Petronas defends RM31b joint venture with Saudi Aramco

In the wake of concerns raised over alleged attempts to sabotage the nation's economy, Petronas has defended its decision to pursue a RM31 billion deal with Saudi Aramco for the Refinery and Petrochemical Integrated Development (Rapid) in Pengerang, Johor.

English-daily The Malay Mail quoted Petronas group executive vice-president Md Arif Mahmood as saying that it was "never forced into the joint venture" and had always been eyeing a partner like Aramco.

"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," Md Arif is reported as saying in an interview.

The Rapid project is part of Petronas’ Pengerang Integrated Complex (PIC), estimated to cost as much as US$27 billion.

"We are looking for partners to invest and co-invest. And selling and co-investing are very different," he pointed out.

Md Arif also said not many people were aware that discussions between Petronas and Aramco have been ongoing since 2014.

"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," he said in describing the partnership as being "an obvious and perfect" one.

The deal signing was formally witnessed by Prime Minister Najib Abdul Razak and Saudi King Salman on Feb 28 as part of the king's agenda while on a state visit to Malaysia.

Md Arif dismissed as "not credible" reports that said senior Petronas officials were against the joint-venture with Aramco and had to be forced into it.

"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," he stressed.

Among others, Md Arif said, Rapid would be supplying at least 50 percent of the 300,000 barrels of crude oil to be refined a day at its facilities.

On reasons for partnering with Aramco, he said Petronas needed a partner that would be able to leverage its 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 (Rapid) 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," Md Arif added.

Najib last week accused a former leader of spreading lies about Malaysia, which he said had nearly scuttled the deal between Petronas and Saudi Aramco.

In the veiled attack apparently aimed at Parti Pribumi Bersatu Malaysia chairperson Dr Mahathir Mohamad, Najib lamented that the opposition would rather create false propaganda than to engage on facts.