Published December 4, 2008

Petronas cuts output at Terengganu plants

It says economic crisis hitting polymer demand

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(KUALA LUMPUR) Malaysian state energy firm Petronas said yesterday that it has cut production at its petrochemical plants due to lack of demand as the global economic crisis hits.
Temporary closure: Petronas has brought its plants in Kertih in eastern Terengganu down due to a lack of demand for its polymer products

'A lot of petrochemical facilities (worldwide) are being shut down because of lack of demand,' Petronas president and chief executive Mohamad Hassan Marican told reporters.

'We have brought our plants down in Kertih (in eastern Terengganu state),' he said. 'When there is no market, there is no point to produce the polymers.'

Petrochemical plants produce polymers and resins that are used to manufacture plastic consumer items.

With crude oil prices below US$50 a barrel, he said that the industry would have to form alliances to weather the economic storm in 'this challenging environment'. 'We need to look at doing things together, like how we can share drilling rigs,' he said.

Mr Mohamad also said that Petronas, which has expanded abroad aggressively in recent years, would not reduce its current and planned investments because of the negative environment.

'We do not jump from one side to another. Oil is a commodity. There will be years of high prices and years of low prices. The economic viability of a project is not based on today's prices,' he said. 'We are very lowly geared. We have sufficient internal funds to fund the projects. We have both the funds and capacity to borrow.' - AFP