This article first appeared in The Edge Financial Daily, on October 1, 2015.

MALACCA: Petroliam Nasional Bhd’s wholly-owned unit, Petronas Penapisan (Melaka) Sdn Bhd (PPMSB), said it is undertaking studies to evaluate what needs to be upgraded at its current refining facility, in order to produce the Euro-5 grade petrol.

PPMSB general manager and chief financial officer Nik Amri Mohamed said the basic studies are already ongoing and are on track to meet the government’s target for the Euro-5 grade RON95 and RON97 petrol to be sold in Malaysia by 2025.

“We have started the basic studies. We have been talking about Euro-5 for quite a while already and our engineers are looking at what needs to be changed, in terms of the processes.

“But the details, in terms of the machinery and equipment that are needed, are still being evaluated. It’s like setting up a new unit, basically,” said Nik Amri.

He was speaking to the press yesterday during a media visit to the refining plant in Melaka.

As to how much capital the company would need for the new plant, Nik Amri could not give a range, citing that the studies are at early stages.

However, he said a new plant could cost approximately US$3 billion (RM13.29 billion), depending on its complexity.

“Again, this depends on the kind of equipment and technology to be installed, the type of crude to be processed and the resulting output. A lot of factors have to be considered,” he said.

According to PPMSB, the Euro-5 fuel standard contains less sulphur compared to its predecessors, and is less harmful to the environment. 

The standard defines the acceptable limits for exhaust emissions — like carbon monoxide, hydrocarbons, oxides of nitrogen and particulate matters which are considered harmful to human health — from both new petrol and diesel vehicles sold in EU member states, which became mandatory in January 2011.

Petronas recently launched its Euro-4M RON 97 fuel, while RON 95 is still at the Euro-2M standard.

The Ministry of International Trade and Investment last year indicated that Euro-5 fuel can be sold earlier than the gazetted date of September 2020 for diesel and September 2025 for RON95 and RON97.

Last year, Boustead Petroleum Marketing Sdn Bhd introduced its Euro-5 diesel offering in Johor. Following this, Petronas Dagangan Bhd started offering imported Euro-5 diesel in the state.