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KUALA LUMPUR (Reuters) - Malaysia's Prime Minister Najib Razak announced on Monday that Saudi Arabia's state oil company Saudi Aramco will invest $7 billion into an oil refinery and petrochemical project in Malaysia's southern state of Johor.
Najib said the decision was made before noon on Monday after discussions between top executives from Saudi Aramco and Malaysia's state-owned energy company Petroliam Nasional Bhd (Petronas), the sponsor of the $27 billion Refinery and Petrochemical Integrated Development (RAPID) project.
Najib's statement marks a dramatic reversal in RAPID's fortunes after industry sources familiar with the matter said in January that Aramco planned to drop its participation in a partnership with Petronas in the project. At the time, Petronas said it would move ahead in spite of Aramco dropping out. Najib did not give any details on the change of heart.
"This is a significant investment and more details will be announced tomorrow," Najib said at a brief news conference after hosting a state luncheon for Saudi Arabia's King Salman and his entourage.
"I just want to confirm that the agreement has been reached and King Salman is satisfied that the deal will be signed tomorrow," Najib said.
The RAPID project, located at Pengerang in Johor, is expected to begin operations in the first quarter of 2019. RAPID will contain a 300,000-barrel-per-day oil refinery and a petrochemical complex with a production capacity of 7.7 million metric tonnes. The complex will be alongside an existing oil storage site at Pengerang.
Last year, Petronas sought proposals for a $7.2 billion loan for the project, with separate guarantees from the company and Aramco, Thomson Reuters IFR reported in June.
Reporting by Rozanna Latiff, Writing by Joseph Sipalan; Editing by Christian Schmollinger