When the construction is already RM5.1 billion – petroleum refinery

Oil price has been going up. Note that I do not say recovery because based on the usual cost of production, the price of oil should not reach the levels of yesterday. Perhaps the price should just normalise at current level. However, investments into oil and gas sector is continuing. After all, total sales for electric cars still way too little compared to the whole car industry. Coming back to oil and gas industry investments. Regardless of the industry, whenever we invest a certain amount of money, we expect to achieve a certain amount of profit which is usually derived from a certain amount of revenue. It’s called the potential return on investment. It is also with a long-term view or strategy that we invest our money in the first place. So, if we are investing RM5.1 billion, what do you think the investor has in mind? Yeah, probably revenues which are many times that on a yearly basis and profitable enough so that the invested amount is worthwhile.

The investment that we are talking about is not in Iskandar or Kuala Lumpur but it is in the east coast. In this case, it will bring economic growth to Kuantan, Pahang. The company is NewOcean Energy Holdings Limited from Hong Kong. It announced that it planned to build a RM5.1 billion petroleum refinery complex on Malaysia’s east coast with two partners. The partners are Malaysia’s Kuantan Port Consortium Sdn Bhd and Malaysia’s east coast development body. The news article is in livetradingnews.com  It was also mentioned in the article that NewOcean is a Hong Kong-listed company primarily engaged in the sales and marketing of liquefied petroleum gas and natural gas, oil and electronic products. Meanwhile Kuantan Port Consortium is jointly owned by IJM Corporation and Hong Kong’s Beibu Gulf Holding (Hong Kong) on a 60:40 equity holdings basis. The Malaysian government has a special rights share in the consortium.

Seriously, I think I must follow my colleague to her hometown in Kuantan to see for myself what’s the extent of the investments there. It’s the same like when some friends tell me that there is NOTHING happening in Iskandar but when I was there to meet customers, I could see real activities and construction is happening feverishly. One developer I met in Iskandar has only the showroom when I visited her many years ago. Recently, when I drove past the development, it was already fully developed. No idea if it’s fully occupied but as usual the first 12 months of completion usually meant that there are not that many people staying yet.  As for Kuantan, a search in iproperty.com.my and propertyguru.com.my has not yielded enough residential listings yet. Two reasons. Both sites are not well known there yet OR there is really too few residential developments there and all the existing ones are fully occupied. Good news actually. Kuantan people, ready to read a bit more and start investing? Happy following.

written on 9 Aug 2017

Next suggested article: RM15 billion GDV Kuantan Waterfront Resort City

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