Saudi Arabia's national oil company Saudi Aramco and its Malaysian counterpart Petronas are facing technical issues in finalizing the US$7bn financing deal for the RAPID refinery (Refinery and Petrochemical Integrated Development) in the southern region of Johor (Malaysia). The agreement stumbles upon certain terms that must be fulfilled by both parties and the negotiations process is taking longer than expected. Saudi Aramco and Petronas expect the agreement to be completed soon.
The US$16bn RAPID project will consist of a 300,000 bbl/d refinery and a petrochemical complex with a combined capacity of 7.7 Mt/year of various grades of products, including differentiated and speciality chemical products (synthetic rubbers and high-grade polymers). The project is part of Petronas' Pengerang Integrated Petroleum Complex (PIPC), estimated at US$27bn. The refinery project is on track to be commissioned in 2019, with petrochemical operations will follow in 2020.
In January 2017, many sources believed Saudi Aramco would withdraw from the project because of the volatile environment and the low prices. Petronas said in the meantime that it would go forward regardless of Saudi Aramco's decision. Saudi Aramco eventually decided to maintain its share in the project and is also expected to buy a stake in the refinery and could also supply around 50% the crude that will be processed there.