PetroChina's state-owned parent company, China National Petroleum Corporation (CNPC), is to invest in a $10 billion refinery project in Malaysia, according to private Malaysian firm Merapoh.
CNPC, China's largest oil and gas producer and supplier, has also agreed to buy the refinery's products for at least 20 years, Reuters reported.
Merapoh Chairman Nazri Ramli told a press conference that “CNPC will take up equity in the project” which will see a 350,000 barrels per day (bpd) refinery built in the northwestern Malaysian state of Kedah.
Environmental approval for the project is expected by September.
Merapoh is responsible for project development and construction which has been slated to commence later this year and be completed by 2014.
This deal will further strengthen CNPC's overseas presence in the downstream segments, especially since its publicly listed arm PetroChina just got approval to acquire a stake in a Nippon Oil refinery following another acquisition which saw it become the controlling shareholder in Singapore Petroleum Company (SPC).
PetroChina last week made a mandatory cash offer for the remaining SPC shares.
PetroChina International (Singapore) Pte. Ltd., recently acquired a 45.51% stake in SPC, representing 234.5 million shares, for S$1.47 billion ($1.02 billion) from Keppel Corporation's Keppel Oil & Gas Services Pte Ltd (KOGS).
SPC has a 50% interest in Singapore Refining Company Private Limited, one of the three major petroleum refiners in Singapore. SPC also conducts terminalling and distribution and trading of crude and refined petroleum products.
Meanwhile, it is understood that two private equity firms, Hong Kong Beijing Star Ltd and Winson Investment Ltd, has already raised funds to buy a 40% stake in Merapoh each.
According to Nazri, Merapoh management would be controlling the remaining 20% stake in Merapoh, which holds the license to build and develop the Kedah refinery.