The Edge Markets
1st March, 2017
KUALA LUMPUR: The Pengerang Refinery and Petrochemical Integrated Development (Rapid) project opens a new chapter today. The Saudi Arabian Oil Co (Saudi Aramco) is pumping in US$7 billion (RM31 billion) to hold equity stake in selected assets in the massive petrochemical project in Pengerang, southern Johor.
Saudi Aramco has entered into a share purchase agreement (SPA) with Petroliam National Bhd (Petronas) to equally own some facilities, including 300,000 barrels per day (bpd) processing capacity, and a steam cracker plant capable of producing three million tonnes of petrochemicals annually.
Through the joint venture (JV), Saudi Aramco will supply up to 70% of the crude feedstock requirements of the refinery. Petronas, on the other hand, will supply gas, power and other utilities.
The SPA was signed during Saudi Arabia’s King Salman Abdulaziz al-Saud’s visit to Malaysia.
“The signing of this agreement is truly a historic moment for the industry as it is not often that two professionally run national oil companies enter into a partnership in a world-scale greenfield project.
“Now we have long-term crude supply security for the refinery. This region is also a focus for Aramco, and together we will develop this business,” said Petronas group chief executive officer (CEO) Datuk Wan Zulkiflee Wan Ariffin (Wan Zul) said at a press conference yesterday.
Wan Zul noted this will be the only agreement on a JV basis for Rapid.
The deal also ended speculation that the Arab oil giant had pulled out from the Rapid project, valued at US$27 billion in total. “When the news came out, we did not elaborate to the media, as we were planning for this occasion,” Aramco CEO Amin H Nasser said.