UPDATE 1-Petronas to expand Malacca plant for high-grade fuel

* Expansion to produce Euro IV fuels, meet future demand

* Refinery to process more sour crude as output falls

* New hydrocracker started operation in Q3
(Adds details)

By Florence Tan

SINGAPORE, Oct 28 (BestGrowthStock) – Malaysia’s state-owned
Petronas plans to expand and upgrade its Malacca refinery to
produce higher-quality fuel and meet rising demand after
recently raising the plant’s capacity to 290,000 barrels per
day (bpd), industry sources said on Thursday.

The project comes as several other refiners have revived or
are considering expansions. Around 5.1 million bpd of net
refining capacity is likely to be added between 2011 and 2015,
according to Wood Mackenzie.

Upgrades will allow Petronas [PETR.UL] to process more sour
crude at the refining complex, as the country’s sweet crude
production declines, one of the sources said.

The study, which will determine the capacity and investment
costs, is expected to be completed in first-quarter next year,
he said.

The company could not be immediately reached for official
comment.

The expansion will be carried out at the refinery’s Train
1, which has a design capacity of 100,000 bpd, but operates at
120,000 bpd and processes only locally produced sweet crude,
the source said.

EURO IV FUELS

Petronas plans to produce Euro-IV gasoline and diesel at
the refinery ahead of a possible government mandate to raise
fuel standards in the country, the source said.

“Industry players are talking to the government although
there is no specific date,” he said.

The company is also looking at increasing capacity to meet
stronger demand in the future, he said.

The project includes increasing the refinery’s base oil
output, he said. Petronas has a 300,000 tonne-per-year (tpy)
Group III base oil plant at Malacca.

In the third quarter, Petronas started operations at a new
50,000-bpd hydrocracker which raised the overall refining
capacity at Train 2 to 170,000 bpd, the source said.

Petronas owns 53 percent of the refinery while U.S. oil
company ConocoPhillips (COP.N: ) holds the remaining stake.
(Editing by Ramthan Hussain)

UPDATE 1-Petronas to expand Malacca plant for high-grade fuel