KUALA LUMPUR: Regional oil refining company Hengyuan Refining Company Bhd has allocated RM700 million in capital expenditure (capex) over the next one to two years to finance two cornerstone projects, said chairman Wang You De.
He said the projects, namely Euro 4M Mogas and Atlas II, were essential for the company to enhance operational reliability, capture commercial opportunities throughout the value chain and also comply with upcoming regulations on gasoline and diesel specifications.
“The high capex commitment marks a significant juncture in the company’s future as we enter our next growth phase by implementing proven and advanced refinery technologies,” he told reporters after the company’s annual general meeting yesterday.
The investment was critical to enable the company to achieve its dual objectives of complying with the upcoming regulations and further improving operational efficiencies to maximise refinery margins, he added.
It was reported that Hengyuan, formerly known as Shell Refining Company (Federation of Malaya) Bhd, had recorded an eight per cent margin in 2017.
The company however did not expect similar performance this year as it faced a low pitch refinery in the first quarter of 2018 due to oversupply of production.
“However, beginning May, we are seeing a pick-up in margin, supported by the higher Brent crude oil price in the global market,” Wang said.
He said the Euro 4M Mogas project faced a longer-than-expected duration so as to fabricate the main equipment and is now scheduled to be completed in fourth quarter of 2019. The Atlas II will be completed during the refinery-wide 2018 major turnaround exercise starting August this year and once completed, the complex will be able to produce 1.15 million tonnes per annum.
“Resources will also be allocated to instal facilities in order to comply with future regulatory requirements, namely clean air regulation and Euro 5 gasoil.
“These installations will be tied-in during the scheduled shutdown in the third quarter of 2018 to avoid future refinery shutdowns,” he said. — Bernama