Petronas Plans Chemicals Venture With Evonik After BASF Pullout

Petroliam Nasional Bhd., Malaysia’s state energy company, plans to start a specialty chemicals manufacturing venture with Germany’s Evonik Industries AG after ending a similar partnership with BASF SE.

Petronas, as the company is known, signed a letter of intent with Germany’s biggest closely held chemicals group, according to a joint e-mailed statement by both firms in Kuala Lumpur today. The partners plan to build manufacturing facilities within a $20 billion refining and petrochemicals complex in Malaysia’s southern Johor state, bordering Singapore.

“We’re seeking a strong long-term strategic partner like Petronas” as part of the company’s Asia growth strategy, Dahai Yu, an Evonik board member, said in the statement, without giving any financial details.

Petronas had intended to jointly invest a total of 1 billion euros ($1.3 billion) with BASF (BAS) on new specialty chemicals facilities in Johor and expand an existing joint venture. The companies decided to terminate plans for the new plants after failing to agree on terms, according to a Jan. 21 joint statement. They’ll still expand their existing factory in Pahang state.

Evonik is one of the world’s largest producers of hydrogen peroxide and C4-based products with facilities in Europe, North America, South America, Africa and the Asia-Pacific.

Its joint venture plants in Johor are targeted for completion in 2016. They will produce 250,000 metric tons per year of hydrogen peroxide, used as a bleaching agent in the paper and textile industries, the companies said.

Petronas and Evonik will also manufacture 220,000 metric tons of isononanol, used in soft PVC production, and 110,000 tons of 1-butane, a co-monomer used for plastic polyethylene, according to today’s statement.

To contact the reporters on this story: Elffie Chew in Kuala Lumpur at echew16@bloomberg.net

To contact the editors responsible for this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net; Jason Rogers in Singapore at jrogers73@bloomberg.net

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