It said on Thursday the decision was based on a review of various key aspects of the elastomers project, including the product’s market outlook and project return on investment.

“The project cancellation is expected to improve the overall returns of Petronas Chemicals’ investments,” it said.

“The cancellation of the elastomers project will result in capacity reduction of 0.35 million mtpa and projected investment cost by US$1.3 billion,” it said.

Petronas Chemicals said the initial total projected investment cost for the polymers, glycols and elastomers segments was about US$3.9bil with a combined capacity of 3.5 million metric tons per annum (mtpa).

It said it remained committed to the rest of the petrochemical projects that it had undertaken, namely the polymers and glycols projects.

The cancellation of the elastomers project is not expected to have any impact on the commencement date for PRPC Polymers Sdn Bhd and PRPC Glycols Sdn Bhd which is scheduled to start in 2019.