KUALA LUMPUR (Jan 17): Petronas Gas Bhd’s (KL:PETGAS) wholly owned subsidiary Regas Terminal (Pengerang) Sdn Bhd (RGTP) has executed and completed a share subscription agreement with Dialog Equity (Three) Sdn Bhd (DE3SB), for the development of Malaysia’s first liquefied natural gas (LNG)-driven air separation unit (ASU) in Pengerang, Johor.

Under the shareholder agreement, DE3SB, a wholly owned unit of Dialog Group Bhd (KL:DIALOG), will subscribe to 27.78% of shares in RGTP by acquiring 500 ordinary shares for RM500,000, and 9,724 redeemable preference shares for RM9.7 million.

According to Petronas Gas, the project will be developed based on a design, build, and lease model, where the ASU will be constructed and leased to a qualified and experienced industrial gas market operator for a 25-year period.

In return, RGTP will generate a consistent revenue stream through fixed monthly facility charges paid by the operator.

The final investment decision on the ASU project was obtained in December 2023, with the target commercial operation date in November 2026. The total awarded engineering, procurement, construction, and commissioning (EPCC) cost is RM368 million, Petronas Gas said.

The project is expected to reduce electricity consumption by approximately 25% and lower carbon emissions by 15,000 tonnes annually, compared to traditional ASU plants.

Dialog was invited to participate in this project due to the project’s location on the Pengerang deep-water terminal plot, it added.

Meanwhile, both Petronas Gas and Dialog said the venture aligns with both parties to achieve business sustainability, and to fulfil the environmental, social, and governance (ESG) agenda through commercially viable ventures.

Dialog stated that the financing will come from internally generated funds and external borrowings, including sukuk proceeds.

Following the execution, the issued and paid-up share capital of RGTP will subsequently be increased from RM26.6 million to RM36.8 million.

At Friday’s closing, shares of Petronas Gas were down 26 sen or 1.5% lower at RM17.18, giving it a market capitalisation of RM33.99 billion. Meanwhile, Dialog’s shares were up two sen or 1.1% at RM1.90, valuing it at RM10.73 billion.