Pengerang Energy Complex well on track, says CEO

The Pengerang Energy Complex (PEC) is well on its way toward financial closing, according to developer ChemOne Group.

Slated for EPCC commencement in Q1 2023, the US$4.4 billion (approximately SG$6.12 billion) PEC facility aims to be one of the world’s largest and most competitive integrated condensate splitter and aromatics facilities, and will be located within the Malaysia Federal and Johor State Government dedicated Pengerang Integrated Petroleum Complex (PIPC).

Asian Downstream Insights recently sat down with Alwyn Bowden, CEO of Pengerang Energy Complex, to find out more about the project and what can be expected.

To start off, could you tell us a little more about the Pengerang Energy Complex?

We’ve been working on this particular project since 2017, and it’s taken quite a while because there are a number of interesting dimensions to it. The first one is that we have a lot of very interesting partners in this project – partners who are pretty much household names, and they have their own processes and due diligence regimes. So, not only were we doing our own work to make this project happen, we were also assisting these partners in making sure that what we’re doing is the right way to proceed. That’s been quite a time-consuming activity.

The second one, of course, is that we’ve lived through oil prices that have been at floor level, and we’ve lived through prices that have gone to extraordinary heights. We’ve had to struggle through COVID as well.

But none of those things have derailed us whatsoever, and we’ve maintained our focus on this project; What we’re building is an aromatics plant, and our core product is paraxylene, which is one of the core components in the manufacturing of synthetic fibres. So it’s like a natural competitor to cotton, and it’s an industry that’s still growing.

The PEC is being developed by ChemOne Group, which is based in Singapore, and the complex itself will be in Malaysia. How do you think the PEC will contribute to both nations, and perhaps on a more regional level?

The PEC will definitely contribute on a ground-root level, for Malaysia it’s a very simple equation in that it brings in very large amounts of export income to Malaysia, and local employment through construction and then operation of the plant. Beyond that, it’s a potential catalyst for further downstream development, which will bring even more business to Malaysia.

As far as the link between Singapore and Malaysia is concerned, for us, ChemOne is based in Singapore, and Pengerang was selected because its attributes are pretty similar to those that are available in Singapore.

When we first started thinking about this project, we had imagined that all of our core products, the aromatics, would be going into China. But the reality has proven to be different in that demand is coming up in Southeast Asia itself – and it’s very likely now that a reasonably high percentage of our core product will actually go into Southeast Asia.

In the downstream industry, especially in the Southeast Asian region, we see that demand is growing while the industry is still evolving. Recently, we’ve seen the exponential growth in alternative fuels, digitalisation advancements and sustainability – all of which are coming into increasing focus. How is the PEC aimed at addressing and supporting these issues?

There’s no longer any such thing as a simple petrochemicals plant; You have to build with an eye on all of the aspects that you just mentioned, and you have to build with an eye to the future, you can’t just rely on your plants being competitive for the next 10, 20 years.

The question comes down to how you make the best use of all the products that are produced from your plant. We have our core product, which are the aromatics. As a by-product, we also produce fuels that are also highly in demand, and we can contemplate using these fuels in the future for different things. The first one is in renewables, because you have a lot of the base elements that you need. You have feedstock from Malaysia, from Southeast Asia, for a renewable fuels plant. You also have sources of hydrogen, should you choose to use it from our plant itself. And if you look towards sustainable aircraft fuel (SAF), that’s a blend of traditional jet with renewable jet fuel. There is the potential that you could mix jet fuel that is produced as a by-product in our plant with renewable jet fuel that comes from an adjacent HVO plant, and then you’re producing SAF – which is definitely a bridge to another technology in the future which has yet to materialise.

This is a constantly evolving concept that will take place over many years, starting with a plant such as PEC, that is already designed to be the most efficient and cost-effective.

As you’ve mentioned, it’s important for plants to keep an eye on the future. With regard to the refining and petrochemicals industry, where do you think it’s going to go in the next 5-10 years?

Although margins are currently reasonably good in petrochemicals, it’s not always the case. You need to be very careful in how you manage your plant, and you have to be alert to things that may damage your ability to produce well ahead of the event actually happening. There are other global threats that everybody has to think about: Drones have become quite an issue in that there has to be some kind of policy to protect yourself against the misuse of drones. Unless properly protected, the plant is always in danger from some kind of external attack – the risk will always exist, you can’t escape from that fact.

And of course, cybersecurity is a huge factor to look into for the future as well. Digitalisation of all commercial and operational aspects, as well as artificial intelligence, will take on a bigger and bigger role in the future.

Coming back to PEC, we have seen significant progress… Now, with regional markets opening up and demand rising, we hope to gain even further momentum as we gear up to commence construction and look towards entering into production in 2026.