Aramco, one of the world’s leading integrated energy and chemicals companies, has signed a definitive agreement to acquire an additional 22.5% stake in Rabigh Refining and Petrochemical Co. (“Petro Rabigh”) from Sumitomo Chemical for $702 million. Petro Rabigh, a refining and petrochemical complex, is located on the west coast of the Kingdom of Saudi Arabia.
Currently, Aramco and Tokyo-based Sumitomo Chemical each own 37.5% of shares in Petro Rabigh, which was listed on the Saudi Exchange in 2008. Upon completion of the transaction, priced at SAR7 per share, Aramco will become the largest shareholder with a 60% equity stake, while Sumitomo Chemical will retain a 15% equity stake. The transaction, subject to customary closing conditions including regulatory and third-party approvals, is part of a financial package designed to strengthen Petro Rabigh’s financial position.
Under the terms of the share sale and purchase agreement, all proceeds received by Sumitomo Chemical from the sale will be reinvested into Petro Rabigh through an agreed mechanism. Additionally, Aramco will match Sumitomo Chemical’s $702 million contribution, bringing the total financial injection to $1.4 billion to enhance Petro Rabigh’s financial standing and support its future strategy.
Moreover, Aramco and Sumitomo Chemical have agreed to a phased waiver of $750 million in shareholder loans each, resulting in a direct $1.5 billion reduction in Petro Rabigh’s liabilities.
These measures are expected to improve Petro Rabigh’s balance sheet and cash liquidity as part of a remedial plan that Aramco and Sumitomo Chemical plan to explore with Petro Rabigh. This plan includes initiatives to upgrade the refinery to enhance profitability. The agreement aligns with Aramco’s downstream expansion strategy and Sumitomo Chemical’s shift from commodity chemicals to specialty chemicals.
Hussain A. Al Qahtani, Aramco Senior Vice President of Fuels, stated: “Aramco continues to identify opportunities to strengthen its downstream value chain, secure placement of its upstream crude oil with affiliated refineries, and convert more of its hydrocarbons into high-value materials. By increasing our shareholding, we expect to achieve even closer integration with Petro Rabigh and facilitate its turnaround strategy. We look forward to building on our existing relationship with Petro Rabigh, in alignment with our strategic goals.”
Seiji Takeuchi, Sumitomo Chemical Senior Managing Executive Officer, added: “Amid the evolving business landscape in both the refining and petrochemical sectors, Aramco and Sumitomo Chemical have considered options to find an appropriate turnaround strategy for Petro Rabigh and identify an appropriate framework to facilitate Petro Rabigh’s future plans. We believe this transaction, which aligns with the strategic directions Aramco and Sumitomo Chemical are respectively pursuing, will significantly enhance Petro Rabigh’s financial position.
