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TAIWAN’S Kuokuang Petrochemical Technology Company (KPTC) has abandoned plans to build a RM35bn (US$10.64bn) refinery and petrochemical project in Johor, Malaysia, according to reports.

The complex, which was planned to include a 150,000 bbl/d refinery and would have had a capacity of 800,000 t/y of ethylene and 425,480 t/y of propylene, was to have been part of the Pengerang Integrated Petroleum Complex (PIPC), which will cover an area of around 8,100 ha. As well as refineries and petrochemical plants, the complex will include naphtha crackers, an LNG import terminal and a regasification plant. Petronas’ RM60bn Refinery And Petrochemical Integrated Development (RAPID) project, is also part of the PIPC.

A spokeswoman for Taiwan’s CPC, the parent company of KPTC, told resources information provider Platts that the decision was taken due to the project no longer being economically viable. The KPTC complex would have used naphtha as a feedstock to produce ethylene. However, she said that the use of shale gas as an alternative feedstock, a practice rising around the world, was cheaper, meaning that products made from naphtha would not be able to compete on cost.

Lin Sheng-Chung, chairman of CPC, told Free Malaysia Today that using ethane from shale gas to make ethylene only costs half as much as using naphtha. He added that the company is reconsidering all of its overseas investments in projects which include naphtha cracking.

KPTC signed a letter of intent for land investment with the Johor government in July 2012, which expires at the end of August 2013, according to Free Malaysia Today. The Johor Petroleum Development Corporation CEO Mohd Yazid Jaafar told the news outlet that KPTC’s withdrawal had come as a surprise, and that they had received no formal notification from the company. However, he added that it will not affect the PIPC as the allocated land could be divided between other investors.