Saudi Aramco agrees US$702m deal with Sumitomo Chemical for majority stake in Petro Rabigh

OIL AND GAS giant Saudi Aramco will become the majority stakeholder of Petro Rabigh in a deal worth US$702m, further expanding its downstream petrochemical and refining operations.

Tokyo-based Sumitomo Chemical will sell off 22.5% of its shares in Petro Rabigh to Saudi Arabia’s state-owned oil company, giving the latter a 60% share.

The Petro Rabigh refinery converts crude oil into a variety of refined products, including gasoline, diesel, and naphtha and is capable of processing 400,000 barrels of crude oil per day.

Hussain A Al Qahtani, Aramco’s senior vice-president of fuels, said: “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.”

He added: “By increasing our shareholding, we expect to achieve even closer integration with Petro Rabigh and facilitate its turnaround strategy.”

Downstream expansion

From 2020, Aramco has expanded its investment and operations in downstream refining and petrochemicals as part of its transformation programme.

The company, which recorded an income of US$121.3bn last year, has recently expanded its presence in South America, completing a 100% acquisition of Chilean fuels and lubricants retailer Esmax, which distributes Petrobras fuel in Chile.

Aramco is looking to further its downstream ties in China and last month purchased a 10% interest in chemicals company Rongsheng Petro Chemical. The US$3.4bn deal will see Aramco supply 480,000 bbl/d of crude oil to the company.

Balancing losses

Aramco says its larger stake in Petro Rabigh is part of a package of measures to reinforce its financial position. Last year, Petro Rabigh recorded a loss of US$297m, with total assets slumping from US$19.4bn in 2022 to US$17.5bn in 2023.

Under the new deal, Sumitomo will use the US$702m it earns to invest in improving Petro Rabigh’s balance sheet and cash liquidity.

Aramco said it will match the investment, giving Petro Rabigh a total cash injection of US$1.4bn.