Aramco JV was well thought out, says Petronas

The Pengerang Integrated Petroleum Complex, which houses RAPID, is 60 per cent complete. — Picture by Malay Mail
The Pengerang Integrated Petroleum Complex, which houses RAPID, is 60 per cent complete. — Picture by Malay Mail

KUALA LUMPUR,March 27 — The joint venture with Aramco for the Refinery and Petrochemical Integrated Development (RAPID) was not done overnight but had been looked at since 2014, said Petronas group executive vice-president Md Arif Mahmood.

Arif said the Malaysian unit was “never forced into the joint venture” and had always been eyeing a partner like Aramco.

Arif, who is the downstream chief executive officer, dismissed as “not credible” reports which said that senior Petronas officials were against the joint-venture with the Saudi Arabia’s oil giant Aramco in the RAPID project and had to be forced into it.

Instead, he said, the partnership was “an obvious and perfect” one.

“How can we be forced to do this deal? We were looking for a partner that would complement the project. We are not selling RAPID as reported. It’s a 50-50 partnership,” he said in an interview with Malay Mail.

“We are looking for partners to invest and co-invest. And selling and co-investing are very different.” 

Arif said the joint-venture was going to be a long-term marriage, and Petronas was not going to be forced into such a massive venture with a foreign partner.

“I am going to make this very clear. It had to be within the terms agreeable, not only for us but agreeable to both parties before we could actually get to the stage where we are now.”

Asked why Aramco was chosen as a partner of all the global players, Arif said the joint venture was mutual and it was a perfect match.

“We were looking for a partner that would complement the project and that is the obvious criteria when you are looking for partners.”

Petronas needed a partner that would be able to leverage their strength and manage the risks at the same time.

“Why Aramco? It is the biggest crude supplier in the world with a supply capacity of 10 million barrels a day,” he said.

“This refinery needs a specific type of crude oil that will allow us to make the necessary cut to supply to the petrochemical plants.

“To have a crude supplier as a partner, for long-term crude security, that itself is a good reason why Aramco.” 

Arif said the deal with Aramco was not made within short notice.

“Not many people are aware of this, that is the discussions between Petronas and Aramco have been ongoing for some time.”

He said the Saudis had a look at this venture from 2014, and visited the site that was just being cleared for construction.

“The discussions with the Saudis took more than two-and-a-half years. They looked at the due diligence of the investment opportunities. It is not like it is only yesterday we decided to partner Aramco.

“Just to be clear, RAPID is just a sub of the whole Pengerang Integrated Complex (PIC) project. The whole complex today has seen a progression of 60 per cent and we are doing well,’ he said.

Asked whether RAPID would be refining only Aramco’s crude oil following this deal, Arif said since the partnership is on a 50-50 basis, Aramco will supply at least 50 per cent of the 300,000 barrels of crude oil to be refined at RAPID.

Aramco is investing US$7 billion (RM31 billion) cash, an amount that will be invested within a year upon the signing of the agreement, giving Aramco equal ownership in selected ventures and assets of the RAPID project with Petronas.

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