Aramco/Sumitomo to waive US$1 bn loans to reduce Petro Rabigh’s debts

Saudi Arabia’s Aramco and Japan’s Sumitomo Chemical Co. have each agreed to waive US$500 million each in revolving shareholder loans (RSLs) and any associated commissions for Rabigh Refining and Petrochemical Co or Petro Rabigh. Thus, it will have US$1 billion in debt waived by its two largest shareholders as part of its refinery upgrade plans. Its accumulated losses had risen to US$2 billion recently.

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% stake in Petro Rabigh from Sumitomo Chemical for US$702 million, to make Aramco the majority shareholder with approximately 60% of the stake, reducing Sumitomo Chemical’s share to 15%.

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