Saudi Aramco to Invest $7 Billion in Malaysian Oil Refining Hub

  • Agreement between Aramco, Petronas to be signed on Tuesday
  • Petronas building $27 billion oil complex in southern Malaysia

Saudi Arabian Oil Co. will invest $7 billion in an oil refining project being developed by Malaysia’s Petroliam Nasional Bhd., according to the Southeast Asian nation’s prime minister.

The deal will be signed Tuesday, Prime Minister Najib Razak told reporters Monday in Putrajaya. The two national oil companies have finalized plans to develop and operate a crude oil refinery as part of the larger integrated oil and petrochemicals complex at Pengerang in the southern state of Johor, Najib said, without providing further details. The agreement coincides with a visit to Malaysia by Saudi Arabia’s King Salman bin Abdulaziz.

Najib Razak, right, and King Salman bin Abdulaziz, Feb. 27.

Photographer: Mohd Rasfan/AFP via Getty Images

“The value of this investment is one of enormous significance,” Najib said.

A deal with the world’s biggest oil exporter may be a boost for the $27 billion development known as Refinery and Petrochemicals Integrated Development, or RAPID. The project, which will border the traditional Asian oil trading and refining center of Singapore, was announced in 2011 and originally scheduled to come online last year.

For Saudi Aramco, as the company is known, it furthers its long-standing strategy of investing in refining to help lock in demand for its crude, as it’s done in markets including U.S., Japan and South Korea. The company, which is preparing for what may be one of the world’s largest initial public offerings, has been battling for global market share against challenges posed by U.S. shale oil producers, Russia and even fellow members of the Organization of Petroleum Exporting Countries.

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