State-owned Saudi Aramco has become the majority shareholder in the PetroRabigh refining and petrochemical complex on Saudi Arabia's west coast, buying 22.5pc from its Japanese joint-venture partner Sumitomo Chemical in a $702mn deal.
The acquisition takes Aramco's stake in PetroRabigh to 60pc with Sumitomo Chemical retaining 15pc. The partners previously owned 37.5pc of PetroRabigh that listed on the Saudi Exchange in 2008.
All proceeds received by Sumitomo Chemical from the sale will be injected back into PetroRabigh. Aramco will also provide additional funds, matching the $702m from Sumitomo Chemical to bolster PetroRabigh's financial position and support its future strategy. The additional $1.4bn funding aims to help the company lift its balance sheet and cash liquidity, with the consortium also exploring initiatives to upgrade its 400,000 b/d refinery, the partners said. Aramco and Sumitomo Chemical have also agreed to a phased waiver of shareholder loans of $750mn each, which will result in a $1.5bn direct reduction in PetroRabigh's liabilities.
Sumitomo Chemical's sale reflected its strategy to shift from basic goods to high performance products, as well as Aramco's aim to enhance its downstream sector at home and abroad. Aramco also bought a controlling share in Saudi petrochemical firm Sabic in 2020.
But Sumitomo Chemical said it will continue to play a key role in refinancing PetroRabigh. The Japanese firm has struggled to handle losses from PetroRabigh, reporting a core operating loss of ¥20.7bn ($141mn) for its basic petrochemical sector during April-June, the first quarter of the 2024-25 fiscal year. It also reported an investment loss of ¥17.4bn during April-June because of worsening finances at PetroRabigh.
PetroRabigh's petrochemical complex can produce up to 1.34mn t/yr of paraxylene, 450,000 t/yr of benzene and 1.625mn t/yr of mixed xylenes. Its steam cracker has an ethylene production capacity of 1.6mn t/yr, high-density polyethylene capacity of 300,000 t/yr and a low-density polyethylene capacity of 160,000 t/yr.
