MOSCOW (MRC) -- Rabigh Refining and Petrochemical Co (Petro Rabigh) plans a Saudi riyal (SR) 1.21bn (USD321m) capital reduction, followed by a rights issue of up to SR7.95bn (USD2.12bn), said Argaam.
“The purpose of this Petro Rabigh capital reduction and capital increase is to eliminate the accumulated losses incurred due to the large deficit in FYfiscal year 2020 and strengthen Petro Rabigh’s financial position,” Japan’s Sumitomo Chemical said in a statement.
Petro Rabigh is a joint venture between Saudi Aramco and Sumitomo Chemical - each with a 37.5% stake in the company, while the remaining 25% is held by Saudi investors. The planned twin exercise is still subject to regulatory approvals.
Under the plan, about 120.5m Petro RaUSDigh shares will be cancelled, bringing the total down to 755.5m shares after the reduction. The rights issue of up to $2.12bn will be done soon after the capital reduction, with both Saudi Aramco and Sumitomo Chemical chipping in USD795m, equivalent to their respective stakes in Petro Rabigh.
Petro Rabigh’s financial performance in the current fiscal year “continues to be healthy to date due to its stable operations and improvements in market conditions, such as prices for crude oil and petrochemical products”, the Japanese shareholder said. In the third quarter of 2021, the Saudi manufacturer of refined petroleum products and petrochemicals swung into a net profit of SR221m on the back of improved product margins.
Petro Rabigh posted a nine-month net profit of SR1.59bn, compared with the SR3.85bn loss recorded in the same period last year. In October 2020, Sumitomo Chemical and Saudi Aramco jointly loaned out a total of $2bn to Petro Rabigh, which faced shortfall of working capital following a deterioration in the market environment since end-2019 amid the coronavirus pandemic.
As per MRC, Saudi Arabia’s Rabigh Refining and Petrochemical Co (PetroRabigh) has no overhaul schedule for its polypropylene (PP) plant at the moment. The company operates two lines at this plant, which can produce 350,000 mt/year of PP each.
As MRC wrote previously, the company conducted a 55-day scheduled turnaround at its PP units in Rabigh since end-February 2020. Besides, the company has a 300,000 mt/year high density polyethylene (HDPE) unit, a 160,000 mt/year low density polyethylene (LDPE) unit and a 600,000 mt/year linear low density polyethylene (LLDPE) plant at the same site.
PetroRabigh, a joint venture between Saudi Aramco and Japan's Sumitomo Chemical, has an annual output capacity of 18 million tonnes of refined products and 2.4 million tonnes of petrochemicals. Thus, the complex currently has a cracker to produce 1.6-million t/y of ethylene, as well as downstream production of polyethylene, polypropylene, propylene oxide, ethylene glycol and butene-1.