What is Johor’s contribution to Malaysia’s energy sector?
JAAFAR: At the moment, Johor has a very limited contribution to Malaysia as a whole. I believe Johor accounts for only 13% of power generation. Going forward, I believe Johor is a suitable place as far as our geographical location is concerned. We can make full use of this geographical advantage since we do not have natural resources like oil and gas. We have an ideal location on a historical trading route. The increase in trading has created a hot spot where we can locate our fuel parcels. This is a way Johor can play an important role as far as the region is concerned. We can contribute to the whole country.
What energy projects are currently taking place and how much money has been invested?
JAAFAR: We have quite an ambitious project. We are looking at an area of about 85 sq. km. We plan to develop integrated refineries and several petrochemical complexes. This particular facility would have an import terminal for Liquefied Natural Gas (LNG). This will enable us to power our electricity as well. We can also use the raw material for our downstream processes. We are looking at a confirmed investment from PETRONAS of about $20bn into the Refinery and Petrochemical Integrated Development (RAPID) project. We have a key terminal that will act as a gateway to this area of 85 sq. km. This will have a storage capacity of about 5m m3 for petroleum products. The storage terminal project is worth about $3bn. Ultimately, upon completion of this massive project, we are looking at a total investment of close to $50bn – $60bn.
What is the project timetable for the Pengerang Integrated Petroleum Complex (PIPC)?
JAAFAR: The first phase is underway. DIALOG-Vopak is quite advanced in the implementation stage of phase one. It is supposed to be completed in the first half of 2014. In parallel, the Refinery and Petrochemical Integrated Development (RAPID) project has started and they are targeting 2016 as the commission date, and 2017 to start commercial operation. We expect 2017 will be a high demanding year for petrochemicals.
What opportunities are there for foreign investors to become involved in RAPID?
JAAFAR: The area of 85 sq. km. is huge. PETRONAS’ RAPID is a catalytic project for PIPC that we believe will attract other petrochemical investments into the area. We hope we are part of active negotiations in any way during the final stages, to confirm more investments. The size of this project is about $20bn. There are foreign investors as well. Our purpose is to create an ecosystem to support this. It is ideal to have this massive investment, but you need ecosystems that can support development. We welcome foreign investors with expertise to help manage our utility systems. We invite them to help develop Johor as an oil and gas hub.
What geographic areas are you looking towards for collaboration, partnerships, and investment?
JAAFAR: We are very close to Singapore and we cannot ignore them. They have a very established ecosystem. We are quite far behind in terms of supporting industries, such as banking and arbitration centers. This is where we can work together with Singapore. Singapore realizes the size of the cake is growing by about 420,000 barrels a day per year of crude oil from 2010 to 2015. Having partners in close proximity to Singapore is beneficial for both of us. We are working together with Singapore to see how we can turn Singapore and Johor into one large region that will serve the needs of oil and gas in the region. The opening of the ASEAN Economic Community (AEC) represents both opportunities and threats. We see it as an opportunity, because there will be better movement of people and goods. We need people and talent to come over and work on this together.
We are looking at a confirmed investment from PETRONAS of about $20bn into the Refinery and Petrochemical Integrated Development (RAPID) project. We have a key terminal that will act as a gateway to this area of 85 sq. km. This will have a storage capacity of about 5m cubic meters for petroleum products. The storage terminal project is worth about $3bn. Ultimately, upon completion of this massive project, we are looking at a total investment of close to $50bn – $60bn.
What are your projections for future petrochemical production in Johor?
JAAFAR: The focus in Johor is on increasing the value chain of oil and gas. In this case, we are looking at petrochemical products. They will have a direct impact when this project is complete. We will have an LNG import facility that will open up a new market for independent power producers to set up power plants and stations in Johor as well. This project is part of the Economic Transformation Programme. We have limited resources in Malaysia. Eventually they will run out. This is one way to make sure we have better returns. Malaysia currently only extracts, processes, and sells its resources. Now we intend to add value to receive better returns. Malaysia will be able to double its production of petrochemicals by 2020 or 2025. When we developed Pengerang, we looked at a couple of models. We looked at our neighbor Jurong, to see what type of development models they used. We looked at Shanghai Chemicals Industrial Park, Al Jubail, and the Port Rotterdam Authority. I think we gained valuable learning experience on we can draw from this area. We decided to focus on the model of the Port of Rotterdam, along with some of the ideas from Singapore. We are also looking at the triangle of Rotterdam, Amsterdam, and Antwerp. These represent a large market, and they are the gateway to Europe. This is our aspiration with the opening of the ASEAN community. We can be this impetus as far as oil and gas are concerned, along with Singapore.