Saudi Aramco, the world’s biggest oil producer and Malaysia's state-owned energy company Petronas, agreed to form two joint ventures in the Asian country for the development of a refinery and petrochemical complex supplied by Saudi crude.
Aramco and Petronas will have equal partnership in the JVs, which are part of the Refinery and Petrochemicals Development project located in Pengerang Integrated Complex in Malaysia’s southern state of Johor, the Dhahran-based company said in a statement on Wednesday. Aramco did not disclose the cost of the projects.
“This agreement strengthens Saudi Aramco’s position and growth in South East Asia through crude supply and world-scale downstream operations,” said Abdulaziz Judaimi, Aramco’s senior vice president of downstream. “Through this venture, we will also achieve a high degree of integration between refining and petrochemicals, with petrochemicals production greater than 20 per cent of crude intake.”
Saudi Arabia, the world’s biggest oil exporter, is planning to nearly double its refining capacity from 5.4 million barrels of oil per day now by expanding in the kingdom and abroad, where it has stakes in refineries in China, the United States, Japan and South Korea.
Aramco plans to meet 50 per cent of the refinery’s crude needs, with an option to increase supply to 70 per cent, while natural gas, power and other utilities will be provided by Petronas and its affiliates.
The 300,000-barrel-per-day refinery will produce an array of products that include gasoline and diesel, which meet Euro 5 fuel specifications and will also provide feedstock to the petrochemical complex, which can produce 3.3 million tonnes per annum of products.
With 87 per cent of construction work on Rapid completed, the refinery is set for start-up in the first quarter of next year.
Aramco and other Arabian Gulf state-owned companies, including Abu Dhabi National Oil Company are expanding their refining and petchems capacities as part of efforts to eke out extra value from each barrel of oil. Adnoc plans to nearly double its refining capacity and petrochemical production by 2025.
The JV “is also in tandem with our downstream growth strategy where we are investing in a global refining and petrochemicals system of strategically located world-scale manufacturing complexes with participated refining capacity of eight to ten million barrels per day,” said Mr Judaimi.