OSK buys Melbourne property for AUD 145 Million, promises gardens in the sky,and gets EPF to pay AUD 154 Million for 49% in a market that is expected to collapse

by Ganesh Sahathevan 

The provident fund is paying A$154mil for a 49% stake in Yarra Park City Pty Ltd (YPC), which holds the rights to a five-acre mixed-use development worth over RM9bil in Melbourne. The remaining 51% interest in YPC is held by PJ Development Holdings Bhd (PJD), which is a subsidiary of OSK. The Melbourne project also marked the fund’s second development venture overseas after the Battersea project in London. (Picture shows: Ong Leong Huat (second from left) exchanging documents with Shahril. With them are OSK deputy group managing director Ong Ju Yan and EPF head of private markets department Rohaya Mohammad Yusof.)

The AFR reported in February this year:

Malaysia's OSK Property has won approval for the first stage of a $2.8 billion mixed-use project in Melbourne's Southbank, one of the largest single development proposals ever put to the state's planning authorities.

To be known as Melbourne Square, the project will transform a city-fringe block into a vertical village with six towers linked by a network of elevated gardens.

Then known as PJ Development, the Malaysian developer paid a record $145 million to acquire the city fringe site in June 2014 from interests associated with the Mario LoGiudice's Banco Group.

Today ,Thursday, 6 April 2017 The Star reported:

The Employees Provident Fund  is paying A$154mil for a 49% stake in Yarra Park City Pty Ltd (YPC), which holds the rights to a five-acre mixed-use development worth over RM9bil in Melbourne.
The remaining 51% interest in YPC is held by PJ Development Holdings Bhd (PJD), which is a subsidiary of OSK.

“The disposal and YPC subscription are expected to increase the net earnings of the OSK group by A$38.2mil (RM129mil) and a foreign-exchange gain on the total investment in YPC of RM49.2mil, which was previously recorded as foreign-exchange reserve; or a total increase of 12.86 sen per share for the financial year ending Dec 31, 2017,” said OSK.

In essence OSK;s PJD makes a profit of AUD 38.2 million ((RM129mil)  upfront, enjoys a forex gain of RM 49.2 million, and gets the EPF to pay for the entire purchase cost, while still controlling the development company.

As for the AUD 2.8 Billion Gross Development Value (GDV)?Recall that it does not mean anything to the EPF until and unless the project makes a profit, and that profit is paid over to the EPF in dividends. 

To make matters worse, unlike 2014 when Ong Leong Huat bought the property, the market today is fragile.

END 

See also

Aussie Banks: Property Bubble Fears Raise Alarm
Barron's-4 Apr. 2017

Thursday, 6 April 2017
EPF buys stake in OSK’s Aussie project



BY EUGENE MAHALINGAM

 

 PETALING JAYA: The Employees Provident Fund (EPF) is making a new investment in properties overseas after a year-long hiatus, this time by taking a significant stake in a Malaysian-owned development project in Australia.

The provident fund is paying A$154mil for a 49% stake in Yarra Park City Pty Ltd (YPC), which holds the rights to a five-acre mixed-use development worth over RM9bil in Melbourne.

The remaining 51% interest in YPC is held by PJ Development Holdings Bhd (PJD), which is a subsidiary of OSK.

The Melbourne project also marked the fund’s second development venture overseas after the Battersea project in London.

In a statement, EPF chief executive officer (CEO) Datuk Shahril Ridza Ridzuan said the Melbourne Square project met EPF’s long-term objectives and would be a good addition to its overseas portfolio.

“The increasing demand for residential property in Melbourne will enable the EPF to generate returns for its members,” he pointed out.

In the statement, OSK said the Melbourne Square development would transform a former carpark bounded by the Westgate Freeway and Kavanagh, Balston and Power Streets in Southbank into a dynamic mixed-use community and retail centre, with an expected gross development value (GDV) of A$2.8bil (RM9.4bil).

OSK CEO and group managing director Tan Sri Ong Leong Huat said the Melbourne Square project was one of the last sizeable prime land available for an iconic development in the city.

“We are delighted to partner the EPF on this exciting project,” he said.

“The project will mark OSK’s maiden foray into Melbourne, whose growing population and vibrant property market have received much interest from international developers in recent years, including several established Malaysian developers,” he pointed out.

The project comprises four towers of residential apartments, an office tower, a hotel/serviced apartment tower and multiple street-level retail lots across the various components.

It will be developed in five stages over eight to 10 years.

Slated for residential use, the towers have a capacity of over 1,000 apartments, with a GDV of over A$900mil.

In a filing with Bursa Malaysia, OSK said its unit PJD had entered into a share sale agreement with the EPF to dispose of its entire stake in Yarra Development Holdings (Australia) Sdn Bhd (Yarra Holdings), which is a wholly-owned subsidiary of PJD.

Subsequently, OSK said its indirect subsidiary, Yarra Australia Development Pty Ltd, had entered into a share subscription agreement with YPC to subscribe to 110.49 million shares or 49% of the entire enlarged paid-up share capital of YPC.

“The disposal and YPC subscription are expected to increase the net earnings of the OSK group by A$38.2mil (RM129mil) and a foreign-exchange gain on the total investment in YPC of RM49.2mil, which was previously recorded as foreign-exchange reserve; or a total increase of 12.86 sen per share for the financial year ending Dec 31, 2017,” said OSK.

It said Yarra Holdings had applied for a credit facility of up to A$175mil from CIMB Bank Bhd, OCBC Bank (M) Bhd and RHB Bank Bhd. YPC has appointed a list of top-tier consultants for the project, including Cox Architects to design the master plan and Stage One of the project, Carr Design for interior design services, Sinclair Brook for project management and CBRE as the sales agent for Stage One, which has just been launched this month.

Feb 23 2017 at 12:15 AM

Updated Feb 23 2017 at 12:15 AM

Malaysia's OSK gets OK for massive 

Melbourne projecte via Email

The first stage of Malaysian developer OSK's Melbourne Square project. FloodSlicer Pty Ltd

• 
  

by Nick Lenaghan

Malaysia's OSK Property has won approval for the first stage of a $2.8 billion mixed-use project in Melbourne's Southbank, one of the largest single development proposals ever put to the state's planning authorities. 

To be known as Melbourne Square, the project will transform a city-fringe block into a vertical village with six towers linked by a network of elevated gardens.

Designed by Cox Architecture, almost a fifth of the huge site will be devoted to public realm with a park, a shopping centre, childcare facility, and specialty stores.

The overall proposal is to build the six towers, ranging in height from 30 levels to 65 levels with the tallest 226 metres, on a two-hectare car-park site at 93-119 Kavanagh Street.

It includes 60,000 square metres of office space, a hotel and serviced apartment tower with 687 rooms and four apartment towers with 2610 apartments, and a childcare centre.

The first stage now approved will comprise the park as well as two upmarket towers with more than 1000 apartments. Pre-sales for the apartments are due to get under way this year.

Key destination

"It is our hope that Melbourne Square will be an important destination within the world's most liveable city," said OSK's chairman, Tan Sri Ong Leong Huat, in a statement.

Cox Architecture worked with landscape architects Rush Wright Associates for the masterplan and Taylor Cullity Lethlean for the first stage. 

"A deliberate decision was made to significantly exceed the open space area requirements," said Cox director Ian Sutter.

Then known as PJ Development, the Malaysian developer paid a record $145 million to acquire the city fringe site in June 2014 from interests associated with the Mario LoGiudice's Banco Group.

The company is controlled by one of Malaysia's richest men, Ong Leong Huat. In December 2015, PJ Development paid $27.8 million to Quintessential Equity for a suburban Sydney office building.

Melbourne is popular with Malaysian developers, such as SP Setia which has five Australian sites and last year lodged plans for a $640 million twin tower project in central Melbourne.

Giant Malaysian sovereign developer UEM Sunrise has a substantial pipeline as well, including the $770 million, 92-storey Aurora Melbourne Central residential tower.

ANZ's same sex marriage campaign on a collision course with its Islamic credentials, and with its biggest private banking client Najib Razak's 1MDB theft

by Ganesh Sahathevan






From the ANZ website

Islamic Finance

ANZ has been involved in Islamic finance since the early 1980s. When banking in Pakistan was converted to a non-interest based Islamic system, ANZ played a leading role in the transition and was heavily involved in the development of the Islamic finance documentation utilised by all the banks. In 1987, ANZ successfully launched "First Grindlays Modaraba", an Islamic leasing company in Pakistan. This listed entity attracted substantial investments from the Middle East and Europe, and quickly established itself as one of the most successful lessors in Pakistan. ANZ was the first large conventional bank to establish a wholly Islamic entity within its group.

ANZ's Global Islamic Finance unit was established in London in 1989 to undertake cross-border Islamic financing. Since its inception, the team has arranged and structured transactions well in excess of US$2 billion. We have an established reputation in arranging and structuring Islamic financing and has developed an expertise in structuring transactions according to Islamic financier's Sharia (Islamic law) requirements.



From a 2011 newspaper report:

Malaysian Islamic connection for ANZ bank
MALAYSIA'S rapidly growing AmBank Group, almost 24 per cent owned by ANZ, plans to exploit the global connections of its major investor for its next phase of growth.
ANZ has invested almost $900 million in the mid-tier Malaysian bank, its single largest investment in Asia.
Ashok Ramamurthy, AmBank's deputy group managing director and chief financial officer, said the first six months were "tough" but the relationship was now going well. "We've demonstrated we can deliver," he said.
Mr Ramamurthy said AmBank was being positioned to be "Malaysia's preferred banking group with international connectivity", as it linked into the ANZ global network to tap into cross-border financing.
He said AmBank was one of the most active in Islamic banking, which had been growing at around 20 per cent annually in recent years. It was one of the top three issuers of Islam Shariah bonds, and also operated a 20bn ringgit Islamic fund. Islamic banking, albeit from a low base, had grown four times faster than conventional banking.
AmBank was well positioned to provide a bridge for ANZ into the fast-growing Islamic banking world, Mr Ramamurthy said.



From a more recent report, where AMBank/ANZ's Islamic banking services gained prominence:

Malaysians now know that Prime Minister Datuk Seri Najib Razak had two bank accounts at AmIslamic Bank, confirmed by the special government task force probing into The Wall Street Journal’s allegations that some US$700 million (RM2.67 billion) was channelled into these personal accounts.




Recalling that Najib has consequently claimed that the money was really a donation from King Abdullah to further the Islamic faith, it is hard to see how ANZ is going to explain this to someone who is probably its largest  private Islamic banking client,,who also happens to be the Minister for Finance Malaysia,who oversees their operations in that country:


The hypocrisy of the marriage equality “acceptance” ring is unbelievable. (Pic: Supplied)

Sixteen companies, including Qantas, Google, ANZ, Fairfax Media, Foxtel, eBay, and ARN, have signed on to the Airbnb “Until We All belong” campaign, designed to build pressure on Federal MPs to push a vote through parliament, rather than keeping an election promise to hold a plebiscite.

END

• 
  

Tan Sri has in fact become tandas-What Tunku tried to avoid has come to pass .......

by Ganesh Sahathevan

I am sure others are aware of this story:

HOW THE TAN SRI TITLE WAS CREATED




From the last paragraph above:

Tan Sri Khir used to narrate a few of his favourite stories, among which is one relating to the Cabinet decision to introduce new honorific titles at the Federal level. “During those early days of independence, Dato’ was the highest title awarded by both the Federal and state governments. Tunku thought that the awards by the Federal government should be styled differently. I intimated to my Cabinet colleagues that in ancient Malacca and Perak, the highest title accorded to citizens was the title “Tun” followed by the title “Tan”. Every one of my colleagues was supportive of my suggestion to use these as Federal titles, until Tunku said, “Now supposing the government had to confer the title of Tan to an Indian and his name is Das. What will happen? Can you imagine? Tan Das similar in pronunciation to “tandas” which in Malay means toilet] would become a laughing stock wherever he goes.” Hence it was Tunku who proposed that the title “Tan” which I had suggested be changed to “Tan Sri” instead.”

And now  it seems despite the Tunku's best efforts, the title has in fact more in common with the tandas:

........, Sultan Ibrahim Ibni Almarhum Sultan Iskandar ( has written) on his official Facebook page that he was offered RM2mil to suggest the person's name to the Chief Secretary to the Government for a "Tan Sri" title. Sources said the Sultan of Johor was “offended and insulted” by the individual.
The sources said the individual himself was obsessed with titles as “he calls himself Tan Sri Datuk Dr”.
It is understood that the MACC will investigate accusations that the individual was a “broker” for royal titles and also probe the source of his income.

The royals have only themselves to blame. See celebrity photographer Kee Tuan Chee again performing sterling service in capturing  the liefestyles of Malaysia's rich and famous,as reported by Malaysia Chronicle.

TAN SRI JASON GOH HOSTED HISTORIC CHINESE NEW YEAR DINNER FOR REIGNING KING, FORMER KING, REIGNING QUEEN AND 2 FORMER QUEENS – KEE@FSWMAG.COM

ON 29 JANUARY 2012 WHICH ALSO HAPPENED TO BE ‘EVERYBODY’S BIRTHDAY’ AS IT WAS THE 7TH DAY OF CHINESE NEW YEAR, TYCOON TAN SRI DATUK WIRA DR JASON GOH TECK CHAI HOSTED A HISTORIC CHINESE NEW YEAR THAT HAS ENTERED HISTORY.NEVER BEFORE HAD A CHINESE NEW YEAR PARTY HOSTED BY A PRIVATE INDIVIDUAL BEEN GRACED BY BOTH REIGNING KING AND FORMER KING OF MALAYSIA!

END 

Three separate studies confirm 1MDB loss is aprroximately USD 20 Billion -Evidence of Najib ,Rosmah managing 1MDB also grows

by Ganesh Sahathevan

This writer recently showed that the  1MDB loss may be closer to USD 20 billion.

Consequently blogger Donplaypuks has reported, using a different method and data, that 1MDB borrowed and lost some RM 85 to RM 95 Billion, or approximately USD 19 to 21 Billion (see  full story below).

In addition the C4 group and journalist-analyst P.Gunasegaram have estimated ,again using a method different to and independent of this writer and the blogger Donplaypuks, that 1MDB's accumulated losses totalled RM  39 Billion , and had as well RM 39.8 Billion in outstanding debt. Given that 1MDb and the Malaysian Government have effectively defaulted on that outstanding debt,the total loss is approximately RM 80 Billion.

We have therefore a classic case of triangulation , where three separate sources of data and methods of investigation yield essentially the same result. We have now very strong evidence that the amount lost,essentially stolen, from the various 1MDB schemes is somewhere near USD 20 Billion , or RM 8-90 Billion.This conformation also adds to the evidence that PM Najib and wife Rosmah managed 1MDB on their own, as some kind of family and friends fund.
END

31/03/2017

RM95 BILLION 1MDB DEBTS! WTF IS NAJIB LYING ABOUT DEBTS SETTLED?

NB.

1. 1MDB'S accounts for the years ended 31st March 2015 and 2016 have yet to be prepared and audited. The MoF has not commented on having the 2013 and 2014 accounts re-audited. No action has been taken by CCM (Companies Commission of Malaysia) to fine 1MDB or its top officers for the pathetic  failure to comply with the law!

2. Of the funds raised in the US, RM15 billion disappeared into Najib, Jho Low and their cronies pockets! More is missing too from funds raised in Malaysia! CLICK HERE.

Based on 1MDB's 31st March 2014 Detoilette audited accounts, it had a total of RM46 billion in borrowings and creditors. (Detoilette because auditors Deloitte announced in 2016 that their 2013 AND 2014 audited accounts could not be relied upon, and then resigned! The details are as follows:

Bank Loans, Bonds, Sukuk, overdraft etc. - RM42billion

Derivative Debt, Trade and Other Creditors - RM4 billion.

Yesterday, Najib "cleverly" announced that about RM10 billion of 1MDB's short tem debts had been repaid. He deliberately failed to say how much more was outstanding. Or, how these were going to be repaid, given it had sold its IPPs and Bandar Malaysia land. He also did not produce an unaudited 1MDB balance sheet to show us its current financial position.

Also, part of the RM10 billion was used to pay debts incurred by 1MDB AFTER 2014 e.g. RM950 million MoF standby credit!

Since 2014, 1MDB has had to service interest on its $42 billion borrowings at an average of say, about 5% per year. It had also defaulted on some loan interest as well as capital repayments. Tycoon Ananada Krishnan was instrumental in re-financing some RM4 billion of 1MDB's loans in 2015!

More than that, the US$ has ballooned to about 4.40 against the ringgit, adding some RM10 billion to 1MDB's debts, due to exchange rate losses.

Another headache is the US$6.5 billion that IPIC of Abu Dhabi has sued 1MDB for interest and loan repayment guarantees. This is the subject of an arbitration case being heard in London.

Based on the above table, 1MDB had about RM95 billion in debts, which after yesterdays announcement, is reduced to RM85 billion.

So, over to Najib:

1. How is this RM85 billion going to be repaid?

2. Which are the projects Najib is going to inflate to illegally cover-up 1MDB's losses? ECRL? Pan Borneo Expressway? KL-Singapore HSL? Rapid JB?

3. Who should go to jail for it all? Surely, Najib first?

4. Why has the IGP/AG failed after 1 year to charge ex-1MDB CEO Sharol Halimi for fraud, theft etc., despite a PAC report demanding it? What about Ismee, Chairman Lodin Wok, Arul Kanda, Mof Chief Secretary Dr. Irwan Serigar Abdullah and Chief Secretary to the Government Dr.Ali Hamsa?

Bamboo River Resort is soon going to be very, very over-crowded!

Sultan of Johor's assertions about Forest City adds to confusion about status of strata tiles, confirms LKY's warning that investment in Iskandar is risky business

Johor's Sultan Ibrahim Iskandar has likened Johoreans who
believe "lies" peddled on the Forest City development in
Pasir Gudang, to individuals who committed treason.
(Source:Malaysiakini)

by Ganesh Sahathevan

In 2013 the late Lee Kuan Yew of Singapore warned:

"This is an economic field of co-operation in which, you must remember, we are putting investments on Malaysian soil," Lee said. "And at the stroke of a pen they can take it over."

That warning is hard to dismiss , especially now when the Sultan Of Johor himself ,technically the sovereign in perpetuity of all of Johor, makes statements such as this:

“The freehold is actually the strata, not for the land. The company owns the freehold land, not the buyers,” he said.

And that after Sekijang MP Anuar Manap said this:
"Yes it is a freehold title but it's not for the land, but for the strata. Not an inch of of Johor land is given out as freehold in this case,"



And the developer Forest City said this:

Asset Protection
freehold property for generations
commonwealth legal system, property rights with high level of privacy protection
no economic environment constraints, preserve the value of the asset.

END 

More on the Petronas-Aramco JV: Unlike Petronas, Petrochina offered stake in Aramco IPO, and in talks to provide EOR services

Comment 


Petrochina has been offered a slice of the Aramco IPO ,and is in talks to provide enhanced oil recovery services to Aramco. Petronas has not said anything about being offered a stake in the listed Aramco, nor has it said anything about providing its EOR services to Aramco.
Both are potential money spinners, so why then is Petronas not part of these.

END



PetroChina latest China oil major to consider Aramco listing

PetroChina (601857.SS) (0857.HK) will consider taking part in national oil giant Saudi Aramco's initial public offering based on market conditions, it said on Thursday, the second Chinese oil major to discuss becoming an investor this week.

"Saudi Aramco has raised this plan to PetroChina," president and vice-chairman Wang Dongjin said on Thursday at a briefing following the announcement of China's largest oil and gas producer's 2016 results.

"I think we will make our evaluation and study based on the market situation," Wang said.

On Monday, Sinopec Corp (600028.SS) said the Aramco president had visited the firm and both sides would have talks on the IPO, which is expected to be the world's largest equity sale.

Wang said PetroChina was also in talks with Aramco on its Yunnan Petrochemical plant and about the possibility of supplying its enhanced oil recovery technology to Saudi oil fields.

"We are also having discussions on the joint venture Yunnan Petrochemical. We are making very active progress," he said.


Sources told Reuters in 2015 that Aramco was looking to invest $1-1.5 billion in its new refinery in the country's southwest. [nL3N1H13NV ]

The company expects oil prices to range between $50-58 per barrel this year, recovering from the multi-year lows hit early in 2016.







(Reporting by Gabriel Yiu and Raffaele Huang; Writing by Josephine Mason; Editing by Tom Hogue and Susan Thomas)

Petronas' Arif Mahmood's "nothing like Pengerang in this region " comment suggests a desperate attempt to justify excessive costs.

by Ganesh Sahathevan





The matter of Petronas executive VP Md Arif Mahmood (photo above)  defence of the RAPID project has been previously explored in the article:

RAPID refinery " needs a specific type of crude oil "-Petronas executive VP Md Arif Mahmood explains why RAPID refinery will not be as advanced as public were led to believe

Readers will note from the comments to the above article that there has been an attempt to deny that Arif ever uttered those word.To quote one " Nadia"  this writer is  "putting words in others' mouths..... And saying things that they did not say?

Be that as it may, Arif said even more.To the question put to him by Malay Mail Online:

There have been people saying the top management of Petronas was actually unwilling to do this joint venture?

I don’t know how they report this but I think information has to come from credible sources.

Here readers can see for themselves  precisely whose credibility it is that Arif questions, in the linked references from The Star,quoted in  this writer's article titled 

PETRONAS CEO Wan Zulkiflee May Be Sacked, And An EPF Bail Out Of RAPID Likely The Implications Of PM Najib's Claims Of Economic Sabotage.

Having said that, Arif is on a roll, and one must not stop him. He has also said :

If you look at this region, nothing comes close to the Pengerang project. If anything, you will hear about the expansion of refineries, or they may or may not come onstream. This is as real as it can be.

At this point, the level of hyperbole, which one would not expect from a national oil company, becomes too much to bear and readers are simply referred to these projects in Singapore.

On the matter of feedstock, given that the RAPID refinery " needs a specific type of crude oil ":

Feedstock flexibility key from ExxonMobil in Singapore

On the matter of storage,and thus access to feedstock:

The Jurong Rock Caverns, being built 150 metres underneath petrochemical hub Jurong Island, will be taller than a nine-storey building and store almost 1.5 million cubic metres of oil -- the capacity of 600 Olympic swimming pools.

The real question here is this:Why the over the top attempt to justify Pengerang and RAPID? Is the real issue here cost over-runs, that now need to be justified?

END 

Money

Nothing in this region comes close to Pengerang

BY WONG SAI WAN AND KAZI MAHMOOD
MARCH 27, 2017

‘We need crude, and we were looking for partners who can actually secure us supply of crude,’ Arif said. — Picture by Ahmad ZamzahuriKUALA LUMPUR, March 27 — In an interview with the Malay Mail recently, Petronas downstream chief executive officer and group executive vice president Md Arif Mahmood elaborated further on the Aramco deal in the Refinery and Petrochemical Integrated Development (RAPID) project and explained why the company was not forced to enter the deal with Aramco as well as the need for Petronas to look into regional demands for oil and gas.

With the recent signing of the agreement with Aramco, how are things going at RAPID?

Just to be clear, RAPID is just a part of the whole Pengerang project. The whole complex today has progressed by 60 per cent and we are doing well. The Aramco deal is actually a share purchase agreement of 50 per cent of RAPID, which means they have signed up to be our partner in this project.

At this stage, it revolves around the refinery and the cracker.

When you say RAPID, what do you mean?

The refinery, the cracker and petrochemicals. After that, we have the regassing facilities, power plant and a lot more.

Is the project 60 per cent complete?

So far the progress has been good, and it is progressing as planned.

When will it be completed?

We are still on track, and the plan is to get it operational by 2019.

Would RAPID be refining only Aramco crude following this deal?

Since the partnership is 50-50, and with this, Aramco will supply at least 50 per cent of the 300,000 barrels of crude oil to be refined at RAPID.

What will be the use of the fuel refined at RAPID?

The intent is to predominantly supply the domestic market but eventually, it will be for regional distribution.

Why Aramco? No one has asked this question.

Actually, looking for partners for such a project is a given thing. Both partners are leveraging their strengths and managing risks at the same time. Not many people are aware of this — the discussions between Petronas and Aramco have been ongoing for some time.

Actually, they had a look at this venture beginning in 2014. At that time, we had just cleared the site, and they were then keen on both the project and on the country itself — that is the stability of Malaysia. The discussions with the Saudis took more than two-and-a-half years.

They looked at the due diligence on the investment opportunities. It is not like it was only yesterday when we decided to partner Aramco.

But if you look at ‘Why Aramco’?: It is the biggest crude supplier in the world, with 10 million barrels a day. This refinery needs a specific type of crude oil that will allow us to make the necessary cut to supply to the petrochemical plant.

To have a crude supplier as a partner, for long-term crude security, that itself is a good reason for Aramco.

Was it Petronas looking for Aramco or Aramco looking for Petronas?

You see, it was a mutual thing. We need crude, and we were looking for partners who can actually secure for us supply of crude. They need partners who will help them extend their downstream business, especially in Asia Pacific.

If you look at this region, nothing comes close to the Pengerang project. If anything, you will hear about the expansion of refineries, or they may or may not come onstream. This is as real as it can be. Then on top of that, you see, Aramco has done this kind of integrated complex many times already with their partners.

Of course this was mainly in Saudi Arabia, not outside of the country. That experience they have is also beneficial to us. With their interest in growing their own downstream business, they wanted to see that here too, and I think this is the perfect match in that sense.

A lot of people think it is an overnight thing, but it is not since it is something we have been discussing for quite an extended period. I presume there are no changes to plans and design of the project even with the entry of Aramco?

Because you see, although it is a greenfield project, the project is already progressing well so you do not make changes when it is ongoing. But they have provided inputs to us from their experience on what is it that we should be doing in order to enhance the project further.

This was even before the deal was signed?

Even before that. We discussed this. Like in any venture, we have the technical, commercial as well as crude supply teams in discussion.

People are asking whether you are forced to do this venture?

No. How can we be forced to do this deal? We were looking for a partner that would complement the project and that is the obvious criteria when you are looking for partners.

There have been people saying the top management of Petronas was actually unwilling to do this joint venture?

I don’t know how they report this but I think information has to come from credible sources. I think we can always speculate about a lot of things. Things like, for example, why are we selling this? We are not selling this.

We are looking for partners to invest and co-invest. And selling and co-investing are very different. And then they say top management are forced into this JV. This is going to be a long-term marriage; we are not going to be forced into this.

I am going to make this very clear. It had to be with agreeable terms, not only for us but also for Aramco before we could actually get to the stage where we are now.

Copyright © 2017 | Malay Mail Online

References

Market outlook: Feedstock flexibility key from ExxonMobil in Singapore

31 January 2014 10:01 Source:ICIS Chemical Business

ExxonMobil is using innovative technology in Singapore to enable it to crack crude oil and other streams

ExxonMobil says as many as 50 refinery streams move backwards and forwards between its expanded cracker and refinery in Singapore. The company has pushed the envelope on steam cracking still further to crack crude oil and eliminate the reliance on expansive naphtha or other costly liquid feedstocks.

ExxonMobil’s advances open new Asian markets Copyright: Exxon Mobil

More than 40 new proprietary technologies are being employed in the company’s Singapore petrochemical complex at the heart of which is a new 1m tonne/year steam cracker started up last year. The production complex expansion was inaugurated on Wednesday 8 January by Singapore Prime Minister Lee Hsien Loong.

ExxonMobil built the world’s first steam cracker in the US in the 1940s and has been developing its own steam cracking technology since.

The current head of the energy giant’s chemicals business, Stephen Pryor, says the new Singapore cracker can process an unprecedented range of feedstocks, from light gases to heavy liquids.

“In fact, it is the first steam cracker that can use crude oil as a feedstock,” he said. “It is ExxonMobil’s biggest advance in steam cracking since we invented the process some 70 years ago.”

That degree of flexibility, and the product streams that will be available from the plant, are helping the company target a wider range of growing markets in East Asia. “ExxonMobil views the Singapore complex as a platform for future growth,” according to Pryor.

ADDITIONAL DERIVATIVESAlongside products it has made historically, the company has looked at what additional derivatives it might want to produce. There are plans to make halobutyl rubber from the C4 streams from the cracker and tackifying resins from C5s.

The complex includes a 300,000 tonne/year specialty elastomers plant and Singapore will become ExxonMobil’s global supply point for these products.

The company believes ethylene is heading for oversupply in Asia and has voiced concerns about lengthening derivatives markets, particularly as new capacities come on-stream in the US based on shale gas and in China based on coal.

“Asia remains at the bottom of the cycle. We’ll be in a challenging environment for a while and the extent to which the shale phenomenon [in the US] will add to that challenge – that’s a fact of life too,” Pryor said.

Its push into specialties and the broadened cracker feedstock capability would be hedges against a more challenging period for the industry.

UPBEAT ABOUT THE LONG TERMExxonMobil is convinced, however, that the long-term fundamentals for the chemicals business remain strong. Regional demand for its metallocene polyethylenes (PE), for instance, is expected to grow 1.5 to 2.0 points higher than GDP.

Global chemicals demand is expected to grow by 50% over the next decade with two thirds of that growth in Asia-Pacific.

The innovations that have been the driving force behind the capacity expansions in Singapore show what can and has to be achieved by petrochemical producers if they want to remain competitive.

The shale revolution in the US has been a huge driving force for change in the sector, prompting a wave of capacity expansions and new project announcements.

But Pryor has talked before about the game-changing nature of shale and put the rush to add new shale-gas based petrochemicals capacity into perspective.

“The idea that the shale feedstock advantage will always be so large overlooks the dynamic nature of energy and chemical markets,” he said at the Gulf petrochemical Association annual meeting in Dubai in November.

“Shale technology has given our industry a tremendous new source of energy and feedstock. But shale is not our industry’s first game-changer and it won’t be the last,” he added.

Major petrochemical companies will always play to their advantages, but those advantages shift position and change over time.

ExxonMobil was not prepared to jump on the shale gas to chemicals bandwagon too soon but has plans to add 1.5m tonnes of ethylene capacity in Baytown coupled to two 650,000 tonne/year PE plants in nearby Mont Belvieu.

The addition of light feedstock cracking capacity in the US, however, is really only layered on the company’s multi-feedstock approach.

“The idea that the shale feedstock advantage will always be so large overlooks the dynamic nature of energy and chemical markets,” Pryor said at the GPCA meeting.

“For chemical companies to maintain a competitive advantage in this ever-changing environment, we must continuously innovate across the value chain – from our raw materials to our finished consumer products.”

By Nigel Davis