Linde Malaysia Sdn Bhd and PETRONAS Gas Berhad have confirmed their agreement to develop a new air separation unit (ASU) in Pengerang after signing a memorandum of understanding.

The joint venture (JV) will build and manage a gases facility that will produce oxygen (O2) and nitrogen (N2) to meet the demands of PETRONAS’ integrated refinery and petrochemical complex (RAPID) in the Malaysian town.

In total, the project is estimated to cost around $172m. It is understood that PETRONAS will hold a 51% stake in the JV, with the Malaysian branch of the Tier One corporation obtaining the other 49%.

Construction on the project is expected to start in the third quarter of 2016, with commissioning anticipated by the end of 2018.

A Linde spokesperson confirmed, “The Linde Group is pleased to confirm that its subsidiary will enter into a joint venture with PETRONAS to develop a gases facility in Pengerang, Johor state of Malaysia. The Final Investment Decision has been obtained from the respective board of directors of both PGB and Linde.”

Strategic move

In a stock exchange filing, PETRONAS stated, “The strategic partnership with Linde will provide Petronas Gas with the opportunity to leverage on the technical capabilities of a world renowned industrial gases producer in the development of an industrial gases facility at a strategic location.”

The Malaysian gases market was valued at approximately $450m in 2014. According to gasworld Business Intelligence, confirmation of this new addition will vastly improve tonnage revenues in the South Pacific rim country, which currently only accounts for around 15% of its market. Senior Business Analyst James Barr signified, “In this case, the JV is a good strategic move for Linde as it will remove some of the risk associated with refinery and petrochemical clients in the current climate.”