Saudi energy giant Aramco is poised to strengthen its position in Rabigh Refining and Petrochemical Company (Petro Rabigh) with the acquisition of an additional 22.5% stake from Tokyo-based Sumitomo Chemical. The transaction, valued at $702 million (SR7 per share), will elevate Aramco’s ownership in the refining and petrochemical complex to approximately 60%, making it the majority shareholder. Sumitomo Chemical’s stake will decrease to 15%.
Previously, both Aramco and Sumitomo Chemical each held a 37.5% share in Petro Rabigh, a company listed on the Saudi Exchange since 2008. The strategic move by Aramco aligns with its ongoing efforts to expand its downstream operations, while Sumitomo Chemical is shifting its focus from commodity chemicals to specialty chemicals.
“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,” stated Hussain Al-Qahtani, Aramco’s Senior Vice President of Fuels, in a press release.
The acquisition is anticipated to bolster Petro Rabigh’s financial standing by improving its balance sheet and cash liquidity, ultimately enhancing the company’s profitability. “By increasing our shareholding, we expect to achieve even closer integration with Petro Rabigh and facilitate its turnaround strategy,” Al-Qahtani added. “We look forward to building on our existing relationship with Petro Rabigh, in alignment with our strategic goals.”
The deal is subject to customary closing conditions, including regulatory and third-party approvals. According to the joint statement, the proceeds from Sumitomo Chemical’s sale will be reinvested into Petro Rabigh through an agreed-upon mechanism. Aramco will match Sumitomo’s $702 million investment, bringing the total financial support to $1.4 billion, aimed at driving Petro Rabigh’s future strategy.
In addition, both Aramco and Sumitomo Chemical will implement a phased waiver of $750 million each in shareholder loans, reducing Petro Rabigh’s liabilities by $1.5 billion. Seiji Takeuchi, Sumitomo Chemical’s Senior Managing Executive Officer, remarked, “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.”