KUALA LUMPUR: University Malaya Vice Chancellor Sultan Nazrin Muizzuddin Shah (right) presents an honorary degree of Doctor of Letters to Saudi Arabia's King Salman yesterday. - AFP

KUALA LUMPUR: Saudi Arabia's Aramco will invest $7 billion in a giant Malaysian oil refinery project, Prime Minister Najib Razak said yesterday, as he declared ties with the kingdom were "at an all-time high". The deal between Aramco and Malaysian state energy firm Petronas for the $27 billion project will be signed today, the prime minister said. "This is a huge investment and is very significant," said Najib. The vast scheme under construction in the southern state of Johor near the Singapore border is known as the Refinery and Petrochemical Integrated Development Project.

It is being led by Petronas, which said last month development was more than 50 per cent complete, with the project set to come online in 2019. Victor Shum, vice president for energy at global consultancy IHS Markit, said the deal was a "win-win situation". "Having Saudi Aramco as a partner with Petronas is a boost for the project and for Malaysia," he said. "For Aramco it's more than just an outlet for its crude supplies. They are now part owner of the plant." He added: "It's really going to make this region - Singapore and South Johor - a major refining and petrochemical hub in Southeast Asia."

The project is expected to create thousands of jobs in Malaysia, according to Craig Erlam, a senior market analyst at Oanda, adding it would provide stiff competition to Singapore, a major refinery hub. Najib made the refinery announcement on the second day of a four-day state visit to Malaysia by Saudi Arabia's King Salman. He told reporters: "The visit will cement and put our relationship on a strong trajectory," adding the Saudi head of state was "satisfied and happy" the agreement would be signed.

Malaysia is keen to attract foreign investment as the energy-exporting, trade-dependent economy has seen growth steadily slow in recent years, denting revenues and putting severe pressure on the ringgit. Earlier yesterday, Malaysian and Saudi Arabian officials signed several other agreements on trade, human resources and scientific and educational cooperation. In 2016, bilateral trade rose 28 percent from a year earlier to 14 billion ringgit ($3.2 billion).

After Malaysia, King Salman is to visit Indonesia, Brunei, Japan, China and the Maldives, the official Saudi Press Agency said. The monarch will also visit Saudi Arabia's neighbor Jordan before returning home. Saudi Arabia is the world's largest oil exporter, with much of its crude destined for customers in Asia. The kingdom is eager to attract investment as it diversifies its economy, including its upcoming initial public offering of part of Aramco. - Agencies