Developing Eastern Johor: The Pengerang Integrated Petroleum Complex

Summary

Introduction

Johor has had the fastest growing state economy in all of Malaysia since 2011. With lofty goals of becoming the next Shenzhen, the peninsula's southernmost state now seems poised to become the country's second largest state economy within the next few years. Johor is already the country's busiest transshipment hub, benefiting from its position along some of the world's most important maritime routes. Its diversified economy has manufacturing and services as its main strengths.

While Johor has vast land banks, development has mostly been on its western and southern coasts. Much of its industrial areas remain within the Greater Johor Bahru area. Areas to the east of the Johor River are not part of the Iskandar Development Region, and while Mersing in the upper reaches of eastern Johor is meant to benefit from the Eastern Economic Corridor, “progress” there has been minimal.

The arrival of the Pengerang Integrated Petroleum Complex (PIPC) on the east coast is said to have been the game changer for the eastern shores of Johor. The transformation of the wider Pengerang region from five fishing villages and adjacent smallholder farmlands to the bristling metallic towers of the petrochemical refinery, innumerable white domed storage chambers and barren red landscapes waiting to be built upon is both startling and extraordinary.

This paper looks into the details of the PIPC and examines the components that make up the complex and adjacent auxiliary projects. The sections will discuss the significance of the PIPC in light of regional oil and gas facilities and the value that it brings to Malaysia. The paper will then consider both the need and the success of the project as a catalyst for development in east Johor, as well as its impact on the local community and the environment.

BACKGROUND TO THE PIPC

The PIPC began in 2011 as the Refinery and Petrochemical Integrated Development (RAPID) project in response to the realization that gas resources in Peninsular Malaysia were finite, limiting the growth of the gas-based petrochemical industry. It was thus decided that it would be financially sustainable to enhance Petronas’ petrochemical portfolio through an integrated refinery and petrochemical complex enabling Malaysia to move into downstream production of premium differentiated petrochemicals. In 2012, then Prime Minister Najib Abdul Razak declared the Pengerang Integrated Complex, comprising RAPID and its associated facilities, to be a “National Project of Strategic Importance”.