PETRONAS TO BUILD RM3 BLN MEGA AMMONIA UREA PLANT IN SIPITANG – RAYMOND TAN

Petronas to build RM3 bln mega ammonia urea plant in Sipitang – Raymond Tan

9th March, 2011 KOTA KINABALU: Petronas will be investing RM3 billion to build a mega ammonia urea plant in Sipitang.

Industrial Development Minister Datuk Raymond Tan said the plant is expected to be ready by 2013 in time for the gas from the northern field (block J) of Sabah to be channel to Bintulu via Sipitang in 2013-14.

“This is their first urea plant in this region and as an anchor industry, they will need about 70-80 million scf of gas to power the plant,” he said at the Ministry of Industrial Development (MID) annual media conference 2011 at a hotel here yesterday.

He said the Sabah Oil and Gas Terminal (SOGT) in Kimanis will be getting 750 million scf of gas from the north field and it will be piped to Sipitang before it is diverted to Bintulu.

On the Kota Kinabalu Industrial Park, (KKIP) which had been established for the past 15 years with over 70 percent already developed, Raymond said the remaining 30 percent of the development will be focused on the bio-technology, wood and rubber-based industry which is contained in the Economic Transformation Programme (ETP).

“And since Sabah is the biggest producer in the oil palm industry in Malaysia with 1.4 million hectares of oil palm, producing 6.5 million tonnes of crude palm oil (CPO) and 1 million tonnes of palm kernel oil, we have 30 million tonnes of valuable palm oil biomass which is actually a waste product that had been thrown away from the mills in Sabah that are operated by some 127 operators now,” he said.

But what have come about in the new area of development is that those waste that were discarded are valuable today, because from the biomass we can produce fertilizers, another line of downstream activity, he said.

He said there are now five to six players that have set up their plants to produce fertilizers at the POIC Lahad Datu.

And the challenge now is how much biomass or the empty fruit bunch that we can get to supply to the plants and POIC Lahad Datu has taken the initiative to buy the waste product to keep it as stock so as to encourage the downstream activity.

Overall, he said the challenges confronting the economy in 2010 are expected to persist through 2011.

He noted that the declining investment in the manufacturing sector in Sabah could be due to several factors, one of them being the dampened world economic growth and trade. Another is the increasing competition from the new emerging regional economies such as Vietnam.

A survey by UNCTAD’s World Investment Prospects indicates renewed business optimism and stronger appetite of investors to pursue expansion in 2011 and 2012. Given the scenario, global FDIinflows into our country are expected to further increase in 2011 and beyond.

To position Sabah as a desired destination for investment, Raymond said his ministry will continue with its efforts to attract investors in targeted industries such as downstream processing of palm oil, processing of oil palm/palm oil biomass and in the medium term, the processing of oil and gas as well as the service sector.

The task ahead is very challenging, and therefore the coordinated effort of all ministries, departments and the agencies in Sabah is necessary if Sabah is to maintain its competitiveness and to continue to receive high levels of foreign and domestic investment, he said.