KUALA LUMPUR: Petronas Chemicals Group Bhd (PetChem) plans to invest US$12 billion over the next 20 years to further contribute to parent Petroliam Nasional Bhd’s downstream businesses.
In an exclusive interview here recently, PetChem managing director and chief executive officer Datuk Sazali Hamzah said the allocation involvesd 20 value enhancing projects including mergers and acquisitions, and venture capital participation.
Sazali does not discount PetChem's organic growth in business via research and development (R&D).
When PetChem started 35 years ago, he said the company's focus was on basic chemicals converted from natural gas.
"At that time, specialty chemicals only consisted two to three per cent of our production," he added.
Now that PetChem's isononanol plant within the Pengerang Integrated Complex in Johor is slated to start operation at the end of this year, Sazali foresees earnings from the specialty chemicals business to expand to five per cent next year.
In 20 years, PetChem expects to produce as many as 50 variants of specialty chemicals. Sazali estimates this would boost contribution to 25 per cent of group earnings.
Specialty chemicals are usually used in construction materials, industrial paints and coating, toiletries, healthcare devices, neutraceuticals, automotive and oil and gas.
"We cannot continue to rely entirely on oil and gas reserves when specialty chemicals can be sold at a higher margin and is less exposed to the vagaries of crude oil and gas price fluctuations.
"Currently, PetChem contributes six per cent to Petroliam Nasional Bhd’s earnings. Hopefully, as our business expands over the next 20 years, we can see earnings contribution doubling to between 10 and 12 per cent," Sazali said.
"Our R&D is showing a lot of exciting developments, especially for four projects, one of which is now close to pilot plant stage, before we scale it up to be commercialised. If all goes well in five years, there will be announcements later.”
PetChem has three or four projects that involved mergers and acquisitions that will enhance its value chain in the pipeline.
"I cannot share the details but in the next six or seven years, we may invest US$6 billion, depending on the opportunities available," he said.