KUALA LUMPUR: Shell Refining Company (Federation of Malaya) Bhd will make a decision on its refinery in Port Dickson by end-June, said Shell Malaysia Ltd (SML) chairman Iain Lo.
Lo is also chairman of Shell Refining Co.
“The decision has not been made yet whether it is a sale or conversion, I believe we will try to make a decision and bring it to shareholders at the AGM at the end of June,” he told reporters at the officiating ceremony of Menara Shell yesterday.
Lo said the board of Shell Refining Co is proactively investigating long-term options including potential sale of the refinery assets and conversion of operations to a storage terminal.
“Shell Refining Co is a business that’s very, very challenging, we’ve had losses the last four years now. So the board has decided that something has to be done about it. Clearly, operating as a refinery, as a going concern, we see it as quite a challenge because the refining environment globally is very challenging. Refining margins are very, very thin and it is very difficult to make profits.
“One of the options is to convert it to a terminal so that we can continue to supply fuel to the Malaysian market. Of course in the same process, we will look to see if there are other people who feel that they can operate the refinery. So these two processes are going on in parallel,” he added.
In terms of exploration, Lo said Shell Malaysia made 10 discoveries in the last 18 months, making it the most successful country in the Shell group for exploration.
“Our gas operations in Sarawak supplies our own gas-to-liquid (GTL) plant where we produce the world’s cleanest high-grade waxes that are exported to more than 50 countries across the globe. Our Sarawak specialty wax range is a key component in adhesives to lipsticks and ink toners,” he said.
Shell Malaysia is the largest foreign oil producer in Malaysia with its Gumusut-Kakap deep water platform producing 150kbpd. It is also working on its second deep-water venture, the Malikai oil field, 100km offshore Sabah.
On its new offices in, Lo said Menara Shell in KL Sentral brings together 10 facilities across the Klang Valley into 17 floors with over 300,000 sq ft for 1,700 staff. The group also has a business services centre in Cyberjaya that houses its IT, human resource, finance, procurement and order processing support units.
On the relocation of its IT division to Bangalore over the next five years, Lo said the move is driven by the big talent pool and lower costs in Bangalore.
“So we need to look for additional work for Cyberjaya because we have the talent, we have the infrastructure and the sort of work we are looking at, when I say value-added, it means not just the transactional type of work…we’re looking for something more value-add for example in the lubricant supply chain, there is now a department in Cyberjaya that does all the coordination of lubricant supply in the country. It’s that kind of work that we are looking to bring more and more from our different downstream and upstream businesses to Cyberjaya,” he said.
Ministry of International Trade & Industry secretary general Datuk Dr Rebecca Sta Maria said the ministry has maintained its investment targets this year despite the challenging economic environment and the government is committed to maintaining a dynamic and progressive business environment to attract more potential investors.
“When an investor decides to locate in a country, it is not just about the oil prices or the value of the ringgit but really the business environment that we have created - how easy is it to do business, what is the bureaucracy like. So if you can put those in place, make it easy to do business and that’s exactly what we are doing, for me it is not an issue.
“In our interaction with companies, we were in Malacca yesterday meeting some of the companies, they are expanding. They are expanding because the environment here is conducive enough for them to want to put more money into this country and I think that’s what really should be the focus going forward,” she said.