Saudi Aramco, Sumitomo Chemical invite banks to back JV plant expansion

Saudi Arabia’s PetroRabigh said its founding shareholders had formally invited banks to provide financing for $8.5 billion

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Saudi Arabia’s PetroRabigh said on Wednesday its founding shareholders had formally invited banks to provide financing for the 32 billion riyal ($8.5 billion) expansion of its petrochemicals complex in the kingdom.

No figures for how much cash would be raised by PetroRabigh - a joint venture between Saudi Aramco and Sumitomo Chemical - were given in the statement.

However, Sumitomo President Masakazu Tokura said last November that both companies would each put in 100 billion yen ($975 million), with the rest of the funds coming from project financing.

The requests for proposals were issued by the parent firms to local and international banks on Tuesday, with financing of the expansion to be split between conventional loans and sharia-compliant facilities, the bourse filing said.

PetroRabigh’s existing plant can produce an annual 18 million tonnes of refined products and 2.4 million tonnes of petrochemical products.

The new facility, known as Rabigh II, is to be built as an expansion of PetroRabigh’s existing petrochemical plant, increasing output and introducing higher-margin products.

The project, located on Saudi Arabia’s Red Sea coast, received a formal go-ahead from the parent firms in 2012; PetroRabigh has said previously it is due to come online in 2016, despite a string of maintenance problems at the existing facility.

Rabigh II will produce ethylene propylene rubber, thermoplastic polyolefin, methyl methacrylate monomer and polymethyl methacrylate among other products.

The ownership of Rabigh II will be transferred to PetroRabigh from the parents in the fourth quarter of this year, the joint venture firm said last month, although Aramco and Sumitomo would continue to guarantee the debt raised to build the scheme.

($1 = 3.7502 Saudi Riyals)

($1 = 102.6100 Japanese Yen)

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