Malaysia building LNG terminal in Johor

$1.6b facility, seen as future rival to Jurong Island, among 7 projects unveiled

By Teo Cheng Wee, The Straits Times, 14 Sep 2012

PUTRAJAYA - Malaysia is adding a RM4 billion (S$1.6 billion) liquefied natural gas (LNG) terminal in south-east Johor, bolstering the capacity of an oil and gas hub that has been touted as a potential competitor to Singapore's Jurong Island.

The LNG terminal in Pengerang comes on top of a RM5 billion petroleum storage terminal already under construction, the first phase of which is expected to be completed by 2014.

The Johor state government and oil and gas companies, Dialog Group from Malaysia and Royal Vopak from the Netherlands, are partners in the project.

They form part of the larger Pengerang Integrated Petroleum Complex, which includes a refinery by national oil company Petronas.

Malaysia envisions Pengerang as a top regional oil and gas hub, to drive growth in what it has singled out as a key sector for the country.

Analysts have noted that Pengerang - once a sleepy fishing village about 90 minutes from Johor Baru - has real potential because of its strategic location, deepwater jetty facilities and abundant land. It is, however, likely to be years away from posing real competition to Singapore.

The LNG project was one of seven announced yesterday by Prime Minister Najib Razak under his Economic Transformation Programme, with investments totalling RM5.6 billion.

He said they would boost Malaysia's gross national income by RM2.36 billion and create more than 18,000 jobs by 2020.

Pengerang's terminal will be used for the storage, loading and regasification of LNG, both for trading and for domestic use.

Said Datuk Seri Najib: "This will be the first independent LNG trading terminal in Asia, allowing multiple LNG users to store and trade the product. It will spur the growth of the industry and help establish Malaysia as Asia's LNG trading hub."

Dialog Group executive chairman Ngau Boon Keat said the terminal, which will be built on 60ha of land, could also be used as reserve storage for the country's energy supply. Construction could begin as early as next year, pending final agreement on funding and returns among the partners.

The terminals will be built in two phases up till 2018. It will eventually have 720,000 cubic m of storage capacity, with regasification facilities.

Another project announced by Mr Najib was a pharmaceuticals manufacturing plant by Ranbaxy Laboratories, a major Indian pharmaceutical company. Ranbaxy, in a joint venture with local partners, will invest RM125 million in a new plant at an as-yet-undisclosed site in Malaysia, which will become one of the company's eight global manufacturing hubs for generic drugs.

The project, which will commence this month, is expected to triple Malaysia's output of generic drugs from one billion to three billion units.

Mr Najib's economic reforms are targeted at helping Malaysia become a high-income nation by 2020. But yesterday, he singled out data from the World Economic Forum last week that showed that Malaysia had dropped four places in the Global Competitiveness Index, and urged his countrymen to do better.

"If other countries improve, we need to work harder. If they walk, we have to run. If they run, we have to accelerate," he said. "There is no place for us to be complacent."