Two things are obvious following Petronas proposed take over of Aramco’s stake in a refinery and petrochemical joint-venture in Pengerang, Johor - firstly, it will have total control of the products coming out of the facilities, and secondly, it will continue to get the crude needed from the Saudi Arabian company despite no longer being partners.
Both these factors will go a long way to ensure the nation’s energy security especially at a time when the reliability of global fuel supply is often challenged.
Thirdly of course, the ability to take over Aramco's stake is also a testimony of Petronas’ financial strength as well as its agility to quickly pivot to new business directions when the opportunity arises.
On Monday, Petronas announced it is buying Aramco’s stakes in Pengerang Refinery Company Sdn Bhd and Pengerang Petrochemical Company Sdn Bhd, collectively referred to as PRefChem, which are the crown jewels of the US$27 billion Pengerang Integrated Complex. Past reports suggested that the Aramco stake is valued at US$7 billion (RM27.8 billion).
PRefChem is a 50:50 joint venture between the two national oil companies and is involved in the refining and cracking of crude, as well as the production of petrochemicals.
Petronas and Aramco share the rights to buy and distribute the refined petroleum and petrochemical products on equal basis, but once the proposed acquisition gets through, all will be with the national oil company.
The recent attack by the United States and Israel on Iran has resulted in disruptions in the West Asian oil and gas industry and infrastructure. It also resulted in the closure of the Straits of Hormuz, which affected global supply and consequently the price of the commodity world wide.
Malaysia’s crude supply has been compromised, as a result. Since the attack, the national oil company has been working hard to make sure that our pumps continue to supply petrol and diesel, our kitchens have LPG tanks and our planes have fuel to fly.
Apart from being tasked with developing the national oil and gas resources, Petronas is also mandated to look into Malaysia’s energy interests. It has done the task well, progressively extending fuel supply guarantee initially until end May in the early days of the war, and then pushed to June and now later to end July.
We are in fact rather oblivious to the fuel supply challenges faced by other nations as we go on with our lives as normal because of the work of Petronas and the Government. This is what energy security is all about. Also the availability of consistent and affordable energy has a direct correlation to inflation, affordability and our quality of life.
By taking full control of PRefChem, Petronas will have greater control of the petroleum refining and production outputs, and need not be subjected to allocations as per the partnership agreement if Aramco were still to be around.
For instance, half of the Euro 5 gasoline, diesel, and Jet A1 fuel produced by the 300,000 barrels-per-day refinery is technically pledged to Aramco. However, once PRefChem becomes its wholly-owned company, Petronas has a free hand on what it wants to do with the entire yield.
Full ownership, at this moment, will remove potential obstacles including the two giants diverging priorities. If Petronas wants the entire PRefChem products to be for domestic uses, it can now do so without needing approval from a partner.
If a global geopolitical disruption or supply-chain crisis occurs, for instance, it can instantly re-route 100 per cent of PRefChem’s output directly into the domestic market. This would insulate Malaysian consumers, industries and commerce from supply issues without the need to go through a board of diverging interest. It needs only to consider the nation or its interests.
It is important too for Petronas to make sure that crude supply for the refineries remains protected even after privatising PRefChem. Under the joint venture, Aramco is to provide between 50 per cent and 70 per cent of the feedstock needed for the refinery complex, and this will remain so even after PRefChem is wholly-owned by Petronas.
It is understood that Aramco exit has more to do with what its plans are going forward and not because of issues with its investment or doing business here. The plan to divest is civil, cordial and pragmatic and not due to any falling out of the relationship.
Saudi Arabia especially is paying a high price from regional instability and there is an obvious need to restrategise its businesses.
It is a pragmatic de-coupling, to use the showbiz term - Aramco monetises its investment to fund its new economic goals, while Petronas gains 100 per cent sovereignty over its domestic energy security. - May 26, 2026
Datuk Zainul Arifin is the Chief Executive Officer of Big Boom Media that publishes Scoop.my
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