KUALA LUMPUR (Reuters) - The chemical manufacturing unit of Malaysia’s state energy firm Petronas [PETR.UL] is actively looking to acquire companies to expand its specialty chemical business, its chief executive officer said on Tuesday.
Petronas Chemicals Group Bhd (PCGB.KL) is looking to grow aggressively in specialty chemicals, which are raw materials used to manufacture consumer products such as high-performance tyres and LCD televisions.
CEO Sazali Hamzah said acquisitions would be a key step toward expanding the higher-margin specialty chemicals business.
“We have already targeted a few. When we acquire, it’s not only for technology but also for market penetration,” Sazali told Reuters in an interview, adding that Petronas Chemicals was looking at companies in Europe, the United States and India.
Sazali also said the acquisition market was competitive as a lot of companies are looking to expand into petrochemicals.
The hunt for acquisitions comes as parent company Petroliam Nasional Bhd, or Petronas, relies more on its downstream business to boost revenue amid analyst estimates that it will produce less oil in the future.
Much of Petronas’ capital expenditures in the last few years has been spent on its downstream business, particularly the Refinery and Petrochemical Integrated Development (RAPID) project in the southern Malaysian state of Johor.
RAPID is part of the Pengerang Integrated Complex (PIC) that includes a 300,000 barrel-per-day oil refinery and a petrochemical complex with a production capacity of 7.7 million metric tonnes and an oil storage site.
Companies such as Saudi Aramco, Exxon Mobil Corp (XOM.N) and Royal Dutch Shell Plc (RDSa.AS) have all been expanding into petrochemicals in recent years to diversify their businesses from crude oil production.
Last year, Aramco inked a deal to invest $7 billion in RAPID. It later bought a $900 million stake in petrochemical projects in the RAPID complex.
Petronas Chemicals is spearheading the petrochemicals component of RAPID, which is Petronas’ largest downstream project with an estimated $27 billion of total investment.
Sazali said Aramco could expand its investment in PIC.
“There is a possibility... Some we offer to them, some they are interested in but subject to the economics of it,” he said.
The company is conducting joint studies with other potential partners for developing more petrochemical projects in PIC, he said, declining to provide details.
Reporting by A. Ananthalakshmi and Emily Chow; Editing by Christian Schmollinger