Saudi Aramco to acquire additional 22.5% stake in Petro Rabigh from Sumitomo Chemical for $702 million

Saudi 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 Petro Rabigh, a refining and petrochemical complex located on the west coast of the Kingdom of Saudi Arabia, from Sumitomo Chemical for $702 million.

Currently, Saudi Aramco and Tokyo-based Sumitomo Chemical each hold 37.5% of Rabigh, which was listed on the Saudi exchange in 2008. The transaction, priced at SAR 7 per share, will make Saudi Aramco the largest shareholder in Rabigh with a stake of approximately 60%, while Sumitomo Chemical will retain a 15% stake. The transaction is subject to customary closing conditions, including regulatory and other third-party approvals, and is part of a package of financial measures to strengthen Rabigh's financial position.

Under the terms of the share sale agreement, all proceeds from the sale to be received by Sumitomo Chemical will be injected into Rabigh through an agreed mechanism. Saudi Aramco will also provide additional funding to Rabigh through the same agreed mechanism, matching the $702 million provided by Sumitomo Chemical, to improve Rabigh’s financial position and support the petrochemical company’s future strategy, bringing the total injection to $1.4 billion.

In addition, Saudi Aramco and Sumitomo Chemical agreed to waive each other’s $750 million shareholder loan in phases, which will directly reduce Rabigh’s $1.5 billion in liabilities.

These measures are expected to improve Rabigh’s balance sheet and cash liquidity as part of the remediation plan that Saudi Aramco and Sumitomo Chemical intend to explore with Rabigh, which also includes initiatives to upgrade the refinery to help improve the profitability of the business. The agreement is also in line with Saudi Aramco’s downstream expansion and Sumitomo Chemical’s strategy to transform from commodity chemicals to specialty chemicals.

Hussain A. Al Qahtani, Senior Vice President of Saudi Aramco’s Fuels Business, said: “Saudi Aramco continues to seek opportunities to strengthen its downstream value chain, secure upstream crude oil with affiliated refineries, and convert more hydrocarbons into high-value materials. By increasing our stake, we expect to achieve closer integration with Rabigh and facilitate its transformation strategy. We look forward to building on our existing relationship and further achieving our strategic goals.”

Seiji Takeuchi, Senior Executive Officer of Sumitomo Chemical, said: “Amid the changing business landscape of the refining and petrochemical industries, Aramco and Sumitomo Chemical have considered multiple options to find a turnaround strategy that is appropriate for Rabigh and have identified an appropriate framework to facilitate Rabigh’s future plans. We believe that this transaction is in line with the strategic directions pursued by Aramco and Sumitomo Chemical and will significantly improve Rabigh’s financial position.”