A state owned oil company from Malaysia and a Saudi Arabian Oil Co. has planned to construct refinery and a petrochemical complex in the Southeast Asian nation and the two companies are seeking proposals from banks for a finance of about $7 billion for the planned project, the media said quoting people familiar with the matter.
The two projects are worth a total of $12 billion and are to be constructed by Petroliam Nasional Bhd and and Saudi Aramco and the lenders would provide financing for both the projects. According to sources, the two oil companies have signed a memorandum of understanding that would guide the construction and commissioning of the projects. The sources further said that the banks are expected to submit proposals by later this month.
While there were no comments offered by Saudi Aramco’s media officials at its headquarter in Dhahran, Saudi Arabia, a Petronas’s spokesman couldn’t immediately be reached for comments by the media.
While Petronas announced its prolonged commitment to invest in long-term projects, the company also announced in January that it would cut its capital and operating expenditures by 50 billion ringgit ($12.2 billion) over a period of four years. the company has plans of building up the $27 billion Refinery And Petrochemicals Integrated Development that it is building for future growth and will come onstream in 2019 and the planned projects with Saudi Aramco are part of that larger project.
According to May 18 statement, lower product prices and reduced sales volume have driven Petronas to report a 71 percent decline in net income of 2.7 billion ringgit in the first quarter from 9.3 billion ringgit a year earlier. Compared to RM591.9 billion as at Dec. 31, its total assets decreased to 567.6 billion ringgit as at end March. In March last year, the company raised $5 billion by selling dollar bonds and Islamic debt.
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Saudi Aramco has a share in plants capable of processing 5.4 million barrels a day from its refining and petrochemical partnerships in the U.S., China, South Korea and Japan, as well as in Saudi Arabia. It is also the world’s biggest oil exporter. Chief Executive Officer of the company Amin Nasser told reporters on May 10 that it is also looking to develop more joint ventures in countries including the U.S., China, Indonesia, India, Vietnam and South Africa.
In the wake of the lower prices since 2014 for its most lucrative export sector, Saudi Arabia is seeking to reduce its reliance on oil sales. Creating what could be the world’s largest listed company, the Middle Eastern nation wants to sell stock in Saudi Aramco for the first time in the history of the company as a part of its effort to reduce reliance on oil.
(Adapted from Bloomberg)