Company signs share purchase agreement for Petronas’ Rapid project in Johor

KUALA LUMPUR: Saudi Arabia’s Aramco is taking up a 50% stake in the refinery and cracker assets at the Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, Johor, in a multi-billion-dollar deal with Petronas.

The two state-owned oil companies have signed the share purchase agreement to facilitate the US$7bil (RM31.1bil) investment by Saudi Aramco in Petronas’ Rapid project within the Pengerang Integrated Complex (PIC).

The huge investment makes Aramco the single largest investor in Malaysia.

Petronas president and group CEO Datuk Wan Zulkiflee Wan Ariffin said the partnership would be a valuable one.

“It is not often that two national oil companies – with strong reputations, wealth of operational experience and proven record in developing mega projects – come together to work on a greenfield project,” Wan Zulkiflee said.

“We will continue to explore other potential areas of collaboration and partnership which will further deepen our long-term relationship,” he told reporters after signing the share purchase agreement here yesterday.

The signing ceremony was held in conjunction with the state visit of Saudi Arabia’s Ruler, King Salman bin Abdulaziz Al-Saud, to Malaysia. Prime Minister Datuk Seri Najib Tun Razak and King Salman witnessed the ceremony.

Also present were Minister in the Prime Minister’s Department Datuk Seri Rahman Dahlan; Saudi Arabia’s Energy, Industry and Mineral Resources Minister Khalid Al-Falih, who is also Saudi Aramco chairman; and Saudi Aramco’s President/CEO, Amin H. Nasser.

Working hand in hand: Saudi Ruler King Salman bin Abdulaziz Al-Saud (seated, left) and Malaysian Prime Minister Datuk Seri Najib Tun Razak witnessing the exchanging of documents between Petronas president and group CEO Datuk Wan Zulkiflee Wan Ariffin and Saudi Aramco president and CEO Amin H. Nasser after the signing of an MoU between the two conglomerates in Kuala Lumpur. — Bernama

Upon completion of the transaction, subject to regulatory approvals and the completion of other associated agreements, Petronas and Saudi Aramco will hold equal ownership in selected ventures and assets of the Rapid project within the Pengerang Integrated Complex (PIC), Wan Zulkiflee said.

He added that Petronas was expected to complete all the conditions precedent to the agreement about one year upon its signing.

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.

According to Khalid, the Saudi Arabia group’s partnership with Petronas fits its agenda in establishing a strong presence in Malaysia.

“This is the market that we have always wanted to be in. Not only do we see Malaysia as a growth market with its strong gross domestic product, but we also see it as a platform for us to target other markets in the region,” Khalid said.

Aramco’s investment into Malay­sia’s Rapid project is expected to beef up its downstream portfolio ahead of its initial public offering in 2018.

“For Saudi Aramco, this is a final investment decision although we have to go through the legal and regulatory process to complete the deal,” Khalid explained.

Amin said the deal would strengthen the company’s position as the leading supplier of petroleum feedstock to Malaysia and South-East Asia.

The Rapid project is part of the PIC development in Johor undertaken by Petronas and is positioned to be a regional downstream oil and petrochemical industrial hub.

Rapid’s refinery will come with a capacity to refine 300,000 barrels of crude per day.

Petronas said the PIC development was 60% complete, putting the project on track for refinery start-up in 2019.