Saudi Aramco, Sumitomo Chemical waive $1bn debt for Petro Rabigh

• Aramco and Sumitomo Chemical have each agreed to waive $500 million in revolving shareholder loans and any associated commissions
• Debt waiver is part of broader turnaround strategy to enhance Petro Rabigh’s profitability, balance sheet, and liquidity

RIYADH: Saudi oil giant Rabigh Refining and Petrochemical Co., known as Petro Rabigh, has had $1 billion in debt waived by its two largest shareholders as part of its refinery upgrade plans.

According to a statement on Tadawul, Saudi Arabia’s Aramco and Japan’s Sumitomo Chemical Co. have each agreed to waive $500 million in revolving shareholder loans and any associated commissions.

RSLs are loans from shareholders that can be drawn upon and repaid multiple times within a set period, typically used to support operations, finance projects, or address short-term cash flow needs.

This debt waiver is part of a broader turnaround strategy aimed at enhancing Petro Rabigh’s profitability, balance sheet, and liquidity.

The move aligns with Aramco’s plans to expand its downstream operations and Sumitomo Chemical’s transition from commodity to specialty chemicals.

Earlier in August, Aramco announced it would acquire an additional 22.5 percent stake in Petro Rabigh from Sumitomo Chemical for $702 million. This acquisition, priced at SR7 per share, is expected to make Aramco the majority shareholder with approximately 60 percent of the stake, reducing Sumitomo Chemical’s share to 15 percent.

The filing revealed that these agreements are related-party transactions, with Aramco and Sumitomo Chemical each owning 37.5 percent of Petro Rabigh. The debt waiver is anticipated to positively impact the company’s financial position, which will be detailed in a future announcement.

When the initial acquisition announcement was made, Sumitomo Chemical indicated it would reinvest the proceeds into Petro Rabigh, while Aramco pledged additional funding to match Sumitomo Chemical’s $702 million. The combined funding is set to reach $1.4 billion. Additionally, both companies agreed to phased loan waivers totaling $750 million each, resulting in a $1.5 billion reduction in Petro Rabigh’s liabilities.