KUALA LUMPUR (July 26): Malaysia’s national oil-and-gas company Petroliam Nasional Bhd, or Petronas, has reached the final investment decision with its partners to develop an over RM6 billion biorefinery at the Pengerang Integrated Complex in Johor.

A final investment decision in the oil-and-gas industry typically takes years to make and is a sign that a project will proceed as proposed, following extensive studies and planning. The project owners will then sanction the budget, allowing contractors to purchase materials, as well as equipment to begin work.

Together with Enilive SpA, a unit of Italian oil supermajor Eni SpA, and Japanese biotech firm Euglena Co Ltd, Petronas will establish a joint venture company to build and operate the biorefinery. Petronas and Eni will be the largest shareholders, the company said in a statement.

“This milestone will solidify Petronas’ standing in the biofuels value chain beyond trading, paving the way for the establishment of a holistic bio-based ecosystem in Malaysia that will offer a feasible and sustainable solution to reducing carbon emissions,” said Ahmad Adly Alias, Petronas’ vice president of downstream refining, trading and marketing.

Details of the shareholding and the project’s financials were not disclosed in Petronas’ statement.

The project size is US$1.3 billion (RM6.05 billion), according to a separate statement from Euglena. Petronas and Enilive will each initially hold a 47.5% stake in the joint venture.

Euglena said it will have 5% and has the option to raise its stake in the joint venture to 15%.

The biorefinery is expected to process up to 650,000 tonnes per year of inputs to produce sustainable aviation fuel, hydrogenated vegetable oil and bio-naphtha. Construction would begin in the fourth quarter of this year and the plant is expected to be operational by the second half of 2028, it said.

The planned feedstock will comprise used vegetable oils, animal fats, waste from the processing of vegetable oils, and other biomass including microalgae oils, which will be explored in the mid-term, Petronas noted.

“With this new initiative and in cooperation with Petronas and Euglena, we will enter into the Asian market and have a distinctive global footprint,” said Enilive’s chief executive officer Stefano Ballista.

For Euglena, the project in Malaysia will allow the startup “to pave the way to achieve carbon neutral society and aspiration in Japan,” said its founder and president Mitsuru Izumo. “Euglena will expedite our microalgae research and development activities and supply algae oil to the global market,” he said.