The Business Year

Lee Dong Woo

President & CEO, Lotte Chemical Titan (LCT)

Sven Crone

Managing Director, BASF PETRONAS Chemicals

With a huge downstream effect on the country's industrial landscape, Malaysia's leading chemicals producers are starting to supply the entire region.

How have you helped contribute to Malaysia’s petrochemical industry?

LEE DONG WOO We are an olefin and polyolefin producer, and our key products, such as butadiene, benzene, toluene, polyethylene, and polypropylene, are common raw materials that are used to produce a variety of day-to-day items, from plastic containers, packaging, and medical equipment to shoes, car tires, and automobiles materials. In 2018, the petrochemical market in Malaysia was valued at about MYR30 billion. With its massive industrial applications, petrochemical products also have a spillover contribution to the overall downstream manufacturing industries and consumer end-products, with a contribution in excess of MYR300 billion to the Malaysian economy, which translates to roughly a quarter of its GDP. This is also illustrative of the contribution of LCT toward the continuous development of the petrochemical market and manufacturing industries. LCT relies on its skilled workforce to support its large-scale petrochemical operations in Malaysia. The company employs over 1,100 employees here, from engineers and technicians to various other support functions. LCT also emphasizes constant development and provides regular trainings and skill development courses to groom its employees and ensure they are equipped with the latest skillset required by the industry. At the same time, we also provide various internship opportunities to undergraduates from all over the country who seek to pursue a career in the petrochemical sector.

SVEN CRONE BASF PETRONAS Chemicals has been around for over 20 years, and its industrial growth and partnership with Malaysia can be divided into two phases. The initial scope of the business consisted of three basic petrochemical complexes with an initial investment of MYR3.4 billion. In the last five years, a second phase of MYR1.5 billion has been invested into new complexes, infrastructure, strengthening the existing site, and preparing for future growth to bring new and sustainable technologies and products benefiting the chemical industry to Malaysia. We have also always invested in human capital, creating abundant job opportunities. We continuously qualify and train our people, especially in new technologies such as digitalization. BASF PETRONAS Chemicals’ latest range of products is focused on downstream and specialty products, which attract further industries that help extend Malaysia’s value chain. A significant share of our production is exported out of Malaysia, but the Malaysian portion of sales is continuously growing.

What if any expansion plans do you have?

LDW We are expecting the commencement of commercial operations for our ethane cracker and monoethylene glycol (MEG) plants in our Lotte Chemical US Shale Gas (LC USA) project in Lake Charles, Louisiana, in 1H2019, a project that achieved mechanical completion in December 2018. The LC USA project has a nameplate capacity of 1,000 KTA ethylene and 700 KTA MEG. Total investment for the LC USA project is estimated at about USD3 billion, and LCT owns a 40% equity stake in the project. Additionally, in December 2018, we celebrated the successful groundbreaking of our Lotte Chemical Indonesia New Ethylene (LINE) project in Cilegon, Indonesia. This project is estimated to cost at least USD3.5 billion. Located adjacent to our three existing PE plants in Indonesia, the LINE project comprises a naphtha cracker and an integrated downstream petrochemical complex with a nameplate capacity of 1 million tons of ethylene per annum and other value-added downstream derivatives. Construction for the project is expected to commence in 2019 or 2020 and will be completed by 2023. Upon completion, it will further strengthen our co-product economics, enable vertical integration, and stabilize our earnings in the long run. The Indonesia market is among the largest domestically-driven and high-growth olefin and polyolefin markets in Southeast Asia, with its fast-growing population underpinned by high urbanization and consumption rates supporting its emerging economy. By strengthening our foothold in the largest economy in SEA, we anticipate our position will continue to be strong in the region, buoyed by our ongoing capital investment projects that boost our nameplate capacity and key integrated production processes across our regional plants.

SC We built a plant at the Gebeng site to produce 2-Ethylhexanoic Acid (2-EHAcid), which is used in the production of synthetic lubricants and oil additives as well as in many other applications. The other plant produces highly reactive polyisobutene (HR-PIB), which is an additive for lubricants and performance fuel primarily intended for the automotive industry. The final plant is an integrated aroma ingredients complex, which is important for ingredients used as flavors and fragrances for the food and beverage, fabric, and homecare and healthcare industries. All three plants are the first of their kind in Southeast Asia and, in the case of our aroma ingredients plant, even for the whole of Asia.



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