Shearman & Sterling is advising Malaysian national oil company Petroliam Nasional Berhad (PETRONAS) in connection with a US$7 billion investment by the Saudi Arabian Oil Company (Saudi Aramco) in PETRONAS’ Refinery and Petrochemical Integrated Development (RAPID) project in Johor State, Malaysia.
On February 28, 2017, PETRONAS and Saudi Aramco signed a share purchase agreement (SPA) in respect of the Saudi Aramco investment. Following completion, PETRONAS and Saudi Aramco will hold equal ownership in selected ventures and assets of the RAPID project. The signing of the SPA took place in Kuala Lumpur and was witnessed by Malaysian Prime Minister Dato’ Sri Najib Tun Abdul Razak and King Salman Bin Abdulaziz Al Saud of Saudi Arabia who was on a visit in Malaysia, as well as the chief executive officers of PETRONAS and Saudi Aramco respectively.
The refinery and petrochemical project will be the largest downstream petrochemical project in Asia following completion in 2019. With capacity to refine 300,000 barrels of crude per day, the refinery will produce a wide range of refined petroleum products, including gasoline and diesel which meets Euro 5 fuel specifications and will produce 3.5 million tonnes per annum of products. The RAPID project forms part of the larger Pengerang Integrated Petroleum Complex (PIC) being developed in the Malaysian state of Johor. The PIC is a 22,000 acre complex which includes a cogeneration plant, an LNG regasification terminal, a raw water supply project, a deep water terminal and centralized and shared utility facilities. Shearman & Sterling’s Project Development and Finance team has been advising PETRONAS on various elements of the RAPID project since 2012, led by partner Bill McCormack (Singapore-Project Development & Finance).