KUALA LUMPUR (Nov 12): Petroliam Nasional Bhd (Petronas) is buying Phillips 66 Asia Ltd’s 47% stake in Malaysian Refining Company Sdn Bhd (MRC) for US$635 million (RM2.12 billion) cash.

The proposed acquisition would result in MRC being wholly-owned by Petronas, the national oil company said in a statement today.

Petronas said it had reached an agreement with Phillips 66 Asia, a subsidiary of US-listed Phillips 66, on the acquisition of the MRC stake, and would pay Phillips 66 Asia in cash with adjustment at completion of the purchase.

Both companies expect the deal to be finalised on December 31 this year.

Petronas Chief Operating Officer  Datuk Wan Zulkiflee Wan Ariffin said the acquisition would enable the company to “realise greater synergy” between its refineries in Malacca.

“Our acquisition of Phillips 66’s interest in MRC will enable us to realise greater synergy between our refineries in Melaka and it will also strengthen our presence in the refining and trading businesses,”  Wan Zulkiflee said.

He said Petronas had an excellent working relationship with Phillips 66 over the years.

Larry Ziemba, Phillips 66 refining executive vice president, said the MRC stake divestiture would allow the company to redeploy resources to more strategic areas of its business.

"Petronas has been a strong partner over the years and we value our relationship,” he said.

MRC,commissioned in 1998, has a refining capacity of 170,000 barrels per day.

Reuters reported on Aug 29 that Petronas was running the 100,000 barrel-per-day (bpd) refinery it jointly owned with Phillips 66 at a lower rate than usual after unexpectedly shutting a secondary unit.

Quoting industry sources, the report said a glitch had compelled Petronas to close the desulphuriser unit, which had caused the refinery's crude distillation unit to run at a lower operating rate, from Aug 21 to Sept 8 while the secondary unit was being fixed.

Petronas did not comment on the issue at that time.