This acquisition aligns with Aramco's strategy to expand its downstream operations and integrate more closely with Petro Rabigh. Hussain A. Al Qahtani, Aramco’s Senior Vice President of Fuels, highlighted that this increased shareholding is expected to enhance the company's integration with Petro Rabigh and support its turnaround strategy.
Petro Rabigh, listed on the Saudi Exchange since 2008, has faced financial challenges, accumulating losses of $2.36 billion by the end of June, over 53% of its share capital. To address these issues, Aramco and Sumitomo Chemical will inject a combined $1.4 billion into Petro Rabigh. This includes $702 million from each company, aimed at improving the company's financial position. Additionally, both companies will waive shareholder loans totaling $1.5 billion, further reducing Petro Rabigh’s liabilities.
The transaction, priced at SAR 7 per share, is subject to regulatory approvals. It forms part of a broader financial restructuring plan intended to stabilize Petro Rabigh's finances and ensure compliance with Saudi Arabian regulations, which require joint-stock companies to announce and address significant losses within 60 days.
Sumitomo Chemical’s move away from commodity chemicals towards specialty chemicals complements Aramco's downstream expansion. Seiji Takeuchi, Sumitomo Chemical’s Senior Managing Executive Officer, noted that the transaction is designed to support Petro Rabigh's future plans amid an evolving business landscape in the refining and petrochemical sectors.
Aramco's broader strategy includes increasing its refining and petrochemical footprint globally. The company has been actively expanding in the Chinese market, with ongoing talks to acquire a stake in Hengli Petrochemical and potential refinery partnerships with Rongsheng Petrochemical. These moves are part of Aramco's efforts to secure placements for its upstream crude oil and convert more hydrocarbons into high-value materials.
Aramco’s strong financial performance in the second quarter of 2024, with a net income of $29.03 billion, underscores its capacity to support such strategic investments. The company declared $31.1 billion in dividends for the quarter, indicating robust financial health despite fluctuating market conditions.
The strategic acquisition of the additional stake in Petro Rabigh represents a significant step in Aramco's ongoing efforts to enhance its downstream operations and secure long-term growth in the petrochemical sector.