Malaysia’s state-run Petroliam Nasional Berhad or Petronas Wednesday said it has finalized two joint ventures with Saudi Aramco that give them equal ownership of the Refinery and Petrochemical Integrated Development or RAPID refinery project.

The formation of the joint ventures comes nearly a year after a preliminary agreement was signed between the two national oil companies, and paves the way for the $16 billion refinery project to start operations by early 2019.

Petronas and Saudi Aramco will have equal ownership and participation in the operations of the refinery, cracker and selected petrochemical facilities in the RAPID project in southern Malaysia, Petronas said in a statement.

Under the agreement, Saudi Aramco will supply 50% of the refinery’s crude feedstock with the option of increasing it to 70%, while Petronas will supply the natural gas, power and other utilities needed to run the plant.

The parties will share the rights to offtake the production of the joint ventures on an equal basis, Petronas said.

It said the RAPID refinery, which is a part of the Pengerang Integrated Complex in the Malaysian state of Johor, is on track for starting operations in the first quarter of 2019 and is currently 87% complete.

The $16-billion project includes a 300,000 b/d refinery and a petrochemical complex, and will also have an LNG regasification terminal, water supply facilities and a co-generation power plant.

“It is also in tandem with our downstream growth strategy where we are investing in a global refining and petrochemicals system of strategically located world-scale manufacturing complexes with participated refining capacity of eight to 10 million barrels per day,” Saudi Aramco’s senior vice president of downstream operations, Abdulaziz Judaimi, said in a statement.

In February 2017, Saudi Aramco signed a share purchase agreement for equity participation in the RAPID project but the deal was subject to completion and final negotiations.

The deal is key to Saudi Aramco’s refining and fuels marketing strategy, and chemicals business strategy, and the crude supply will account for a significant portion of trade between Saudi Arabia and Malaysia. It gives the crude supplier a captive market against the backdrop of rising supply from non-OPEC rivals such as Russia and the US.

The refinery is expected to raise Saudi Aramco’s global refining capacity to 8 million-10 million b/d by 2030 from more than 5 million b/d, and boost global chemicals production capacity to 34 million mt/year from 12 million mt/year over the same period.

Petronas said earlier this month that it had set a capital expenditure target of MR55 billion ($14.3 billion) for 2018, up 23.6% from last year, and that robust earnings in 2017 would help its growth strategy, both in domestic and overseas markets.

RAPID will produce gasoline and diesel that meet Euro 5 fuel specifications and also provide feedstock for the neighboring petrochemical complex that has a nameplate capacity of 3.3 million mt/yr.

Petronas said the refinery complex will be the largest glycol and polypropylene producer, as well as the second largest HDPE and isononanol producer in South East Asia. Petrochemicals production is expected to account for more than 20% of the crude intake.

Global crude distillation capacity expanded by over 1 million b/d in 2017. It is expected to grow by over 0.8 million b/d in 2018, and by 7.7 million b/d through 2021, with the bulk of the capacity additions in Asia Pacific where demand for transportation fuels is concentrated.

Additionally, the RAPID refinery will add to the concentration of refining capacity in the vicinity of Singapore’s refining hub, which already has 1.3 million b/d of CDU capacity and an additional 167,000 b/d of condensate splitter capacity, according to Platts Analytics.