Malaysia’s state-owned Petronas is on track to resume operations at its 300,000 bpd Pengerang refinery in Johor in the first quarter of 2021, the national oil company said last week. The facility has been idle since March due to a fire. Petronas also expects to restart the complex’s atmospheric residue desulphurisation trains in the first quarter. Repairs are still underway at the project’s diesel hydrotreater which is scheduled to come online in the fourth quarter of 2021.
Pengerang refinery is a joint venture between Petronas and Saudi Aramco. Aramco will supply half of the refinery’s feedstock crude oil, with an option to increase it to 70% when the facility is fully operational. The project was initially expected to start up in April 2019 but was delayed due to a fire and explosion in that month. Petronas and Aramco began to bring its crude distillation unit online in August 2019, but progress was pushed back due to another fire.
The restart of Pengerang refinery is expected to add more pressure on the oversupplied east Asian refining industry which is grappling with low demand due to the COVID-19 pandemic, weak margins, and fierce competition from new capacities in China. Analysts estimate more than 500,000 bpd of refining capacity mostly in the Philippines, Australia, and New Zealand, is at the risk of closure.
In the January-September period of 2020, Petronas operated its Malaysian refineries at 82.6% of capacity, falling from 91.5 in the same period in 2019 as COVID-19 hurt demand. Over the same period, operations at its petrochemical plants increased from 92.8% to 94.5%. Petronas’ total upstream output fell 3% year-on-year to 1.62 million boepd during that period despite a 4.5% increase in crude and condensate production.
