http://biz.thestar.com.my/news/story.asp?file=/2008/12/2/business/2691101&sec=business
Tuesday December 2, 2008 - The Star
More investors for Kertih Plastics Park
By EILEEN HEE
KUALA LUMPUR: Three potential investors are expected to come on board the Kertih Plastics Park (KPP) next year.
The investors comprised both local and foregin companies, including one from Australia, said East Coast Economic Region (ECER) development council chief executive officer Datuk Jebasingam Issace John.
“The companies are from the various polymer sectors,” he told StarBiz yesterday.
KPP has already attracted three investors: Hi Essence Cable Sdn Bhd, a manufacturer of cables and wires with a proposed investment of RM85mil; pipe maker Latenfield Pipe Industries Sdn Bhd (RM40mil); and FMD Polypipes Industry Sdn Bhd, a producer of heavy duty bags and pipes (RM20mil).
Datuk Jebasingam Issace John They would be having joint ventures with foreign companies and were expected to ink some deals today, he said.
“It is still early days yet for KPP,” he said, adding that interest was gaining traction.
Its proximity to the Kertih Integrated Petrochemical Complex (KIPC) and the new Petronas Polymer Technology Centre offered multiple advantages, he said.
The KPP is set to become the country’s first fully integrated plastics hub and the third in the Asian region.
It will be launched by Prime Minister Datuk Seri Abdullah Ahmad Badawi today.
KPP would be an economic cluster supporting the plastics and plastics-related manufacturing activities and offer the opportunity for small and medium enterprises to locate their manufacturing facilities where they would have access to a wide range of plastic resins for raw materials.
“Because KPP is close to the main source of polymer resins, it will provide plastics companies access to reliable and just-in-time feedstock supply, which translates into savings, logistics and warehousing costs,” he said.
A project under the ECER developement master plan, KPP is anticipated to draw investments of some RM2bil and generate jobs for 7,000 people and to have a multiplier effect on employment.
“For every direct job, there is a potential requirement for 2.5 indirect jobs in the form of support and ancillary services,” John said.
The 140ha KPP site is next to the existing KIPC within the Petronas Petroleum Industry Complex. It is also close to the facilities in the Kertih-Chukai-Gebeng petrochemical hub.
“Feedstock can also be sourced from the Gebeng Integrated Petrochemical Complex or imported through Kuantan Port,” he said.
He added that there were well-established supply chain services such as warehousing and logistics services for other imported raw materials and finished products for other markets.
“KPP is adjacent to Kertih Port (for liquid cargoes) and Kertih Terminal (for dry and bulk cargoes) for centralised tankage, and connected to the Kuantan Port via the Kertih-Kuantan railway system,” John said.
KPP is also centrally located between Europe and Asia, making it an ideal plastics hub. The other two regional plastics parks are in India and Abu Dhabi.
“In challenging economic times, many international companies will seek out a lower cost base or attractive incentives. KPP meets these requirements,” John said.
On Petroliam Nasional Bhd’s (Petronas) commitment to KPP, he said Petronas had laid the neccesary foundation and invested RM70bil to build the oil, gas and petrochemical-related facilities.
“It has taken Petronas 35 years to develop Kertih,” he said, adding that KPP was expected to be fully operational by 2015.
http://biz.thestar.com.my/news/story.asp?file=/2008/12/4/business/2712210&sec=business
Thursday December 4, 2008 - The Star
Petronas shuts petrochemical plants
By FINTAN NG and LEE KIAN SEONG
KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) has shut down indefinitely several petrochemical plants in Kertih, Terengganu and Gebeng, Pahang as demand for polymers fell sharply due to a slump in overseas factory orders.
Chairman and chief executive officer Tan Sri Hassan Merican said the materials were used to produce consumer goods and hence would be the first to get hit in a global slump.
“Resins are stocking up at Kertih due to lack of demand. When there’s no market for polymers or resins, there is no point producing,” he said. He did not give a timeframe when production would resume.
He said amongst plants whose production had been halted were those processing polyethylene, which is used in manufacturing plastic packaging, automobile parts and food wrappings.
Asked to comment on reports that Iran had signed gas deals worth US$14bil with Malaysia, Hassan said Petronas was not involved in any gas deal with Iran.
“I’m not aware of it,” he told reporters after the launch of the third International Petroleum Technology Conference yesterday.
Kertih and Gebeng are the sites of integrated petrochemical complexes which Petronas constructed to process various petrochemicals ranging from polyethylene to polypropylene.
Other petrochemicals processed at the two complexes include polyvinyl chloride, aromatics, olefins, ethylene derivatives and ethylene.
According to its website, Petronas has joint ventures with BP Chemicals in a polyethylene plant in Kertih while BASF AG and Petronas are partners in several BPC plants in Gebeng.
BASF, a German chemical company, had shut down 80 plants worldwide following low demand for its products. The company, which operates 12 plants locally under a joint venture with Petronas, has brought forward the scheduled maintenance of six of these plants.
BASF said the scheduled maintenance was being brought forward because of weak demand. “We’re constantly monitoring market conditions and customers’ demands, so it is still too early to provide an accurate timing of the maintenance schedule of all the plants,” it said.
An industry observer said orders had been declining in recent months following the US financial crisis and the credit crunch.
The slump in global demand was also reflected by the sharp decline of the Baltic Dry Index, which is a measure of dry bulk traffic, from a high of 11,689 points on June 5 to 684 points yesterday as factories cut production.
The credit crisis, the bankruptcy of Lehman Brothers Holdings Inc and collapse of over 20 banks in the US had affected US importers who were unable to obtain letters of credit.
This in turn caused a spiral effect whereby factories could not receive payments and were forced to shut down, he said.
“Several of these importers more than likely got their letters of credit from banks that went bust and so will not be able to honour their orders now,” he told StarBiz.
These factories, faced with rising inventory due to a slump in orders, would also not restock the polymers and resins needed for a whole range of products, hence the need to shut down or bring down production at these plants.
“The next few years will be quite bleak. I’ve been in the business since 1972 and never have I heard of plants shutting down indefinitely; there are shutdowns but they are usually temporary,” he said.
However, he added that oil refining at the complexes was not affected by the shutdown despite oil prices having fallen from a high of US$147 in July to US$47 per barrel yesterday.
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