KUALA LUMPUR: Petroliam Nasional Bhd and BASF will undertake a joint feasibility study to produce specialty chemicals in Malaysia and are considering investing RM4.0 billion (€1.0 billion).

The companies said on Monday, Dec 6 they had signed an MoU for the feasibility study, which would extend the two parties' existing business collaboration in the country.

“The partners are considering a potential joint investment sum of approximately RM4.0 billion (€1.0 billion),” they said in a joint statement.

Petronas and BASF would evaluate the viability of jointly owning and operating the facilities to produce specialty chemicals including non-ionic surfactants, methanesulfonic acid, iso-nonanol as well as other C4-based products.

“The final scope of the investments will be determined following the outcome of the joint feasibility study, which is targeted to be completed in 2011,” they said after the signing of the MoU at the Petronas headquarters in Kuala Lumpur.

Petronas was represented by its executive vice president of downstream business Datuk Wan Zulkiflee Wan Ariffin and vice president of downstream operations Kamaruddin Zakaria. BASF SE was represented by Dr Martin Brudermüller, member of the board of executive directors and who is charge of Asia Pacific and the president, Asia Pacific, BASF, Saori Dubourg.

Wan Zulkiflee said the development of a new specialty chemical products portfolio was an important component of Petronas' plan to further grow the downstream petrochemical business.

He added this was part of its integrated plan to be a key player in the region as well as to spur domestic investment in the oil, gas and petrochemical industries.

Brudermüller said BASF was expanding our specialty chemical business. The move to expand its local production base in Malaysia, would enable it to further improve its ability to supply its customers in Asia, from Asia."

According to its Asia Pacific Strategy 2020, BASF intends to produce 70% of Asia Pacific sales in the region, with investments of €2.0 billion between 2009 and 2013.

The companies said the proposed move would build on their successful strategic partnership in the country, established since 1997.

The partnership, via BASF Petronas Chemicals Sdn Bhd (in which BASF has 60% stake) own and operate an integrated complex in Gebeng, Pahang that produces acrylic monomers, oxo products and butanediol.

For the subsequent phase of the collaboration, Petronas Chemicals Group Bhd and BASF would jointly evaluate the outcome of the feasibility study and will adopt it as part of their strategic growth plans, if technically and commercially viable.