State-run Petronas will build a $20 billion integrated refinery and petrochem complex, Malaysia's largest single investment in recent years, that will boost its refining capacity by half, to 935,300 bpd, as it looks to meet Asian demand for specialty chemicals.

The development in the southern state of Johor bordering Singapore, to be known as the Refinery and Petrochemicals Integrated Development (Rapid), is expected to be commissioned by the end of 2016.

It will put Malaysia on track to vie with Asian oil hub Singapore, which has a refining capacity of about 1.3 million bpd.

'This commitment to an ambitious expansion in its downstream production capacity assuredly signifies the depth of Petronas' ambitions to capture the opportunities Asia's dynamic energy and chemical markets are expected to provide,' Prime Minister Najib Razak said at the project's launch.

Petronas chief executive Shamsul Azhar Abbas said the complex would meet an expected surge in demand for differentiated and specialty chemicals in Asia, the main market for the products, while complementing Singapore's energy business.

'As far the market is concerned, the whole Asian region is going to be short of high specialty products, so this is meant for the region,' Shamsul told reporters after the launch.

The project would expand Petronas' petrochemicals business and spur growth of Malaysia's downstream oil and gas sector, he said.

'More than 80 percent of the products are new products because we have not gone into full specialty product development,' Shamsul added.-Reuters