Hengyuan Secures Sustainable Growth with USD160 million Upgrades

BackJun 16, 2017

Hengyuan Secures Sustainable Growth with USD160 million Upgrades

PORT DICKSON, 16 June 2017 -- In line with its strategic direction to ensure sustainable growth of the company as well as stable supply of quality refinery products to the Malaysian market, Hengyuan Refining Company Berhad (HRC), formerly known as Shell Refining Company (Federation of Malaya) Berhad, today announced that its Board of Directors has approved the investment for two major projects totaling USD160 million (approximately RM700 million) to be undertaken at its refining complex in Port Dickson.

The first project, which is estimated at USD135 million (approximately RM590 million), will allow the refinery to economically produce Euro 4M Mogas. The investment is undertaken to install an integrated complex that is designed to desulphurise the full range Cat Cracked Gasoline (CCG) produced by the Long Residue Catalytic Cracking Unit (LRCCU). The plant will use a combination of hydro-processing and liquid-liquid extraction technology which has been applied successfully by licensors in various operating plants, including Shandong Hengyuan Petrochemical Company Ltd in its Shandong-based refinery and chemical complex that produces Euro 6 grade Mogas. HRC's new Euro 4M Mogas complex will have a capacity of 1.15 million tonnes per annum and is expected to be completed by 2018.

The second project is estimated at USD25 million (approx. RM110 million) and involves the replacement of the top dome and catalyst separation system of the regenerator reactor of the LRCCU. The replacement is required to allow continued and efficient operation of the product upgrader unit as the current system will be reaching its end-of-life parameters in 2018. This project is expected to be completed during the 2018 turnaround.

The projects are planned to be financed mainly from a mix of cash flow generated from operations and a further draw down from an existing term loan.

Maarten Stals, Managing Director and Executive Director of Hengyuan Refining Company Berhad, said, "The Board's approval to invest in these critical upgrades is a major milestone for HRC and ensures our Port Dickson refinery's long-term future and sustainable growth. It also demonstrates our continued commitment to deliver high quality fuels to customers."

About Hengyuan Refining Company Berhad

Hengyuan Refining Company Berhad (HRC), formerly known as Shell Refining Company (Federation of Malaya) Berhad (SRC), was incorporated in Malaysia on 19 September 1960. The company was listed on the Main Board of the then Kuala Lumpur Stock Exchange (now known as the Main Market of Bursa Securities) on 29 October 1962. On 22 December 2016, Malaysia Hengyuan International Limited (MHIL) acquired 51.0% equity stake in SRC from Shell Overseas Holdings Limited for USD66.3 million. MHIL is wholly-owned by Heng Yuan Holdings Limited, which in turn, is a wholly-owned subsidiary of Shandong Hengyuan Petrochemical Company Limited. Hengyuan Refining Company Berhad manages and operates a refinery in Port Dickson, Negeri Sembilan with licensed production capacity of 156,000-bpd. The refinery is involved in the refining and manufacturing of petroleum products, and provides employment for more than 500 individuals comprising of staff and contractors.

About Shandong Hengyuan Petrochemical Company Limited

Established in 1970, Shandong Hengyuan Petrochemical Company Limited (SHPC) is a state-owned enterprise based in Linyi County, Shandong Province, China. SHPC develops, produces, processes, and markets diesel oil, liquefied gas, propylene, propane, polypropylene, tert-butyl alcohol, oil slurry, asphalt, tert-pentene, ethybenzene, and other petroleum related products. SHPC has total assets of 4 billion Yuan (approx. USD582.53 million) and employs 1,700 employees. SPHC is one of the Top 100 Leading Enterprises in Shandong and one of the Top 500 Chinese Chemical Enterprises. The Group has garnered multiple accolades over the years and its Chairman and General Manager, Wang Youde, has also received recognition including ‘One of Ten Outstanding Entrepreneurs in Shandong Province' and ‘Outstanding People Award of National Advancements in Productivity', amongst others.

This news release is issued on behalf of Hengyuan Refining Company Berhad by Acendus Communications Sdn Bhd. For further information, please call I-Mae at 012 383 5688 or Michael Poh at 012 395 5202.