Petrochemical Industry

Petrochemicals are chemicals produced from natural gas, natural-gas liquids, or refinery products derived from crude oil distillation, or cracking. These compounds are made up of hydrocarbons. Some of the products referred to as "petrochemicals" were in the past produced from charcoal, coal-tar distillation by-products, acetylene, or fermentation alcohol. Industrial organic chemistry, upon which the science of petrochemicals is based, was originally the domain of German, British, and other European firms.

The development of petrochemical industry has been in great progress since the early 1990s. The total investment in the petrochemical industry has exceeded RM32 billion by end of 2001. The petrochemical industry is now an important growth industry for Malaysia amongst other chemical sub-sectors such as petroleum products, inorganic chemicals, oleochemicals and industrial gases.

The growth of the petrochemical industry is supported by the Malaysian Government and Petroliam National Berhad (PETRONAS), the national oil and gas company, both determined to make Malaysia a regional hub and base for petrochemicals and for the ASEAN market.

PETRONAS is establishing itself to be a force in the global petrochemical industry with greater participation in international petrochemical projects as well as continuing to embark on new petrochemical projects domestically. The positive and flexible policies adopted by the Government have been a strong pull factor for drawing foreign direct investments in the petrochemical industry.

The industry has developed rapidly thanks to the various advantages enjoyed by the industry including the availability of feedstock, good infrastructure and supporting industries, cost competitiveness as well as strategic location in ASEAN.

The need for synthetic rubber required the development of a large-scale technology for producing benzene, styrene, butylenes, butadiene, and acrylonitrile. All basic petrochemical products from methane to the aromatics and petrochemical intermediates that are mainly exported are now available for development of downstream products like specialty chemicals.

All these factors contribute to the increase in participation of multinational corporations that continues to be important in facilitating the access of the Malaysian petrochemical industry to the global market.

Foreign multinational petrochemical giants which have established joint-ventures with PETRONAS in Malaysia includes BASF, BP, Eastman Chemical, Idemitsu Petrochemical, Mitsui, DSM and Dow. Today, the significant investments by PETRONAS and these major MNCs have made the local petrochemical industry well diversified with the availability of a wide range of products.