Japanese chemical firm Sumitomo Chemical and state-owned oil/gas giant Saudi Aramco will extend a US$2 billion loan to their refinery and petrochemicals joint venture, Rabigh Refining and Petrochemical Company (Petro Rabigh), as it faces a shortfall of capital due to the Covid-19 pandemic and periodic maintenance.
Sumitomo Chemical plans to provide one third of the loan, ie US$750 million, to Petro Rabigh while Saudi Aramco will loan the remainder.
The Japanese firm said it will use funds it raised by issuing hybrid bonds last year for its share and the loan will be provided soon.
The Japanese company also said the financial completion guarantees it and Saudi Aramco provided for financing the Rabigh Phase 2 refinery and petrochemicals complex project had been terminated as of 30 September.
In 2015, Petro Rabigh signed project financing agreements with a syndicate of banks to receive an aggregate loan of US$5.2 billion to cover 60% of the cost of the project in Saudi Arabia.
The parent companies each offered financial completion guarantees for 50% of the loan at the time, but they have been lifted as they have fulfilled the requirements for continuous performance and debt-repayment ability, Sumitomo said.
Petro Rabigh started the scheduled repayment of the debt in June 2019 and will continue to repay the balance of the loan out of cash flow generated from its operations, Sumitomo said in a statement.