KUALA LUMPUR: In a major move to boost cooperation in oil sector, Saudi Aramco signed an agreement with Malaysia’s national oil company Petronas here on Tuesday.
The deal will allow Aramco’s equity participation in Petronas, which is developing a high-tech $27 billion oil processing hub in southern Johor state bordering Singapore.
King Salman and Malaysian Prime Minister Najib Razak witnessed the signing ceremony. The agreement was signed by Amin H. Nasser, president and CEO of Aramco, and Zulkiflee Wan Ariffin, president & Group CEO of Petronas.
Khalid Al-Falih, chairman of Aramco board of directors and who is minister of energy, industry and mineral resources, was also present.
Aramco said in a statement that, “upon the completion of the transaction, subject to regulatory approvals and the completion of other associated agreements, both partners will hold equal ownership in selected ventures and assets of the RAPID project within the Pengerang Integrated Complex (PIC).”
The RAPID project includes a refinery with the capacity to churn out 300,000 barrels of oil a day, a cracker plant and a petrochemical complex with an annual production capacity of 7.7 million metric tons.
The deal will make Aramco the single largest investor in Malaysia.
The PIC, situated 400 kilometers south of the Malaysian capital Kuala Lumpur, is almost 60 percent complete.
The refinery begins operation in 2019.
Al-Falih said: “The Malaysian deal will help expand Aramco’s portfolio ahead of its initial public offering next year, which is touted to become the world’s largest share sale.”
The partnership marks the beginning of a strategic relationship providing RAPID with high-impact strengths from both Saudi Aramco and Petronas.
“On the occasion of the historic state visit to Malaysia by King Salman, Saudi Aramco is proud to be entering into a deeper partnership with our world class partner Petronas via the RAPID project,” Aramco’s president Nasser said.
“Together with Malaysia, the Southeast Asia region offers tremendous growth opportunities and today’s agreement further strengthens Saudi Aramco’s position as the leading supplier of petroleum feedstock to Malaysia and Southeast Asia.”
The partnership will also help Aramco many of is needs.
“Under the partnership, Saudi Aramco will meet most of the crude feedstock requirements of the refinery, with natural gas, power and other utilities supplied by Petronas,” said Aramco statement.
In his remarks, Petronas President & Group CEO Zulkiflee Wan Ariffin said, “The PIC is one of the largest industrial developments in the region as well as PETRONAS’ largest downstream investment on a single site to date.”
The PIC, located on a 6,242-acre site, also includes the development of associated facilities such as a co-generation plant, an LNG re-gasification terminal, a raw water supply project, a deep water terminal, as well as centralized and shared utility facilities.
The PIC forms part of Malaysia’s ambitious 22,000-acre complex under the government’s Economic Transformation Program to establish new engines of growth and push the nation into a new frontier of technology and economic development in the oil and gas downstream sector.