Petronas seeks Aramco as partner in Rapid project

Having cancelled a proposed US$1.3 billion elastomers project at the Refinery and Petrochemicals Integrated Development (Rapid) project in the southern state of Johor earlier this year http://plasticsandrubberasia.com/apr2016/company13.html,Malaysia’s national petrochemicals/oil company Petronas is expected to bring in Saudi Aramco as its partner on board the Rapid project, according to news reports.

Petronas is expected to offer Saudi Aramco a 50% stake in the project and with the two companies to set up a joint venture in the first quarter of next year to run the US$21 billion project. A final decision on the possible partnership will be made in December.

In middle of this year, it was also reported that Petronas and Saudi Aramco had firmed up an agreement to develop a refinery and steam cracker, which is the backbone of the Rapid project. This news was followed by another report that the two oil companies were negotiating for a US$7.5 billion syndicated loan along with a bond issuance later to finance the project.

The first phase of Rapid is slated to be completed in 2019. In its annual report in June, Petronas stated the project is on schedule. Petronas had earlier said the refinery and petrochemical development project would cost some US$13 billion while related facilities, ranging from raw-water supply to a liquefied natural gas regasification terminal, would cost another US$8 billion.

Meanwhile, as part of an economic transformation to contend with the prolonged drop in oil prices, Saudi Arabia is expected to partially list Saudi Aramco, estimated to be worth up to US$3 trillion, in what could be the world’s largest-ever initial public offering, in 2018.

Petronas has been grappling with lower oil prices and has laid off 1,000 employees of its total workforce of 53,000, with media reports indicating it plans to cut several hundred more jobs in its public-listed subsidiaries. Its net profit for the second quarter ended June dropped a whopping 86% from the same period a year earlier. The company also added that it would cut spending by up to US$12 billion over the next four years.