16 December 2013 08:23 [Source: ICIS news]
KARACHI (ICIS)--Saudi Aramco has agreed to supply Rabigh Refining and Petrochemical Co. (Petro Rabigh) with 50 million cubic feet a day (mmcfd) of methane gas or its equivalent at current domestic prices in Saudi Arabia, Petro Rabigh said on Sunday.
“Petro Rabigh has reached an agreement with its all founding shareholders, Saudi Arabian Oil Co (Saudi Aramco) and Sumitomo Chemical Co, for its business and strengthening its financial performance,” the company said in a filing to the Saudi Stock Exchange.
“These include the convention on the Saudi Aramco to supply Petro Rabigh 50 million cubic feet of methane gas, or the equivalent at price used locally, until the completion of the Master Gas System and the allocation of quantities of gas required for the company through appropriate regulatory authorities in the Kingdom,” it said.
Petro Rabigh is a joint venture between oil giant Saudi Aramco and Japan's Sumitomo Chemical, which markets Petro Rabigh's products.
Petro Rabigh said its parent companies have also agreed to cut international marketing fees by a third, which will raise its revenue by almost Saudi Riyals (SR) 1bn ($267m) this year.
"Saudi Aramco and Sumitomo Chemical are committed to reduce marketing commission of all petrochemical products of Petro Rabigh by one third of the current levels and commissions to market petroleum products of Petro Rabigh in the domestic market have been cancelled," it said.
The start of the five-year agreement will be backdated to April 1, 2013 and the deal will have a positive impact on company's revenues by around Saudi riyal (SR) 1bn this year, increasing to SR1.3bn annually in subsequent years based on current price expectations and production levels, the company said.
Under the new deal, the two parent companies will market Petro Rabigh's products equally. Previously, Saudi Aramco marketed refined products for Petro Rabigh while Sumitomo Chemical handled chemicals.
Petro Rabigh has annual output capacity of 18m tonnes of refined products and 2.4m tonnes of petrochemicals.
The company’s earnings have been hit hard this year by maintenance at some of its facilities. For the first nine months of this year, it reported a net loss of SR880.7m against a net profit of SR420.8m a year earlier. In the second quarter of 2013, its sales totalled SR14.2bn.
($1 = SR3.75)
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