KUALA LUMPUR – Petroliam Nasional Bhd (Petronas) is capable of undertaking the US$27 billion (RM119.8 billion) downstream oil and gas project in Johor on its own if Saudi Arabian Oil Co (Aramco) pulled out, said a source close to the matter.

The source said Petronas had set aside the budget in its fixed investment decision and would proceed with the venture. Petronas would likely know soon whether Aramco would pull out from the Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, the source added. “There is no official feedback yet on Aramco’s decision whether to proceed or call off the planned partnership,” said the source.

Aramco was supposed to revert to Petronas last month but had not made any official decision. “We will wait until the end of the first quarter before concluding (on the partnership status). We will wait until the agreed time frame for a decision to be made as understood by both parties during the initial stages,” said the source.

The Wall Street Journal reported yesterday Aramco had given up on the project. It quoted three sources as saying that Aramco had concluded the project would not generate sufficient returns. Previously, it was reported that Petronas and Aramco would hold a 50 per cent stake each in the venture. Rapid is 55 per cent-completed with some packages constructed ahead of schedule.

On the need for a foreign partner, the source said although Petronas had the fund, it was earlier decided that the fund would be used for other projects, considering the sliding oil prices at the time. “However, now with a more promising crude oil price outlook for this year and next, we can safely say the possible pullout will not pose major implications on the project,” said the source.

Another source said the purported withdrawal was due to both parties not having reached an agreement on the project terms. Petronas, when contacted by NST Business, said no statement would be issued on the matter as of yesterday. The refinery is expected to have a capacity of 300,000 barrels per day of crude oil, while the steam cracker plant would have an annual capacity of more than three million tonnes of petrochemicals.