Saudi Arabian Oil Company (Saudi Aramco) has signed an agreement with Malaysian firm Petroliam Nasional Berhad (Petronas) to acquire stake in the latter’s refining and petrochemicals project in the Asian country for $7bn.

Located in the southern Malaysian state of Johor, the Petronas’ Refinery & Petrochemical Integrated Development (RAPID) project comprises a 300,000 barrel-per-day oil refinery and a petrochemical complex which will have a production capacity of 7.7 million metric tons.

Under the deal, Saudi Aramco will supply most of the crude feedstock requirement of the refinery while Petronas will provide natural gas, power and other utilities.

The transaction is subject to regulatory approvals and the completion of other associated agreements.

Saudi Aramco president and CEO Nasser said that the deal strengthens its position as the leading supplier of petroleum feedstock to Malaysia and Southeast Asia.

Scheduled to be commissioned in the first quarter of 2019, the RAPID project is being developed as part of the Petronas’ Pengerang Integrated Complex (PIC) development project.

Upon completion of the deal, Saudi Aramco and Petronas will have equal stakes in selected ventures and assets of the RAPID project within the PIC.

Petronas president and Group CEO Datuk Wan Zulkiflee Wan Ariffin said: “The PIC is one of the largest industrial developments in the region as well as PETRONAS’ largest downstream investment on a single site to date.”

Petronas said that construction work on the PIC is almost 60% complete and is scheduled for start-up in 2019.

The PIC is part of the $27bn Pengerang Integrated Petroleum Complex (PIPC), which was proposed by the Johor state government to support the technology and economic development in the oil and gas downstream sector.

Image: Officials from Petronas and Saudi Aramco. Photo: courtesy of Saudi Arabian Oil Co.