BASF PETRONAS

Chemicals Sdn. Bhd.

Report 2019
Index

Index
Welcome 3

JV Company Limited 4

Overview 7

Key data 9

Further information 10

About this Report

“BASF PETRONAS Chemicals Report 2019 - Including Toray BASF PBT Resin” is published annually as a concise document
about the company’s development, progress and performance in regard to economy, ecology, and society. The reporting period
for this publication is the financial year 2019. All data in the report are the combined 100% total from BASF PETRONAS Chemicals
and 100% from Toray BASF PBT Resins, which is located at the BASF PETRONAS Chemicals site, without BASF Services.

2 BASF PETRONAS Chemicals Report 2019

 Welcome

Welcome
Message from the Managing Director

I am delighted to present BASF PETRONAS Chemicals – In 2019, we continued to support the sustainable
Report 2019, which provides an overview of our commitments growth of the local communities where we operate. We
to all stakeholders: employees, customers, shareholders, focused on our collaboration with various stakeholders
authorities, and the community where we operate. for projects that support biodiversity and community
development, including employee volunteering activities.
2019 was a challenging year for BASF PETRONAS Chemicals
with strong global economic headwinds. The uncertainties Building on our progress in 2019, with the spirit of TOP
in the market environment impacted the company’s overall Team embraced by our people and continuous support from
performance. However, we made several significant improvements our stakeholders, we will be able to weather the storm and
in facing these difficult times and preparing for the future. come out stronger and more resilient in the years to come.

We have continued our “Journey To The Top”: our strategic We will strive to improve our overall performance with better
road map to fulfill our vision: to be the most reliable, reliability and utilization of plant operations, excellent safety
competitive, and preferred supplier of chemical products, performance, and closer collaboration with stakeholders.
contributing to the success and growth of our customers, I offer my warmest thanks for all your support, and I
stakeholders, and our people. This is further reflected in our look forward to driving sustainability for future growth.
people development in line with our “TOP Team” culture.

The protection of people and the environment is our top priority. We Best regards,
strive to provide a safe workplace and minimize the negative
impacts on the environment. In 2019, our team achieved zero
lost-time injuries and received the Green rating, the highest safety
level in the Responsible Care audit. Such achievements are
concrete proof of our strong workplace safety and environmental
responsibility culture. Sven Crone
Managing Director
In our effort to be the most reliable and competitive industry player BASF PETRONAS Chemicals Sdn. Bhd
in the region, we redefined our Asset and Reliability Management
as well as optimized the overall maintenance process, including the
management of contractors and spare parts. These initiatives will
further enhance and strengthen our technical capabilities onsite.

BASF PETRONAS Chemicals Report 2019 3

 BASF PETRONAS Chemicals Sdn. Bhd.

BASF PETRONAS Chemicals Sdn. Bhd.

At a Glance

BASF PETRONAS Chemicals Sdn Bhd is a Malaysian-based In 2016, the company commissioned a 2-ethylhexanoic acid (2-EHA-
joint venture between BASF and Petroliam Nasional cid) production plant. 2-EHAcid is a chemical intermediate used as a
Berhad (PETRONAS), Malaysia’s fully integrated oil and compound, for example, in the production of synthetic lubricants as
gas multi-national, under its subsidiary PETRONAS well as oil additives. It is also used for functional fluids like automotive
Chemicals Group (PCG). Incorporated in 1997, the coolants, metal salts for paint dryers, plasticizers, stabilizers, cata-
company operates an integrated petrochemical complex lysts and other applications in various industries including cosmetics.
situated at the Gebeng Industrial Zone, Pahang.
In 2018, BASF and PETRONAS successfully started up
The company’s share of capital is 60% held by BASF and 40% by a new world-scale production plant for highly reactive
PCG, with a total initial investment of about MYR3.4 billion polyisobutene (HR-PIB), which is the first of its kind in
(US$900 million) in production facilities for acrylic monomers, oxo South East Asia. HR-PIB is an important intermediate
products and butanediol. product for the manufacturing of high-performance fuel and
lubricant additives, including additives for sludge prevention.
The site operates according to the “Verbund” (“integrated”)
concept, originating from BASF in Germany, which links multiple A MYR1.5 billion (approx. US$500 million) integrated Aroma
manufacturing plants to use products, by-products and energy in ingredients complex, established in 2017/2018, includes
the most efficient way. The range of chemicals produced by BASF facilities to produce citral, citronellol and L-menthol. Aroma
PETRONAS Chemicals meet the growing demand in various ingredients are used as flavors and fragrances for the food and
industries including plastics, adhesives, lacquers, dyestuffs, beverage, fabric and homecare, and healthcare industries.
automobile and industrial coatings, paper, diapers, water
treatment, textile and leather.

Aroma Complex at Kuantan Verbund Site.

4 BASF PETRONAS Chemicals Report 2019

 BASF PETRONAS Chemicals Sdn. Bhd.

BASF PETRONAS Chemicals Sdn. Bhd.

Shareholders

About BASF About PETRONAS Chemicals Group Berhad

At BASF, we create chemistry for a sustainable future. We PETRONAS Chemicals Group Berhad (PCG) is the leading integrat-
combine economic success with environmental protection and ed chemicals producer in Malaysia and one of the largest in South
social responsibility. More than 117,000 employees in the BASF East Asia. It operates a number of world-class production sites,
Group work on contributing to the success of our customers which are fully vertically integrated from feedstock to downstream
in nearly all sectors and almost every country in the world. Our end-products. With a total combined production capacity of
portfolio is organized into six segments: Chemicals, Materials, 12.8 million metric tons per annum (mtpa), it is involved primarily
Industrial Solutions, Surface Technologies, Nutrition & Care and in manufacturing, marketing and selling a diversified range of
Agricultural Solutions. BASF generated sales of €59 billion in chemical products, including olefins, polymers, fertilisers, methanol
2019. BASF shares are traded on the stock exchange in Frankfurt and other basic chemicals and derivative products. Listed on
(BAS) and as American Depositary Receipts (BASFY) in the U.S. Bursa Malaysia and with three decades of experience in the
chemicals industry, PCG is established as part of the PETRONAS
Group to maximise value from Malaysia’s natural gas resources.

Further information on BASF is available at www.basf.com. PCG is one of the top 10 companies in the FTSE4Good
Bursa Malaysia (F4GBM) Index, out of 200 largest companies
ranked by market capitalisation. It is committed to ensuring
that its business practices are in line with globally recognised
standards for Environment, Social & Governance (ESG) practices.

Further information on PCG is available at www.petronaschemicals.com.my.

BASF PETRONAS Chemicals Report 2019 5

BASF PETRONAS Chemicals Sdn. Bhd.

Members of the Board of Directors

Datuk Md Arif Mahmood Datuk Sazali bin Hamzah

Chairman of the Board of Directors, Managing Director / Chief Executive Officer,
BASF PETRONAS Chemicals Sdn Bhd and PETRONAS Chemicals Group Berhad
Executive Vice President and (PETRONAS Group of Companies)
Chief Executive Officer of Downstream, PETRONAS
(PETRONAS Group of Companies)

Dr. Andrea Frenzel Dr. Carola Richter

President, President
BASF Intermediates Business, BASF SE South & East Asia, ASEAN and Australia/New Zealand
(BASF) (BASF)

Dr. Sven Crone

Managing Director,
BASF PETRONAS Chemicals Sdn. Bhd.
(BASF)

6 BASF PETRONAS Chemicals Report 2019

 Overview

Overview

At BASF PETRONAS Chemicals, we have embarked on Environmental protection,

a new strategic roadmap and culture change aiming
at a transformation of the organization. We achieved health and safety
several key milestones in the environmental protection, health,
At BASF PETRONAS Chemicals, safety is our top priority. In 2019,
safety and social areas, even in this adverse environment.
we implemented several safety initiatives to improve our emergency
preparedness. For example, we introduced the e-hazard hunt
Business development database to encourage employees to report potential hazards
through a user-friendly online system. Moreover, the management
In the face of a challenging and volatile market environment, BASF team conducted regular plant walkabouts and inspections, which
PETRONAS Chemicals continues to be a reliable, competitive demonstrated the company’s commitments to creating a safe
and preferred supplier of chemical products, contributing to workplace for employees. We also continuously strengthen our
the success and growth of its customers and the society. efforts toward health promotion by organizing various health
talk sessions onsite and regular health checks for employees.
We focus on fostering a positive customer experience at every
stage of the journey. We strive to improve the end-to-end
In conjunction with BASF Global Safety Days 2019, under
planning in our business processes. To even better understand
the theme of “Safe choices become safe habits”, BASF
our customers’ needs, we regularly ask them for feedback
PETRONAS Chemicals conducted a series of games and
on our performance. In 2019, we rolled out the Net Promoter
activities to increase risk awareness among employees
System to establish ongoing, closer dialog with customers
and contractors about their daily working environment.
and further increase customer satisfaction and
loyalty. Thanks to the dedication of our motivated teams, we
A campaign was also rolled out to prevent slip, trip, fall (STF)
achieved an average score of +25, which is in a “good” range.
injuries on site. The fall prevention program includes six key
We also demonstrated our commitment to meeting our customers’ focus areas: roof safety, ladder safety, safe loading & unloading,
needs by complying with various management system standards, housekeeping, scaffolding safety, and safe walking. BASF
including: PETRONAS Chemicals promotes this campaign through the STF
Poster Competition and STF awareness briefings to employees.
- ISO 9001:2015 Quality Management System standard;
- ISO 14001:2015 Environment Management System In 2019, BASF PETRONAS Chemicals received a silver award
standard; from the Chemical Industries Council of Malaysia (CICM). This
- OHSAS 18001:2007 Occupational Safety and Health award recognizes the company’s ongoing efforts in maintaining
Management System standard; high EHS standards through the implementation of the TOP Team
- Star K Kosher certifications for aroma ingredients and concept and the collaboration with Transportation Management,
2-EHAcid products; Fire and Security Department to enhance transport safety
- MS 1500 and MS 2200-1 Halal standard; awareness among logistic service providers. With the successful
- FSSC 22000 ver 4.1 execution of the Responsible Care codes at our manufacturing
sites, we were able to achieve zero lost-time injuries in 2019.
Our GC Mark Green Company certificate demonstrates that we
succeeded in minimizing our negative impact on the environment.

BASF PETRONAS Chemicals recognizes the importance of quality

management and food safety. The company complies with the
necessary health and food safety requirements and received HACCP
(Hazard Analysis for Critical Control Point), Food GMP (Good Manu-
facturing Practice) and Skim Pensijilan Makanan Selamat Tanggung-
jawab Industri / MeSTI Secure Food Certification Scheme (MeSTI)
certifications from the Ministry of Health Malaysia for its food grade
Aroma products, including Citronellol, L-Menthol, and L-Isopulegol.

Responsible Care Award by CICM in 2019

BASF PETRONAS Chemicals Report 2019 7

Overview

Employees and society

Employees forming the “best team” are the foundation of our BASF PETRONAS Chemicals is the main sponsor for the National
excellent performance and ensure our long-term success; their Chemical Engineering Symposium (NACES) 2019. This national
skills, commitment, and motivation make BASF PETRONAS event gathered all chemistry students to exchange information
Chemicals competitive and fit for the future. This belief is seen in and to promote discussion between students and industry players
the tangible efforts and resources the company puts into employee on topics of the industrial revolution in chemical engineering.
development as well as into company sponsored activities to
strengthen the team. This is aligned with the vision of harnessing Apart from that, we also supported UMP to co-organize a beach
a workforce that is connected, committed and always competent. cleaning program with a local school at Pantai Balok, Kuantan. The
activities are not limited to litter collection. There was also a sandcas-
The “TOP Team” initiative has achieved several important milestones, tle building competition. This initiative promotes awareness about
including the implementation of training and development the importance of safeguarding the environment among students.
workshops, the use of feedback tools to measure TOP Team
behaviors, TOP Team ambassadors as change agents to further In 2019, we continued our annual site visit for various
promote company culture, as well as various engagement sessions. stakeholders, ranging from students to authorities. Through a
guided tour around the site, visitors were able to learn about
In 2019, 87 employees received 20 years of service awards. Over the state-of-the-art production process, high standard of
1,700 people, including our employees and their family members, safety and environmental protection measures, as well as our
participated in the family days in September and December. We initiatives on sustainability and corporate social responsibility.
were also awarded gold for the “Employer of Choice - private-sec-
tor category” by the Malaysian Institute of Human Resource
Management (MIHRM). This award recognizes our continuous
efforts in improving the HR strategies aligned to the company
goals and supporting the government's strategic reform initiatives.

With the United Nations Sustainable Development Goals as its

guiding principles, we continue our commitment to improving
the quality of life within the communities around our sites and the
Pahang state. In 2019, BASF PETRONAS Chemicals and Universiti
Malaysia Pahang (UMP) signed a Memorandum of Understanding
to foster knowledge-sharing in the fields of engineering, technology,
and science with the university students. This collaboration
also enhances the training and competency of our employees.

Employees celebrating the 2nd anniversary of the TOP Team culture

Local primary school students attended the BASF PETRONAS

Chemicals open day

8 BASF PETRONAS Chemicals Report 2019

Key data

Key data

2019 2018

Financial Results

Sales million € 725 709

Employees (as of December 31)

Number of employees 1,017 986

BASF employee age structure %

Up to and including 25 years 4.2 4.3

Between 26 and 39 years 50.1 52.1

Between 40 and 54 years 41.3 38.9

55 years and older 4.3 4.7

Gender
Male 83.2

Female 16.8

Occupational Safety

Lost-time injury rate (BASF employees, leased personnel and contractors) Per 200,000 working hours 0.08 0.10

Fatalities (total) 0 0

Environment

Emissions to air

Greenhouse gas emissions Metric tons of CO2equivalents 761,844 805,609

Air pollutants (without CH4) Metric tons 721.89 789

Water

Emissions to water: Organic substances (CoD) Metric tons 187 203

Emissions to water: Nitrogen Metric tons 1.2 1.3

Emissions to water: Heavy metals Metric tons 0.32 0.36

Water supply Million cubic meters 3.9 3.2

Water used for production Million cubic meters 0.42 0.49

Water used for cooling Million cubic meters 335 330

Water supply by source

Surface water % 0 0

Groundwater % 0 0

Drinking water % 100 100

Waste

Waste (total amount) Metric tons 12,607 19,399

Recycling and thermal recovery % 51 40

Disposal of waste

Incineration % 25 36

Landfill % 19 10

Underground Storage % 0 0

Energy

Electricity consumption MW h 434,730 413,002

Steam consumption Metric tons 2,605,632 2,764,197

Fuel consumption (Central powerplants and boilers) MW h 1,424,790 1,461,012

9 BASF PETRONAS Chemicals Report 2019

 Further information

Further information

Contact Follow us

Corporate Office
BASF PETRONAS Chemicals Sdn Bhd (199701035807)
Petaling Jaya Office:
facebook.com/basfpetronaschemicals
19.01, Level 19, 1POWERHOUSE, No.1, Persiaran Bandar
Utama, Bandar Utama, 47800 Petaling Jaya, Selangor,
Malaysia.
Tel: +60 3 7456 1088
Fax: +60 3 7456 1053/1054 twitter.com/BASF
Email: [email protected]
Website: www.basf-petronas.com.my

Kuantan Integrated Chemical Site

BASF PETRONAS Chemicals Sdn Bhd (199701035807) linkedin.com/company/basf-petronas-chemicals-sdn-bhd
Kuantan Production Site:
Jalan Gebeng 2/1, Kawasan Perindustrian Gebeng, 26080,
Kuantan, Pahang, Malaysia.
Tel: +60 9 585 5000
Fax: +60 9 583 4623

For more information, please visit www.basf-petronas.com.my or

follow our Facebook page. You can find also this and other BASF
publications online at www.basf.com

We welcome comments and opinions. To provide feedback on this report,

please visit on basf.com/report-feedback
 BASF PETRONAS Chemicals Sdn. Bhd. (199701035807)

Corporate Office

19.01, Level 19, 1POWERHOUSE, No.1, Persiaran Bandar Utama,

Bandar Utama, 47800 Petaling Jaya, Selangor, Malaysia

Tel: +60 3 7456 1088 Fax: +60 3 7456 1053/1054

Kuantan Integrated Chemical Site

Jalan Gebeng 2/1, Kawasan Perindustrian Gebeng, 26080, Kuantan,

Pahang, Malaysia

Tel: +60 9 585 5000 Fax: +60 9 583 4623