Saudi oil giant Aramco will buy an equity stake in Malaysian firm Petronas' major refining and petrochemical project, the companies said on Tuesday, pumping in $7 billion in its biggest downstream investment outside the kingdom.
The deal will boost Aramco's downstream business ahead of a planned initial public offering next year and also bolsters Malaysia's state-controlled Petroliam Nasional Bhd - known as Petronas - after it cut spending because of the slump in oil prices.
In a joint statement, the firms said Aramco will take a 50 percent stake in select ventures and assets in the Refinery and Petrochemical Integrated Development (RAPID) project developed by Petronas. The deal signing was witnessed by Malaysian Prime Minister Najib Razak and Saudi King Salman, seen above, on a state visit to Malaysia - the first in over a decade.
"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 Chief Executive Officer 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."
Petronas' Chief Executive Officer Wan Zulkiflee Wan Ariffin told reporters Aramco will take a 50 percent stake in RAPID's refinery and cracker project. Aramco will supply up to 70 percent of the crude feedstock requirement of the refinery, with natural gas, power and other utilities to be supplied by Petronas.
Like neighboring Singapore, Malaysia's Pengerang peninsula sits between the Malacca Strait and the South China Sea, through which almost all the Middle East oil and gas bound for northern Asia's industrial powerhouses of China, Japan and South Korea is shipped.
Petronas on Tuesday said almost 60 percent of the PIC development is complete, and that it is on track for refinery start-up in 2019.
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