Aramco has signed an agreement to acquire an additional stake of approximately 22.5% in Rabigh Refining and Petrochemical(Petro Rabigh), located on the west coast of Saudi Arabia. This purchase by Aramco from Sumitomo Chemical for US$702 million will establish the company’s presence.
The potential of the Petro Rabigh power plant
Currently, Aramco and Tokyo-based Sumitomo Chemical each own 37.5% of Petro Rabigh, a company listed on the Saudi Stock Exchange since 2008. Following the transaction, priced at SAR 7 per share, Aramco will become the majority shareholder with a 60% stake, while Sumitomo Chemical will hold 15%. This deal is subject to customary closing conditions, including regulatory and third-party approvals, and is part of a package of measures to financially strengthen Petro Rabigh.
As part of the sale agreement, the proceeds obtained by Sumitomo Chemical will be reinvested in Petro Rabigh through a mechanism to be defined in conjunction with the company. In addition, Aramco will contribute additional funds, matching the $702 million contributed by Sumitomo Chemical, for a total of $1.4 billion to improve the financial position of the Petrochemical Plant.
On the other hand, both companies agreed to a gradual loan forgiveness of US$750 million each, directly reducing Petro Rabigh’s liabilities by US$1.5 billion. These actions are designed to improve the company’s balance sheet and liquidity as part of a turnaround plan that also includes modernizing the refinery refinery to increase its profitability. This initiative aligns with Aramco’s expansion in the downstream sector and Sumitomo Chemical’s strategic shift to specialty chemicals.
Hussain A. Al Qahtani, Aramco’s senior vice president of fuels, stated, “Aramco is focused on strengthening its downstream value chain, ensuring the placement of its crude oil in affiliated refineries and transforming more hydrocarbons into high-value materials. We will continue to develop our relationship with Petro Rabigh in line with our strategic objectives. ”.
One of the world’s largest petrochemical and refining facilities. Source: Petro Rabigh
For his part, Seiji Takeuchi, senior managing director of Sumitomo Chemical, commented: “In a changing business environment in both refining and petrochemicals, we have explored options to find an appropriate turnaround strategy for the complex and an appropriate framework for its future plans. This transaction, aligned with the strategic directions of both companies, will improve Petro Rabigh’s financial position. ”.
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Source and photo: Aramco
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