Aramco buys 50% of Petronas polymers unit for $900 mln

Saudi Aramco’s wholly owned subsidiary, Aramco Overseas Holdings, has acquired a 50 percent stake of Petronas Chemicals Group’s (PCG) polymers unit in Malaysia for $900 million, it said in a statement.

The agreement follows one announced in February, in which Aramco Overseas said it would buy 50 percent of PRPC Refinery and Cracker from Petronas Refinery and Petrochemical Corporation (PRPC).

As part of the new deal, Saudi Aramco will supply up to 70 percent of the crude oil required by PRPC Refinery and Cracker, which will help ensure sustainable feedstock supply for the polymers unit, PRPC Polymers.

PCG and Aramco will have equal stakes in PRPC Polymers within the Petronas Pengerang Integrated Complex (PIC). PRPC Polymers’ main activities are to develop, construct, commission and operate polymers and glycol plants.

“The petrochemicals projects in PIC [are] one of the largest growth projects for PCG and Petronas’ largest downstream investment on a single site to date,” said Datuk Sazali Hamzah, Petronas VP and PCG MD and CEO.

“As at August 2017, the PIC development is at about 75 percent overall project progress and the first petrochemical production is expected to commence after the completion of the refinery, which is scheduled in 2019,” he added, noting that the petrochemicals projects within the PIC are currently progressing as planned.

Saudi Aramco in February said it will invest $7 billion in Petronas' Refinery and Petrochemical Integrated Development (RAPID) project in Malaysia's southern state of Johor.

The refinery is part of the planned $27 billion Refinery and Petrochemical Integrated Development (RAPID) project, sponsored by state-run Malaysian energy firm Petronas.  

According to a bourse statement by Petronas, PCG is divesting the stake in order to share project risk with Saudi Aramco as an equal joint venture partner in a mega integrated project.

“The project is still at construction phase and the risk will remain high until project completion in 2019. The divestment consideration to Saudi Aramco is 50 percent of the total project costs incurred up to closing date,” the statement said.