New Straits Times
28th March, 2018
KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) and Saudi Aramco has formed two joint ventures for the Refinery and Petrochemical Integrated Development (RAPID) project.
The strategic alliance is a historic partnership between two of the largest and most successful national oil companies in the world, bringing together the resources, technologies, experience, expertise and commercial presence.
Petronas in a statement today said these joint ventures allow the parties equal ownership and participation in the operations of the refinery, cracker and selected petrochemical facilities in RAPID, which is part of the Pengerang Integrated Complex (PIC) in Malaysia’s southern state of Johor.
Through this collaboration, Saudi Aramco will supply 50 per cent of the refinery’s crude feedstock requirements with the option of increasing to 70 per cent.
Meanwhile, natural gas, power and other utilities will be supplied by Petronas and its affiliates. The parties will share the rights to offtake the production of the joint ventures on an equal basis.
“PIC has been an amazing journey for Petronas. This fast-track integrated development has reached peak construction this year and moving into pre-commissioning and commissioning activities soon,” said Petronas executive vice president & chief executive officer of downstream operations Datuk Md Arif Mahmood.
“The partnership with Saudi Aramco is the result of the collective effort of key stakeholders in the two governments in addition to the two companies. We welcome Saudi Aramco’s participation and look forward for a successful joint venture,” he said.
The refinery, which has a capacity of 300,000 barrels of crude per day, will produce a range of refined petroleum products, including gasoline and diesel, that meet the Euro 5 fuel specifications.
It will also provide feedstock for the integrated petrochemical complex, with a nameplate capacity of 3.3 million tonnes per annum.
The PIC project, which is 87 per cent into completion, is on track for refinery start-up by the first quarter of 2019.
Meanwhile, Petronas Chemicals Group Bhd (PetChem), a subsidiary of Petronas, announced that it has completed the 50 per cent stake sale in PRPC Polymers Sdn Bhd to Aramco Overseas Holding Cooperatief (AOHC), a wholly-owned unit of Saudi Arabian Oil Co (Saudi Aramco).
In its filing to Bursa Malaysia, PetChem said, PRPC Polymers has ceased to be its unit, as of today.
“PRPC Polymers will execute two subordinated shareholder’s loan agreements for shareholder loans amounting to US$622 million, under which PetChem and Aramco Overseas Co B.V, an affiliate of AOHC, will fund its proportion of 50 per cent of the amount of shareholder loans,” PetChem said.
Back in October 2, 2017, PetChem announced its plans to sell its 50 per cent stake in PRPC Polymers to AOHC for US$900 million or RM3.8 billion.
Following Saudi Aramco’s 50 per cent participation in PRPC Polymers, PetChem said it would have positive cash flow and reduce its capital expenditure commitment.
Last week, Minister in the Prime Minister’s Department Datuk Abdul Rahman Dahlan said negotiations on Aramco’s US$7 billion investment in Petronas’ Refinery and Petrochemical Integrated Development (RAPID) project at Pengerang in southern Malaysia have been concluded, and that the investment is expected ‘to be in by the end of this month.
Saudi Aramco had, in February 2017, signed a deal with Petronas to buy a 50 per cent stake in the Rapid project.
RAPID, which comprises a refinery, cracker and downstream petrochemical complex, is part of Petronas’ Pengerang Integrated Complex (PIC) in Johor.
Petronas expects to start to start operations at PIC’s refining and steam cracking complex in 2019 and at all derivatives units in 2020.