petrochemical hub, strengthen O&G sector

Abang Johari putting his signature on a plaque to mark the earth breaking ceremony. Also seen (from left) are Awang Tengah, Manyin and Dr Rundi.

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KUCHING, Sept 11: Sarawak is going all out to maximise the economic contribution of its oil and gas sector with the setting up of a methanol plant to turn Bintulu into a petrochemical hub in the region.

Chief Minister Datuk Patinggi Abang Johari Tun Openg said the plant will be the first step towards establishing another petrochemical hub from the resource country, Sarawak itself.

Noting that the growth of Sarawak’s economy was partly driven by the oil and gas industry, he expressed confident that further value-added downstream businesses through the development of the petrochemical industry would be a major engine of growth for Sarawak in the next five to 10 years.

“We are not contented with the existing development of oil and gas industry in the state. The reason is our oil and gas products are still commodity meant for exports,” he said at the earth breaking ceremony of Sarawak-owned Petchem Methanol Project at Tanjung Kidurong, Bintulu, today.

Giving example on the production of liquified natural gas (LNG), ammonia and urea utilising natural gas as feedstock for the industry, he pointed out the irony that the value-added activities were done abroad utilising the state’s natural gas as raw materials in their petrochemical industry.

“We want to maximise the oil and gas contribution to the state’s economy. In doing so, we want Bintulu to be another petrochemical hub in Malaysia by inviting petrochemical industries to set up their plants in Sarawak,” he said.

“To do this, we will be intensely involved in developing the high value downstream products of oil and gas industries such as specialised and fine chemicals. In this regard, we will consider all feasible proposals to establish petrochemical industry in the state and will facilitate them accordingly,” he added.

Abang Johari said that the methanol and derivative project was one of the two initiatives of the Sarawak government to embark on more downstream value-adding petrochemical industries. The other planned project is an ammonia and derivative plant.

“As part of Sarawak industrialisation agenda, we want to make high value petrochemical industry as one of the key drivers for the growth of the state manufacturing sector,” he said.

“The Sarawak Petchem will be the first Sarawak state-owned company that produces methanol with an annual capacity of 1.7 million metric tonnes per annum. We hope they can increase the production so that we can impose sales tax to become another revenue for Sarawak,” he added.

Abang Johari (inside excavator) together with Abdul Aziz (in safety vest) flanked by Awang Tengah (right) giving their thumb’s up for the project.

The decision for the setting up of Sarawak Petchem was timely due to abundance of natural gas as feedstock for the development of a mega methanol plant, he continued.

He reiterated that it was the policy of the state government that any new findings of gas and resources within Sarawak, 40 to 50 per cent must be retained as feedstock for industries in the state.

The plant, he revealed, was expected to come onstream in 2023 and will receive 160 million standard cubic feet per day of natural gas feedstock from Petronas.

“I am happy to note Petronas’ involvement in this project through sales and purchase agreement (SPA) of methanol, gas supply agreement (SGA) and operation and maintenance support (O&M) on capability building,” he said.

The SPA was signed in December 2018 for the sale of methanol, while the memorandum of understanding (MoU) for O&M on capability building has been executed in June this year.

Touching on the impact of Sarawak Pechem methanol projects on Sarawak, Abang Johari pointed out that this project will undoubtedly be a catalyst to further transform Bintulu from the current world renowned LNG gas producer to a petrochemical hub with future downstream value-added integrated petrochemical complex.

“This will add multiple values to our natural resources, which will benefit the state economically, derived through its value chain,” he said.

The project will generate job opportunities both during construction of the mega project, which was anticipated to have a total workforce that could reach 4,000, with some 300 staff during the operation of the plant, he added.

Abang Johari also reminded the spin-off from the plant operation or other opportunities including in services and maintenance.

With state-of-the-art and high technology, he highlighted that the plant will require competent personnel who are mostly engineers, technicians, operators and specialists.

“We are confident that Sarawak is able to attract investments in the oil and gas downstream sector given our track record in the foreign-direct investment (FDI) in the last decade.

“Sarawak’s ability to attract about RM30 billion in investment since the inception of Sarawak Corridor of Renewable Energy is proof that Sarawak is capable of venturing into the oil and gas industry,” he said.

Deputy Chief Minister Datuk Amar Awang Tengah Ali Hasan, State Secretary Datu Jaul Samion, Sarawak Petchem Sdn Bhd chairman Tan Sri Dr Abdul Aziz Husain, Education, Science and Technological Research Minister Datuk Seri Michael Manyin Jawong and Utilities Minister Datuk Seri Dr Stephen Rundi Utom. — DayakDaily