Saudi Aramco will buy from Japan's Sumitomo Chemical a 22.5% stake in their petrochemical joint venture Petro Rabigh for $702 million, the companies said on Wednesday.
Under the deal, Aramco and Sumitomo Chemical will each provide $702 million in funding to Petro Rabigh and waive loans worth a total $1.5 billion, the statement said.
The deal shrinks Sumitomo Chemical's stake in the joint venture to 15% while increasing Aramco's share to 60%.
The sale aligns with Aramco's downstream expansion and Sumitomo Chemical's move away from commodity chemicals toward specialty chemicals, they added.
“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,” Aramco Senior Vice President of Fuels Hussain A. Al Qahtani said.
“By increasing our shareholding, we expect to achieve even closer integration with Petro Rabigh and facilitate its turnaround strategy,” he added.
According to Seiji Takeuchi, Sumitomo Chemical Senior Managing Executive Officer, the transaction “will significantly enhance Petro Rabigh’s financial position.”
Sumitomo Chemical plans to book a pre-tax loss of 27 billion yen ($183 million) in the July-September quarter as a result of the deal, the company said in a separate statement, adding that it is sticking to its annual profit forecast it announced in April.
