Moody”s Investors Service: Saudi Aramco” Stake in RAPID is Credit Positive for Petronas

Moody''s Investors Service: Saudi Aramco'' Stake in RAPID is Credit Positive for Petronas

KUALA LUMPUR, March 6— Saudi Aramco’s 50% stake acquisition in the Refinery and Petrochemical Integrated Development (RAPID) project is credit positive for the national oil and gas company, Petronas.

In a statement, Moody’s Investors Service said the acquisition would reduce Petronas’ capital outlay for the project, amounting to about US$27 billion (US$1=RM4.45).

“We expect that Petronas will be able to maintain a net cash position in 2017, compared to our initial assumption that the company will need to incur incremental borrowings to fund the RAPID project fully on its own.

“Therefore, Petronas’ credit metrics will continue to remain well positioned for its A1 ratings,” it said.

Furthermore, the credit ratings agency said the tie-up would also bring in a strong downstream partner for Petronas, given that Saudi Aramco has a strong track record in the development of large-scale projects.

The stake sale in RAPID was in line with Petronas’ strategy to reduce its operating and capital spending by about RM50 billion over four years from 2016.

As at September last year, Petronas managed to reduce 28% in capital expenditure year-on-year to RM36 billion.

The RAPID project contains a 300,000-barrel-per-day oil refinery and a petrochemical complex with a production capacity of 3.5 million tonnes per annum.

The project is about 60% completed and Petronas expects operations to commence by 2019.

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