KUALA LUMPUR (Reuters) - Saudi oil giant Aramco is buying an equity stake in Malaysian firm Petronas' major refining and petrochemicals project in the country, investing a total of US$7 billion (S$9.82 billion), the companies confirmed on Tuesday (Feb 28).
In a joint statement, the firms said Aramco will take a 50 per cent stake in select ventures and assets in the Refinery and Petrochemical Integrated Development (Rapid) project developed by Malaysian state-controlled Petroliam Nasional Berhad, known as Petronas.
The deal signing was formally witnessed by Malaysian Prime Minister Najib Razak and Saudi King Salman, currently on a state visit to Malaysia.
Petronas' Chief Executive Officer Wan Zulkiflee Wan Ariffin told reporters Aramco will take a 50 per cent stake in Rapid's refinery and cracker project.
"Malaysia 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," Aramco CEO Amin Nasser said.
"With Rapid's strategic location in a prolific hub, it would also serve to enhance energy security in the Asia-Pacific region."
Aramco will supply up to 70 per cent of the crude feedstock requirement of the refinery, with natural gas, power and other utilities to be supplied by Petronas.
Rapid will contain a 300,000 barrel-per-day oil refinery and a petrochemical complex with a production capacity of 7.7 million metric tonnes. It is expected to go online in the first quarter of 2019.
The facility is planned as part of the Pengerang Integrated Complex (PIC) in the southern Malaysian state of Johor that will include Rapid and oil storage facilities.
Petronas on Tuesday said almost 60 per cent of the PIC development is complete, and that it is on track for refinery start-up in 2019.
Saudi Energy Minister Khalid al-Falih echoed Nasser's comments, saying Saudi Arabia would use the Malaysian investment as a platform other investments in southeast Asia. "We will encourage the private sector of Saudi Arabia to come and look at Malaysia as an investment for its own market and also to address the needs for the broader region," he said.