Saudi Aramco to take 50% stake in Petronas' Rapid project

KUALA LUMPUR: Saudi Arabian Oil Co (Saudi Aramco) is taking up a 50% stake in Petroliam Nasional Bhd’s (Petronas) Refinery and Petrochemical Integrated Development (Rapid) project for US$7 billion (RM31 billion) cash.

Petronas Tuesday signed a share purchase agreement with Saudi Aramco for the stake in the refinery and cracker project, which will see Saudi Aramco supply up to 70% of the crude feedstock requirements of the refinery. Petronas, meanwhile, will supply natural gas, power and other utilities.

The agreement comes after news reports of Saudi Aramco aborting its planned joint venture with Petronas a few weeks ago.

On this, Saudi Aramco chairman Khalid Al Falih stressed that the state-run oil major has never thought of pulling out from the Rapid project since negotiations started three years ago.

“We’re proud of this partnership with Petronas. This is the market that we always want to be in. This is a growth market for us with strong GDP (gross domestic product),” he said after the signing ceremony yesterday.
Petronas president and group CEO Datuk Wan Zulkiflee Wan Ariffin noted that this partnership is a strategic fit for both parties.

“Each of us brings value to the table and both are professionally run oil companies ... with Saudi Aramco, we’ll have a long-term crude supply given that it is the world largest crude exporter. Malaysia is a focused market for them,” he said.

The RM31 billion investment will be pumped in within a year upon the signing of the agreement, according to Zulkiflee.

Upon completion of the transaction, Petronas and Saudi Aramco will hold equal ownership in selected ventures and assets of the Rapid project.

With a capacity to refine 300,000 barrels of crude per day, Rapid’s refinery will produce refined petroleum products such as petrol and diesel, as well as feedstock for the integrated petrochemical complex producing 3.5 million tonnes a year of products.

Rapid is part of the Pengerang Integrated Complex (PIC) that is positioned to be a regional downstream oil and petrochemical industrial hub. PIC is almost 60% complete and is slated for refinery start-up in 2019.

Apart from Rapid, PIC includes the development of associated facilities such as a co-generation plant, a liquefied natural gas regasification terminal, a raw water supply project, a deepwater terminal as well as centralised and shared utility facilities.

Khalid, who is also Saudi Arabia’s Minister of Energy, Industry & Mineral Resources, said Saudi Aramco’s venture into Rapid will help strengthen its downstream refining business ahead of its listing plan next year.
“The company has strategic plan for the refinery capacity growth target. We believe this will strengthen the equity story of Saudi Aramco.

“Saudi Aramco will go public next year and the investors will be looking for the company to have balanced portfolio across the value chain,” he said, adding that Malaysia will be an important platform for Saudi Arabia to grow its refinery business in Southeast Asia.

He noted that Saudi Arabia is comfortable with its partnership with Malaysia and the private sector in Saudi Arabia has been urged to expand its presence in Malaysia.