UPDATE PETRONAS & BASF MULL US$1.33 BLN JOINT INVESTMENT IN PETROCHEMICAL PLANT

(recasting headline&intro, adding more info)

PUTRAJAYA, March 29 (Bernama) -- Petronas and German-based BASF SE, the
world's largest chemical company, are considering a potential joint investment
sum of RM4 billion (US$1.33 bln) to set up a plant to produce petrochemcial
products in Malaysia.

The joint venture project to produce specialty chemicals in Gebeng in Pahang
state and elsewhere in Malaysia, which is subject to a joint feasibility study,
was also expected to generate some 500 high skilled jobs upon completion.

The matter was discussed during a courtesy call by a BASF SE delegation,
headed by a member of the Board of Executive Directors, Dr Martin Brudermuller,
on Prime Minister Najib Razak at the Prime Minister's Office here Tuesday.

A statement issed by the Prime Minister's Office following the courtesy call
said that BASF and Petronas had signed a memorandum of understanding (MoU) on
Dec 6 last year to undertake the joint venture, a move that would extend the two
parties’ existing collaboration in the country.

The German company is operating an integrated petrochemicals complex in
Gebeng, near Kuantan.

The statement said that other members of the delegation were the president
BASF Asia Pacific, Saori Dubourg as well as the managing director of BASF
PETRONAS Chemicals Sdn Bhd, Dr Hermann Brandt.

They were accompanied by Petronas President Shamsul Azhar Abbas and the
executive vice president of downstream business, Petronas, Wan Zulkiflee Wan
Ariffin.

Under the terms of the MoU, the two parties will evaluate the technical,
commercial and economic viability of jointly owning and operating world-scale
facilities for the production of propylene and butylene based specialty
chemicals.

"The study will also look into the expansion of existing facilities in
Gebeng and the production of a new product called Super Absorbent Polymer (SAP),
which is largely used in personal hygiene applications," the statement said.

The statement said the final scope of the investments will be determined
following the outcome of the joint feasibility study which is targeted to be
completed in the fourth quarter of 2011.

"The project will generate spin off industries which in turn will create
further employment opportunities," it added.

The statement said that as substantial quantities of these specialty
chemicals will be exported, it is anticipated to generate significant export
revenue for the country.

The proposed collaboration by Petronas and BASF will build on their
successful strategic partnership in the country, established in 1997.

The partnership, via BASF PETRONAS Chemicals Sdn Bhd of which BASF owns a 60
per cent stake, currently owns and operates the integrated petrochemicals
complex in Gebeng, that produces acrylic monomers, oxo products and butanediol.