The FID marks a "significant milestone" for PIC, of which the Refinery and Petrochemical Integrated Development (Rapid) is a key component, Petronas said in a statement yesterday.
Rapid, an anchor project of the Economic Transformation Programme, is estimated to cost about US$16bil (RM52.48bil) and its associated facilities, US$11bil (RM36.08bil).
But based on current progress, Petronas acknowledged that the refinery would only be commissioned by early 2019.
“The FID is a critical stage gate in our decision-making process. Petronas undertook a rigorous review of the project, including independent third-party assessments to ensure it meets our criteria for long-term profitable and sustainable growth,” president and group CEO Tan Sri Shamsul Azhar Abbas said.
“This decision is in line with our commitment to capital discipline, and with the board’s approval we look forward to progressing the development of the project as planned.
“We will continue to work closely with the federal and Johor state governments to ensure the project’s smooth implementation.
“In a relatively condensed period of time, we have accomplished a lot of work in establishing an excellent base to move forward with confidence to implement our plans.”
The massive project, located at the southern most tip of the peninsula and just 10km from Singapore’s east coast, is understood to have been held up by land acquisition issues, with Petronas facing opposition from fishermen and local residents.
The party solely responsible for the relocation of villages and some 3,000 Chinese and Muslim graves is the state government.
Petronas would also have to procure a stable supply of raw water by building a new dam and 88km of pipelines.
The state-owned oil firm has twice delayed its FID for Rapid, Malaysia’s largest liquid-based green-field downstream development. Its start-up was originally scheduled for late-2016.
Still, the decision to go ahead means Petronas will not have to wait another decade to ride the next upcycle in the petrochemical industry.
According to Petronas, its partners in PIC will announce their respective FIDs in due course.
French firm Technip SA has been appointed the front-end engineering and design contractor for the complex.
PIC is scheduled to commence construction upon the full hand-over of the project site to Petronas by the Johor state government.
“The project would further strengthen Petronas’ position as a key player in the Asian chemicals market, focusing on key growth areas of differentiated and specialty chemicals and capturing the growing automotive, pharmaceutical and consumer products sectors,” the group said.
Domestically, PIC is expected to contribute towards meeting the growing demands for petroleum products and Euro 4M and Euro 5 specification fuels.
Developed within a 6,242-acre site, PIC is to consist of a 300,000 barrels per day refinery and petrochemical complex with a combined capacity of producing 7.7 million tonnes per annum of various grades of products, including differentiated and specialty chemicals products such as synthetic rubbers and high-grade polymers.
The project will also see the development of a host of associated facilities such as a raw water supply facility, power co-generation plant, liquefied natural gas regasification terminal and other ancillary facilities.
At the peak of its construction, Petronas said PIC will employ a workforce of about 70,000 people with varying skills and disciplines. When operational, PIC will require over 4,000 employees.
PIC forms part of the Pengerang Integrated Petroleum Complex, which is envisioned as the next regional downstream oil and gas industrial hub.