Petronas Chemicals sells stake in unit to Aramco for US$900 mn

Petronas Chemicals Group, the petrochemicals arm of Malaysia’s national oil/gas firm Petronas, has sold a 50% stake in its unit, PRPC Polymers, to Saudi Arabian Oil Company (Saudi Aramco) for US$900 million, in what it says is “to share PRPC Polymers’ business risk.”

It inked an agreement with Saudi Aramco’s unit Aramco Overseas Holdings Coöperatief U.A.(AOHC).

Petronas Chemicals said the deal includes the divestment of 50% of any shareholder loans held by it in PRPC Polymers to AOHC.

“Petronas Chemicals will have a positive cash flow impact by decreasing its capex commitment as a result of Saudi Aramco’s 50% participation in PRPC Polymers. Subsequently, it will provide Petronas Chemicals with the financial flexibility to pursue other strategic growth projects,” it said in a statement to Bursa Malaysia.

“The divestment will also provide potential opportunity to pursue future strategic collaborations with Saudi Aramco.” The company didn’t elaborate further but added it will be able to leverage on Saudi Aramco’s experiences in execution, implementation and operation of similar large scale and integrated petrochemical projects, e.g., Sadara Chemical Company.

PRPC Polymers is one of the three project companies under the RAPID (Refinery & Petrochemical Integrated Development) project acquired by Petronas Chemicals in 2015 from Petronas, including PRPC Glycols and PRPC Elastomers.

The initial projected investment cost in RAPID for the polymers, glycols and elastomers segments totalled about US$3.9 billion with a combined capacity of 3.5 million tonnes/year. Last year, the company cancelled the proposed US$1.3 billion elastomers project, a move that cut total capacity by 350,000 tonnes.

On its part, Petronas Chemicals said Saudi Aramco is expected to supply up to 70% of crude oil for the project and ensure sustainability of feedstock. Petronas, meanwhile, will supply natural gas, power, and other utilities to the project.

Early this year, Saudi Aramco and Petronas signed a share purchase agreement allowing Aramco to invest in equity in Petronas’s RAPID project. Aramco agreed on a 50% stake in the refinery and cracker assets, with an investment of US$7 billion, making it the single largest investor in Malaysia. http://plasticsandrubberasia.com/mar2017/company1.html