Saudi Aramco may boost petrochemicals' investment in Malaysia, says Petronas' official

Saudi Arabian Oil Co. (Saudi Aramco), the world's largest crude exporter, may expand its investment in Pengerang Integrated Complex (PIC) that includes a 300,000 barrel-per-day oil refinery, a petrochemical complex, and an oil storage site.

Sazali Hamzah, the CEO of the chemical manufacturing unit of Malaysia’s state energy firm Petronas, said there were mutual offers between the firms, but feasibility remains to be assessed.

Last year, Aramco inked a deal to invest $7 billion in the Refinery and Petrochemical Integrated Development (RAPID). It later bought a $900 million stake in petrochemical projects in RAPID project in the southern Malaysian state of Johor.

"Petronas Chemicals Group Bhd is looking to grow aggressively in specialty chemicals, which are raw materials used to manufacture consumer products such as high-performance tyres and LCD televisions, "Hamzah said. The acquisitions would be a key step toward expanding the higher-margin specialty chemicals business, he added.

“We have already targeted a few. When we acquire, it’s not only for technology but also for market penetration,” Sazali told Reuters, adding that Petronas Chemicals was looking at companies in Europe, the United States and India.

Sazali also said the acquisition market was competitive as a lot of companies are looking to expand into petrochemicals.

The hunt for acquisitions comes as parent company Petroliam Nasional Bhd, or Petronas, relies more on its downstream business to boost revenue amid analyst estimates that it will produce less oil in the future.

Much of Petronas’ capital expenditures in the last few years have been spent on its downstream business, particularly the RAPID project in the southern Malaysian state of Johor.

Companies such as Saudi Aramco, Exxon Mobil Corp and Royal Dutch Shell Plc have all been expanding into petrochemicals in recent years to diversify their businesses from crude oil production.

Petronas Chemicals is spearheading the petrochemicals component of RAPID, which is Petronas’ largest downstream project with an estimated $27 billion of total investment.