Saudi Aramco and Sumitomo Chemical Co. have agreed to waive $1 billion in debt owed by Petro Rabigh, marking a significant step in the refinery’s upgrade and turnaround strategy. According to a statement released on Tadawul, Saudi Arabia’s stock exchange, each of the two major shareholders will forgo $500 million in revolving shareholder loans and associated commissions. 

Revolving shareholder loans (RSLs) are financial instruments that allow shareholders to lend and withdraw funds multiple times within a specified period, typically used to support operations, finance projects, or address short-term cash flow needs. This debt waiver is part of a broader strategy to bolster Petro Rabigh’s profitability, balance sheet, and liquidity. 

The decision aligns with Saudi Aramco’s objectives to expand its downstream operations and Sumitomo Chemical’s shift from commodity to specialty chemicals. Earlier in August, Aramco announced plans to increase its stake in Petro Rabigh by acquiring an additional 22.5 percent share from Sumitomo Chemical for $702 million. At a price of SR7 per share, this acquisition will elevate Aramco’s ownership to approximately 60 percent, while Sumitomo Chemical’s stake will decrease to 15 percent. 

The agreements are classified as related-party transactions, with Aramco and Sumitomo Chemical each holding a 37.5 percent share in Petro Rabigh. The debt waiver is expected to enhance the company’s financial stability, with further details to be disclosed in future announcements. 

Following the initial acquisition announcement, Sumitomo Chemical indicated that it would reinvest the proceeds into Petro Rabigh. Simultaneously, Aramco committed to providing additional funding to match Sumitomo Chemical’s $702 million investment. Combined with phased loan waivers totaling $750 million each, the total reduction in Petro Rabigh’s liabilities is set to reach $1.5 billion. 

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