KUALA LUMPUR: Malaysia’s Prime Minister Najib Razak announced on Monday (Feb 27) that Saudi Arabia’s state oil company will invest US$7 billion in an oil refinery to be set up by Malaysian oil company Petroliam Nasional (Petronas).
Mr Najib said the decision was made before noon on Monday after discussions between top executives from Petronas and Saudi Aramco to build the plant, which is part of Malaysia’s US$27 billion Refinery and Petrochemical Integrated Development (RAPID) project in Pengerang in the southern state of Johor.
The agreement, which is scheduled to be signed on Tuesday afternoon, will make Aramco the single-largest investor in RAPID in Johor.
The RAPID project, which is expected to begin operations in the first quarter of 2019, will contain a 300,000-barrel-per-day oil refinery and a petrochemical complex with a production capacity of 7.7 million metric tonnes.
Mr Najib made the announcement on the second day of a four-day state visit to Malaysia by Saudi’s King Salman. Ties with Saudi Arabia are “at an all-time high”, said Mr Najib, who is also hoping that the investment would not be politicised.
“When we went to China, we were accused of selling our sovereignty. I wonder what they will say now that Saudi Arabia has invested in Malaysia. Are they going to say we sell our sovereignty to Saudi Arabia?” Mr Najib said.
On reports that Aramco is planning to list its oil assets early next year and is seeking investors from the region, Mr Najib said that the issue was not discussed during the meeting with King Salman.
The IPO is said to be the largest ever as Saudi Arabia unveils plans to transform its economy, to be less reliant on oil.
As part of Monday’s meeting, a series of memorandums of understanding (MOUs) were signed between both countries to boost trade and investment in healthcare, education, construction as well as the halal industry.
In 2016, total trade between the two countries was at RM14 billion (US$3.15 billion), an increase of 28 per cent from the year before.
Malaysia also has a strong presence in Saudi Arabia’s construction sector, with 19 contracts worth RM18.5 billion awarded to Malaysian companies.
(Source: Channel News Asia)