Rapid project Aramco Petronas
Industry

Saudis and Malaysians Work Out Differences in Refinery Deal

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Expanding on their petroleum interests in Asia, the Saudi state-run oil company, Saudi Aramco, and Malaysia’s own state oil firm, Petronas, have agreed on a contract that will bring them together on what’s become known as the Rapid project. The deal will be signed on February 27, during King Salman’s visit to the country.

An acronym for Refinery and Petrochemical Integrated Development, the estimated $27 billion refinery project is in Pengarang, which is located in the southern part of the country. It’s targeted to begin operations by 2019 at the earliest and when production begins, an estimated 300,000 barrels of both gas and diesel.

The hope is that the new refinery, which will be part of the Pengerang Integrated Petroleum Complex will become a central component within Asia for both importing and exporting of oil, petrochemicals and liquefied natural gas. The ambitious plan was announced six years ago, when oil prices were twice as high as they’ve been the previous two years.

The agreement is a far cry from what took place in late January. That was when Saudi Aramco suspended any further talks about working together due to concerns that the profit margins would be too slim to justify the investment. In addition, the lingering hangover of steep drops in prices has also made Aramco much more wary of aggressive investments.

The stop in Malaysia will be the first on King Salman’s three-week tour of Asia, with the goal being fulfilling on promises made to diversify the Saudi economy. Later on, the trip also includes visits to China and Japan.

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