Petronas is in talks with several oil majors including Shell and Exxon Mobil to develop petrochemical plants within its $20 billion refinery complex in southern Malaysia, two sources with direct knowledge of the matter told Reuters.

Malaysia's national oil company is also talking to Japanese firms Itochu Corp <8001.T> and Mitsubishi Corp <8058.T> as well as Dow Chemical Co as it seeks to tap surging Asian demand and diversify its earnings, the sources said.

Petronas
is expected to make a decision on the partnerships by mid-2012, which signals it is quickly moving beyond the feasibility stage of the project.

Petronas is getting a lot of interest for the joint venture undertakings, said one source, who declined to be identified as discussions are ongoing.

They have moved to the basic engineering and design stage and after this the tendering process for building the complex will start, the source added. Petronas, Shell and Mitsubishi officials in Malaysia declined to comment. Itochu, Dow Chemical and Exxon Mobil were not immediately available for comment.

Petronas first unveiled the Refinery and Petrochemicals Integrated Development (RAPID) project in May and has said the complex will be commissioned by end-2016, which both sources said was on track.

The $20 billion complex is to be built in southern Johor state which borders Singapore -- the largest oil trading hub in Asia.

(Reporting by Niluksi Koswanage and Liau Y-Sing; Editing by Himani Sarkar)