Possible delay in start of olefins, MEG, polymers production after fire at Malaysia’s PIC

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— The fire at Malaysian Petronas’ Refinery and Petrochemical Integrated Development, or PRefChem, at the Pengerang Integrated Complex in Johor early Friday is expected to delay the start of production of olefins, polymers and at the plant, market sources told S&P Global Platts.

Petronas said in a statement released early Friday that a fire and a subsequent explosion took place at the complex at 1.25 am local time. The fire was contained within 30 minutes and the situation is under control, the state-owned refiner said. As investigations are being carried out, Petronas did not reveal details as to which units of the plant were affected by the fire.

RAPID had earlier targeted to produce ethylene by April 15, and has been running its cracker since mid-March, according to earlier reports by Platts.

However, market sources said they now anticipate a delay in the production of ethylene and other downstream products.

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The steam cracker at PRefChem is able to produce 1.2 million /year of ethylene, 600,000 /year of propylene and 180,000 /year of butadiene.

A butadiene trader said that Petronas executives had told him previously that PRefchem was targetting to export butadiene in H2 May. “I think it will be delayed now,” he said.

For its downstream operations, its linear low density polyethylene and polypropylene units have been in operation since last week, with the first cargo due to be shipped, a company source said.

“We do not have any idea on the impact, and are waiting for the production report to comment,” the source said.

PRefChem’s polymer facilities consist of a 400,000 mt/year of high density polyethylene unit, 900,000 mt/year polypropylene plant and 350,000 mt/year LLDPE unit, which may be converted to mLLDPE production in the future, other company officials had said previously.

The company’s other plants were running smoothly, according to the source, with plans to shut its 250,000 mt/year low density polyethylene plant in Kertih in August for around 45 days of maintenance, the same company source said.

There are no plans to take its 200,000 mt/year high density/linear low density polyethylene swing plant at the same site for a similar maintenance as of yet, the source added.

The plant is owned by Petlin (Malaysia), a 60%-owned subsidiary of Petronas, while the HDPE/LLDPE plant is owned by Polyethylene Malaysia in which Petronas has a 40% share.

For monoethylene glycol, its downstream 740,000 mt/year MEG unit managed to produce on-specification MEG end-March via imported ethylene. It was currently offline waiting for stable ethylene supply from the cracker unit, S&P Global Platts reported previously.

Two market sources said that they expect the start up of ethylene cracker to be delayed, and in turn, the delay of the MEG unit.

Nevertheless, considering the current MEG supply glut, many trade participants do not expect this fire to provide any significant support to MEG prices.

–Elizabeth Low,elizabeth.low@spglobal.com

–Heng Hui, hui.heng@spglobal.com

–Miranda Zhang, miranda.zhang@spglobal.com

–Edited by Norazlina Juma’at, norazlina.jumaat@spglobal.com

Source: S&P Global Platts