Petronas, Malaysia’s national petroleum company, and Saudi Aramco signed an agreement yesterday to collaborate in Malaysia’s Refinery and Petrochemical Integrated Development (RAPID) project. The partnership marks the beginning of a strategic and mutually beneficial relationship providing RAPID with high-impact strengths and synergies from both Saudi Aramco and Petronas. Strategically located in Pengerang on the south Johor coast near deep water port facilities, the US$27 billion RAPID project will see not only refinery activities, but also the production of all manner of petroleum derivatives.
Saudi Aramco, Saudi Arabia’s national oil company, will invest a massive US$7 billion (RM31 billion) in RAPID. With this, bilateral relations with Saudi Arabia, always strong, will be further enhanced. The signing was held in conjunction with Saudi ruler King Salman Abdulaziz Al-Saud’s four-day state visit to Malaysia.
Located on a 2,000ha site, RAPID will mean employment for 70,000 people during the development phase, and generate as many as 4,000 new jobs once completed, which is expected to happen in early 2019. With the signing of the agreement, both parties will hold equal ownership in selected ventures and assets of the RAPID project. Saudi Aramco will be assuring the facility of 70 per cent of the crude feedstock required by the refinery. Petronas, meanwhile, will supply natural gas, power and other utilities. It is billed by the latter as a partnership that brings together two strong organisations to develop a mega project that will have commercial networks in different markets globally.
RAPID will trigger a new phase of economic growth for the country, based on its petrochemical activities that will service the region and beyond. And, too, given the growth of renewable energy worldwide, the hydrocarbon industry must diversify because despite talk of oil being a depleting resource, new, huge reserves have been found in Iran, and the Levant, Syria and Palestine especially. Furthermore, when successful, RAPID is set to be the regional market leader, if not global. Hence, by investing in the project, Saudi Aramco, the world’s largest oil and gas company, will have procured a foot in the industry’s future. For, the project will contain a 300,000 barrel-per-day refinery and a petrochemical complex with a production capacity of 7.7 million metric tonnes annually of differentiated speciality chemicals, such as synthetic rubber and high-grade polymers. And, who knows what future research and development will come up with? RAPID, then, is set to push the frontier of the oil and gas industry into new growth areas.
A win-win agreement, it cannot be denied. Masters in the field, both Petronas and Saudi Aramco will have their hands strengthened. For the latter, this will add value to its proposed initial public offering, much anticipated by the market. As for Petronas, it now goes forward with its accumulated expertise that can mean immense opportunities for the country.