Interview: Mohd Yazid Ja’afar
How is the 2016 national budget enhancing investment in the energy sector?
MOHD YAZID JA’AFAR: The Malaysian government has the vision to create a regional oil storage and petrochemicals hub to enhance the downstream sectors’ contribution to the national economy.
In order to reaffirm the importance of the project, a total of $4.19bn has been allocated by Petronas in 2016 for the development of their Refinery and Petrochemicals Integrated Development (RAPID), located in part of their Pengerang Integrated Complex (PIC) in the Pengerang Integrated Petroleum Complex (PIPC). The PIC will house seven major components: RAPID, an air separation unit, utilities and facilities, Project Air Mentah Rapid, a cogeneration plant, a regasification terminal and a deepwater terminal. RAPID, one of the two catalyst projects, is expected to see growth sustained until it starts operations in 2019.
What infrastructure is needed to make Johor a sustainable, world-class oil and gas hub?
JA’AFAR: The PIPC mega-project spans 20,000 acres and will house oil refineries, naphtha crackers and petrochemical plants, as well as liquefied natural gas import terminals and a regasification plant, upon completion. Therefore, we aim to attract more investments for new refineries, petrochemical plants, as well as companies majoring in downstream products such as plastics and chemicals.
Additionally, we realise that a conducive ecosystem, together with good infrastructure, needs to be developed to support industries More importantly, the most crucial elements are to ensure that there is a sufficient supply of the right talent and construction workers to cater to the development, which will require some 50,000 workers. When fully completed, the PIPC will have a complete portfolio of products, full trading facilities and will be a centre of excellence for downstream oil and gas for the country and region.
What opportunities does Johor’s downstream oil and gas market offer to potential investors?
JA’AFAR: We aim at creating new opportunities for the country’s downstream oil and gas value chain. The PIPC project is one of the biggest contributors to Johor’s approved investments, and it is moving on a steady course. We are the main body to coordinate, facilitate and monitor its development.
In addition, to further strengthen Malaysia’s position as a preferred regional investment destination, the government recently announced the Principal Hub incentive, formulated in tandem with the rising trend of globalisation, offshoring and outsourcing among multinationals. This incentive will complement the increasing trend of global off-shoring activities by encouraging foreign companies to leverage on Malaysia’s position in the ASEAN region.
Malaysia has jumped to the sixth position in the Baseline Profitability Index, sending a clear message that Malaysia provides a friendly business environment that makes it an attractive place to invest. The strategic location of the PIPC, located in Johor at the south-eastern tip of Peninsular Malaysia, offers access to existing major international shipping lanes such as the Middle East, Singapore and China. An important advantage of its location is proximity to Singapore. Malaysia’s refinery hub has to be close to the world’s commodity traders that are largely based there – for example, Platts, an oil and oil products pricing agency, is headquartered in Singapore. In addition, our deepwater infrastructure will enable access to very large crude carriers and ultra-large crude carriers. Furthermore, the economic viability is more feasible in Johor as land costs are significantly lower when compared to across the causeway or other parts of Malaysia.
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