In a significant development within the oil and gas sector, Aramco has announced its acquisition of an additional 22.5% interest in Rabigh Refining and Petrochemical Co. (Petro Rabigh), a deal valued at $702 million. This transaction increases Aramco’s shares in the west coast-based complex of the Kingdom of Saudi Arabia to approximately 60%, transforming it into Petro Rabigh’s primary shareholder.
The deal, initially shared by both Aramco and Tokyo-based Sumitomo Chemical at an equal ownership of 37.5%, will now see Sumitomo Chemical retaining a smaller 15% stake. Finalization of this agreement, which pegs the share value at SAR7, is contingent on standard closing conditions including necessary regulatory and third-party consents.
As part of a broader financial strategy to bolster Petro Rabigh’s financial standing, Sumitomo Chemical will reinvest all proceeds from the share sale back into Petro Rabigh. Additionally, Aramco plans to match Sumitomo Chemical’s investment, thereby injecting a total of $1.4 billion into Petro Rabigh to aid in enhancing its financial health and support future strategic plans.
A crucial element of the agreement includes a collective phased waiver of shareholder loans amounting to $1.5 billion by both parties, directly reducing Petro Rabigh’s liabilities by this amount. These financial maneuvers are expected to notably improve Petro Rabigh’s balance sheet and liquidity, forming part of a remedial plan that encompasses initiatives to upgrade the refinery and bolster the profitability of its operations.
The transaction aligns with Aramco’s ambitious plans to expand its downstream operations, while allowing Sumitomo Chemical to pivot towards specialty chemicals and away from commodity chemicals. Hussain Al Qahtani, Aramco’s Senior Vice President of Fuels, remarked on the acquisition, highlighting Aramco’s commitment to enhancing its downstream portfolio and ensuring the optimal utilization of its crude oil through affiliated refineries.
Seiji Takeuchi, Senior Managing Executive Officer at Sumitomo Chemical, acknowledged the dynamic changes in the refining and petrochemical sectors, noting the importance of this transaction in establishing a solid financial foundation for Petro Rabigh’s future strategies.