German chemicals company BASF and Malaysia's Petronas Chemicals Group Bhd announced on Monday that they will build a major new production plant for 2-Ethylhexanoic Acid (2-EHAcid).

The new facility will be located at the site of their existing joint venture, BASF Petronas Chemicals, in Kuantan, Malaysia. Construction is anticipated to start in the second quarter of 2015.

Financial details of the investment were not disclosed.

2-EHAcid is a chemical intermediate that is used as a compound in the production of synthetic lubricants as well oil additives. It is also used for functional fluids such as automotive coolants, metal salts for paint dryers, plasticizers, stabilizers and catalysts, and has other applications in various industries.

BASF already operates a 2-EHAcid production plant at its Verbund site in Ludwigshafen, Germany.

"With this new plant, we are responding to our customers' growing demands in Asia Pacific. Through this additional capacity BASF will become one of the leading suppliers for high purity 2-EHAcid in the region," said Stefan Blank, president of BASF's Intermediates division.

The new plant in Kuantan will be the first in Southeast Asia to produce 2-EHAcid, the two companies said. It will have an annual capacity of 30,000 metric tons, with production expected to start in the fourth quarter of 2016.

BASF Petronas Chemicals is also building an Integrated Aroma Ingredients Complex at its Kuantan site for the manufacturing of citronellol and L-menthol, as well as citral and its precursors, which are widely used in the flavor and fragrance industries.

The partners are investing $500 million to set up the aroma ingredients complex and it is scheduled to start operating in 2016.