Saudi Aramco and Malaysia’s Petronas have announced that they will set up two joint venture (JV) entities for working on downstream projects in the Southeast Asian country, as part of the Refinery and Petrochemical Integrated Development (Rapid) strategic programme.

The joint ventures will allow Aramco and state-owned Petronas equal ownership of the refining and petrochemical facility, being built as part of the Rapid scheme, within the Pengerang Integrated Complex (PIC) in Malaysia’s southern state of Johor.

As part of the agreement between the two operating companies, Aramco will supply 50 per cent of the upcoming refinery’s crude, with the option of increasing the volume to 70 per cent. Petronas will supply natural gas, power and other utilities to the facility.

The two parties have the right to split the production of the JV units in equal amounts.

Currently 87 per cent of facility has been completed, and the unit is on track to come online in Q1 2019. The project is spread across a 6,239-acres site within the 22,000-acres PIC.

MEED last month reported that Aramco and Petronas were close to raising a loan of $8bn to partly finance the downstream facility.

The refinery, which has a capacity of 300,000 barrels of crude per day, will produce refined petroleum products, including gasoline and diesel, which meet Euro 5 fuel specifications.

It will also provide feedstock for the integrated petrochemical complex, which is capable of producing 3.3 million tonnes per annum of petrochemical products.

Petronas hopes to consolidate its position as the largest glycol and polypropylene producer in the world, as well as the second largest High-density polyethylene and isononanol producer in Southeast Asia, after the PIC unit starts operations.

Apart from the refinery, cracker and the petrochemical facilities that form part of the PIC expansion, future projects under the Rapid plan will include the development of associated facilities - such as a co-generation plant, a liquefied natural gas re-gasification terminal, a raw water supply project, a deep water terminal, as well as centralised and shared utility facilities.

The Rapid programme comprises downstream projects worth $27bn to be developed between the Malacca Strait and the South China Sea, a key maritime zone through which oil and gas from the Middle East producers bound for China, Japan and South Korea pass through.

Aramco has reportedly invested $900m in another stake in the Rapid programme.