Hengyuan warns its production affected, with material financial impact as it shuts cracking, hydrogen manufacturing units after leakage

KUALA LUMPUR (June 20): Hengyuan Refining Company Bhd (KL:HENGYUAN) has shut its long residue catalytic cracking unit (LRCCU) following a leakage found at the carbon monoxide boiler on Wednesday, and warned that there will be a "material" financial impact from the incident as its refinery production will be affected.

The LRCCU is used to convert high-boiling point hydrocarbon fractions of crude oil into high value consumer petroleum products.

"Following the shutdown of LRCCU, the company is required to shut down the hydrogen manufacturing unit
(HMU) and Euro4Mogas facility (E4M) for inspection as part of regulatory requirements. Otherwise, the
refinery plant is operating as usual," Hengyuan said in a statement filed to Bursa Malaysia.

During this shutdown period, its refinery production will be affected, it said, "meaning that the revenue earned by the company during the shutdown period will be reduced".

"Consequently, the company will put in place mitigating measures to ensure there will be no major disruption of production supply to its customers during the shutdown period.

"Given the current uncertainties, the financial impact of this incident cannot be reliably estimated at this point but is expected to be material for the company. Further updates will be made from time to time when there are material developments," it said.

The company said it is taking necessary measures to return the LRCCU to its optimum operational level on a phased basis in the coming weeks.

"In the meantime, the inspection activities, originally scheduled for E4M and HMU in the fourth quarter of the year, will be executed during the period of shutdown. These activities are intended to negate the requirement for the further planned outages in 2024 for E4M and HMU," it said.

At market close on Thursday, Hengyuan’s shares rose one sen or 0.35% higher to RM2.83, valuing the company at RM849 million.