M’sia, Aramco conclude talks for RM27b stake in Rapid project

By NG MIN SHEN / Graphic By TMR

Malaysia has completed talks with Saudi Arabian Oil Co (Saudi Aramco) and is on track to receive a US$7 billion (RM27.44 billion) investment from for the Refinery and Petrochemical Integrated Development (Rapid) complex in Pengerang, Johor, said Minister in the Prime Minister’s Department Datuk Seri Abdul Rahman Dahlan.

“I am pleased to announce that the negotiations with Saudi Aramco for its investment in Petroliam Nasional Bhd’s (Petronas) Rapid project in Pengerang have been concluded and are on track for completion by the end of this month.

“Malaysia’s foreign direct investment inflow will be boosted by this US$7 billion investment from Saudi Aramco,” Abdul Rahman said in his officiating speech at the Offshore Technology Conference Asia 2018 in Kuala Lumpur yesterday.

The investment will be in by the end of March this year, he added.

Saudi Aramco, the world’s biggest exporter of crude oil, agreed to acquire a US$7 billion stake in the project in February last year, in a bid to defend Asia as its largest market.

Last November, Abdul Rahman said the two parties were facing technical issues in completing the deal.

Rapid forms part of Petronas’ Pengerang Integrated Complex (PIC), a US$27 billion project which also includes six associated facilities. To date, 87% of the complex has been completed.

Refinery capacity for the PIC is set to come on stream by the first quarter of 2019 before achieving full commercial operations in October of the same year, adding some 300,000 barrels of crude oil a day to total output.

The remaining two petrochemical plants and associated facilities are scheduled to be operational by end-2019, bringing in additional capacities of 220,000 barrels of fuel per day and 3.5 million tonnes of petrochemical products annually.

“The PIC not only strengthens Petronas’ downstream business, but also enables Malaysia to capitalise on the huge demand for carbon-based composite materials, a market that is forecast to be worth US$100 billion by 2021,” Abdul Rahman further said.

He added that 2017 was deemed by many as the year of recovery, following the global oil price crash in 2014.

“The oil and gas industry today is seeing stability in the market where oil prices have recovered substantially,” he said.

However, he also noted that Malaysia is not immune to the unpredictable global turbulences and headwinds in both the economic and geopolitical fronts.

“Therefore, there is a great need for us to build on our strengths to remain resilient — which comes with tough decisions that may not necessarily be popular, but are beneficial for the country and the rakyat in the long run,” the minister added.

Tan Sri Wan Zulkiflee Wan Ariffin

With the oil price recovery, costs are showing signs of rising at a worrying rate, says Wan Zulkiflee( Pic by Hussein Shaharuddin/TMR)

Petronas president and group CEO Tan Sri Wan Zulkiflee Wan Ariffin, who delivered a keynote address at the same event yesterday, said the improved oil prices have led to a steady rise in the number of active drilling rigs, which should trigger more business opportunities in the sector.

“In Malaysia, we’ve success- fully achieved first production in 11 projects. However, as the outlook remains uncertain, it is imperative for us to continue to be vigilant in maintaining cost discipline and drive for efficiency.”

He said with the oil price recovery, costs are showing signs of rising at a worrying rate.

“This is likely being driven by a premature exuberance among industry players. If we do not keep these escalating costs in check, the industry runs a risk of negating the value gained from intensive cost-efficiency efforts over the last three years,” Wan Zulkiflee cautioned.