KUALA LUMPUR: The Saudi Arabian Oil Company (Saudi Aramco) will take up a 50% stake in the refinery and cracker project in the Pengerang Integrated Complex (PIC) in Johor under the US$7bil deal with Petroliam Nasional Bhd (Petronas).
Saudi Aramco had on Tuesday sealed an agreement with Petronas to acquire the stake in the project which is part of the Refinery and Petrochemicals Integrated Development (RAPID) within the PIC in Johor.
In a joint statement, they said this partnership marks the beginning of a strategic, mutually beneficial relationship providing RAPID with high-impact strengths and synergies from both Saudi Armaco and Petronas.
“Under the partnership, Saudi Aramco will supply up to 70% of the crude feedstock requirements of the refinery, with natural gas, power and other utilities supplied by Petronas,” the statement said.
The agreement was witnessed by the Custodian of the Two Holy Mosques King Salman Bin Abdulaziz Al Saud and Prime Minister Datuk Seri Najib Tun Abdul Razak.
It was signed by Saudi Aramco president and CEO Amin H. Nasser and Petronas president and group chief executive officer Datuk Wan Zulkiflee Wan Ariffin. Also present at the signing ceremony was Khalid A. Falih, who is Saudi Arabia's Minister of Energy, Industry and Mineral Resources and chairman of Saudi Aramco.
The signing was held in conjunction with King Salman's state visit to Malaysia.
Saudi Aramco's Nasser said the agreement marked its deeper partnership with Petronas via its stake in the RAPID project.
“Malaysia offers tremendous growth opportunities and today's agreement further strengthens Saudi Aramaco's position as the leading supplier of petroleum feedstock to Malaysia and SoutheastAsia. And with RAPID's strategic location in a profilic hub, it would also serve to enhance energy security in the Asia-Pacific region,” he said.
Nasser added that together with Malaysia, Southeast Asia offered tremendous growth opportunities.
Commenting on the signing of the agreement, Wan Zulkiflee said:"Today's signing ceremony is a culmination of many months of hard work and goodwill from both parties."
"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 partnership in a world scale greenfield project.
“This partnership will also bring together two organisations with strong reputation, wealth of experience and proven record in developing mega projects as well as having commercial networks in different markets globally. I also look forward to continue to explore other potential areas of collaboration and partnership which will further deepen our long-term relationship."
RAPID's refinery has a capacity to refine 300,000 barrels of crude per day and this will see it producing a host of refiner petroleum products, including gasoline and diesel which meets the Euro 5 fuel specificiations; as well as feedstock for its integrated petrochemicals complex producting 3.5 million tonners per annum of products.
Wan Zulkiflee said the PIC is almost 60% complete and is on track for refinery start-up in 2019.
When Petronas embarked on the PIC back in 2011, it was with a clear vision to position Malaysia as the next regional oil and petrochemical industrial hub to deliver immediate economic benefits and spur future growth.
The PIC is Petronas' largest downstream investment on a single site to date, and is one of the most ambitious industrial developments in the region.
He said over the years, Petronas has established a steady business relationship with Saudi Aramco through the purchase of Saudi crude oil for its existing refineries and also other petroleum products.
“For the RAPID project, it all started in Geneva in August 2014 when I had the opportunity to meet His Excellency Khalid Al Falih who was then the CEO of Saudi Aramco where the idea of a partnership in the RAPID project was first mooted.
“Almost two and a half years after that meeting and many many hours of engagement between our teams, we are here to witness the signing of the Saudi Aramco's acquisition of a 50% stake in the refinery and cracker project,” he said.