Aramco Set to Become Leading Shareholder in Petro Rabigh Integrated Complex, Saudi Arabia

Aramco, a top-tier global integrated energy and chemicals corporation, has finalized a definitive agreement to purchase an additional 22.5% stake in Rabigh Refining and Petrochemical Co. (“Petro Rabigh”). This acquisition, valued at $702 million, is from Sumitomo Chemical and involves the refining and petrochemical facility on Saudi Arabia’s west coast.

Aramco and Sumitomo Chemical, headquartered in Tokyo, currently each hold a 37.5% stake in Petro Rabigh, which went public on the Saudi Exchange in 2008. Following the completion of the transaction, priced at SAR 7 per share, Aramco will emerge as the largest shareholder of Petro Rabigh with an approximately 60% equity stake, while Sumitomo Chemical will maintain a 15% stake. This transaction, pending customary closing conditions including regulatory and other third-party approvals, is part of a broader financial strategy to strengthen Petro Rabigh’s financial standing.

Under the terms of the share sale and purchase agreement, Sumitomo Chemical will channel all proceeds from the sale directly into Petro Rabigh. This injection will be facilitated through an agreed mechanism with Petro Rabigh. Additionally, Aramco will contribute an equivalent amount of $702 million, ensuring a total infusion of $1.4 billion to bolster Petro Rabigh's financial health and support its strategic goals.

Furthermore, Aramco and Sumitomo Chemical have consented to a staggered waiver of shareholder loans amounting to $750 million each. This action will collectively reduce Petro Rabigh’s liabilities by $1.5 billion. These initiatives are designed to enhance Petro Rabigh’s balance sheet and cash liquidity. They form part of a broader remediation plan that Aramco and Sumitomo Chemical are developing in collaboration with Petro Rabigh. This plan includes upgrading the refinery to boost business profitability.

Hussain A. Al Qahtani, Aramco's Senior Vice President of Fuels, emphasized the company's ongoing efforts to enhance its downstream value chain, ensure the placement of its upstream crude oil in affiliated refineries, and convert more hydrocarbons into high-value materials. He stated that by increasing Aramco's shareholding in Petro Rabigh, they anticipate achieving closer integration and facilitating Petro Rabigh's turnaround strategy. Al Qahtani highlighted that this move aligns with Aramco's strategic goals and looks forward to building on their existing relationship with Petro Rabigh to achieve these objectives.

Seiji Takeuchi, Sumitomo Chemical's Senior Managing Executive Officer, commented on the evolving business landscape in the refining and petrochemical sectors, noting that Aramco and Sumitomo Chemical have explored options to develop a suitable turnaround strategy for Petro Rabigh. He stated that they have identified a framework to support Petro Rabigh's future plans. Takeuchi believes that this transaction, aligning with the strategic directions of both Aramco and Sumitomo Chemical, will significantly strengthen Petro Rabigh's financial position.