February 22, 2017 / 2:34 PM / 6 months ago

EXCLUSIVE - Malaysia's Petronas, Saudi Aramco to sign deal on RAPID refinery project

The Petronas logo is seen at one of its petrol outlets in Putrajaya outside Kuala Lumpur December 8, 2012.Bazuki Muhammad/Files

KUALA LUMPUR (Reuters) - Malaysia's state oil firm Petroliam Nasional Bhd (Petronas) and Saudi Aramco are expected to sign an agreement to collaborate in Malaysia's Refinery and Petrochemical Integrated Development (RAPID) project, two industry sources said on Wednesday.

Petronas and Saudi Aramco, the state-owned oil company of Saudi Arabia, appear to be closer to agreeing to terms after sources told Reuters last month that Aramco was suspending a planned partnership in RAPID, a $27 billion refining and petrochemical complex in Malaysia's southern state of Johor.

An agreement is expected to be signed on Monday, said one of the sources who has knowledge of the matter and declined to be identified, during a visit by Saudi Arabia's King Salman to Malaysia. Neither of the sources had any firm details on the particulars of the agreement.

Saudi Aramco declined to comment and a Petronas spokesman said the company could not "offer any comment at this point in time."

The Malaysian government said King Salman is expected to arrive in Malaysia on Sunday in the first leg of his tour to Asia. It is Saudi Arabia's first official visit to Malaysia in over a decade. King Salman will be accompanied by ministers and business leaders.

A business forum is also being planned in the Malaysian capital Kuala Lumpur.

The RAPID project is designed to process 300,000 barrels a day of crude oil and produce 7.7 million tonnes a year of petrochemicals. The facility is planned as part of Petronas' Pengerang Integrated Complex that will include RAPID and oil storage facilities.

Petronas had said last month that RAPID is on track for start-up in 2019, and that its development had reached the 54 percent progress mark to date.

The Malaysian state oil firm has been struggling with the slump in global oil prices and has cut its expenditures in the past year. It has also slashed its dividend payouts to the government.

Petronas is expected to announce its fourth-quarter results on March 14.

Reporting by Emily Chow and Reem Shamseddine; editing by Christian Schmollinger and David Evans

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