Sumitomo, Saudi Aramco lend $2bn to boost Petro Rabigh’s working capital

SINGAPORE (ICIS)–Japan’s Sumitomo Chemical and Saudi Aramco have jointly loaned out a total of $2bn to Rabigh Refining and Petrochemical Co (Petro Rabigh), which faced shortfall of working capital as “the market environment has rapidly deteriorated” since end-2019.

Sumitomo’s share to the total loan was $750m, equivalent to its 37.5% stake in Petro Rabigh, it said in a statement on Thursday.

“Coupled with other factors including periodic shutdown maintenance, Petro Rabigh faced the shortfall of working capital. To cover this shortfall, Sumitomo Chemical and Saudi Aramco have decided to make a loan totaling US$2 billion to Petro Rabigh,” Sumitomo said.

As of 1 October 2020, Petro Rabigh’s capital stood at Saudi riyal (SR) 8.76bn ($2.3bn).

“Sumitomo Chemical continues to provide necessary support so that Petro Rabigh can continue stable operation to achieve sustained growth,” it added.

Petro Rabigh, which manufactures and sells refined petroleum products and petrochemicals, is publicly listed. It is 37.5%-owned by energy giant Saudi Aramco, with the remaining 25% held by Saudi investors.

Meanwhile, Sumitomo and Saudi Aramco terminated the financial completion guarantee for Petro Rabigh’s phase 2 expansion effective end-September 2020.

The guarantee for the $5.2bn project financing for the expansion was ended after ensuring that Petro Rabigh can service its own debts.

Sumitomo and Saudi Aramco had provided a 50:50 guarantee of the project financing for Petro Rabigh’s phase 2 expansion in Saudi Arabia. As of September this year, the outstanding debt stood at around $4.6bn.

“Petro Rabigh has already started the scheduled repayment of the debt principal since June 2019. The company will continue to repay the balance of the loan out of cash flow generated from its operating activities,” Sumitomo said.