PETRONAS CHEMICALS GROUP has sold a 50% stake in its PRPC Polymers subsidiary to Saudi Aramco for RM3.8bn (US$900m).
PRPC Polymers will now operate as a JV between the two companies. The JV will be based within Petronas’ Pengerang Integrated Complex (PIC) in Johor, Malaysia. Petronas vice president and CEO of Petronas Chemicals, Datuk Sazali Hamzah, said that signing the JV agreement with Saudi Aramco is a “momentous milestone” for PIC, Petronas’ largest downstream investment.
According to a filing with Bursa Malaysia, Saudi Aramco will supply up to 70% of PRPC Polymer’s crude supply, helping to sustain feedstock supplies. The sale will allow Petronas Chemicals to draw on Saudi Aramco’s experience in the execution, implementation and operation of large-scale, integrated petrochemical projects. Petronas Chemicals said the sale will also free up some capital to allow it to invest in other growth projects.
“This agreement strengthens Saudi Aramco’s position and growth in South East Asia through crude supply and world-scale downstream operations. Through this venture, we will also achieve a high degree of integration between refining and petrochemicals, with petrochemicals production greater than 10% of crude intake. It is also in tandem with our downstream growth strategy where we are investing in a global refining and petrochemicals system of strategically located world-scale manufacturing complexes with participated refining capacity of several million barrels per day,” said Saudi Aramco VP International Operations, Said Al-Hadrami.
Bursa Malaysia has waived the need for shareholder approval for the transaction, but regulatory and government approvals will still be necessary. The deal is expected to be completed by 15 March 2018.
It is the second deal signed this year between Petronas and Saudi Aramco. In February, Saudi Aramco invested US$7bn in Petronas’ Refinery and Petrochemical Integrated Development (RAPID) project, also in Johor.
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