Saudi Aramco Shelves Venture with Petronas
Saudi Aramco has suspended plans to partner Malaysian state-owned energy company Petronas in the Refinery and Petrochemical Integrated Development (RAPID) project in Johor, according to news agency Reuters citing industry sources familiar with the matter.
Launched in 2012, the RAPID project is designed to comprise a 300,000 bbl/day oil refinery and a petrochemical complex with a total capacity of 7.7 million t/y. The complex, which is costing around $27 billion, is planned to start-up in 2019.
“Considering the scale of the investment, China’s growing regional exports of refined products, Singapore’s existing refining capacity and the competition to Aramco’s own jv refineries in Korea, China and Japan it would have created, its deferral was probably a very well-considered and prudent Aramco management decision,” Sadad al-Husseini, an energy consultant and former Saudi Aramco senior executive, told the news agency Reuters.
Aramco’s move comes at a time when Petronas is struggling with the slump in oil prices, which forced it in early 2016 to announce spending cuts of up to 50 billion ringgit over the next four years. In addition, the Malaysian giant has cut oil production from Jan. 1 2017 following the pact made last month between OPEC and non-OPEC producers.