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Saudi Aramco, which recently agreed to acquire a 70% stake in SABIC from the Saudi Public Investment Fund (PIF) for $69.1 billion, was officially the world’s most profitable company in 2018. According to a bond prospectus issued to the London Stock Exchange on Monday, net income in 2018 rose by 50% to $111 billion and EBITDA was $212.8 billion. By comparison, the five major international oil companies reported EBITDA between $34 million and $61 million. The bond issue, for which roadshows are due to start this week, is expected to raise at least $10 billion.
In 2018 Aramco reported revenues of $355.94 billion ($315.24 billion in direct sales and $40.7 billion in government equalization payments), of which oil, condensate, and gas sales accounted for 61% of the total and downstream, chiefly refining and chemicals, 39%.
The prospectus also revealed how Aramco plans to pay for the SABIC acquisition, which it hopes to complete in 2020 after all antitrust clearances are obtained. “The purchase price for the acquisition will be paid on the closing date in the form of a cash payment equal to 50% of the purchase price and a seller loan in an amount equal to 50% of the purchase price,” the company says. The loan will be repaid to PIF in two equal tranches: 25% of the purchase price plus a loan charge of $250 million on or before 31 December 2020, and the remaining 25% of the purchase price plus a loan charge of $250 million on or before the 31 December 2021.
Aramco has also provided more details about its downstream operations. Its net refining capacity at the end of 2017 made it the fourth-largest integrated refiner in the world. As of 31 December 2018, the company had gross refining capacity, including joint venture partners, of 4.9 million b/d and net refining capacity of 3.7 million b/d. Aramco expects the wholly owned Jazan, Saudi Arabia, refinery and the Rapid project in Malaysia, in which it has a 50% stake, to commence operations by end 2019, which will increase Aramco’s gross refining capacity to 5.6 million b/d and net refining capacity to 3.7 million b/d.
Aramco also has a significant petrochemicals business, which is expanding through organic growth and M&A. It produces aromatics, olefins and polyolefins, polyols, isocyanates, and synthetic rubber. A large part of these assets are in major joint ventures, including Sadara with Dow Chemical, Petro Rabigh with Sumitomo Chemical, and Satorp with Total. At the end of 2018, its net chemical capacity, excluding joint venture partners, was 16.8 million metric tons/year (MMt/y) and gross capacity was 33.2 MMt/y. Aramco expects the Jazan integrated petrochemical refinery, which includes a large para-xylene complex, and the Rapid project in Malaysia to raise its net chemical production capacity to 20.8 MMt/y and gross chemical capacity to 40.2 MMt/y. Both projects are expected to commence operations end of this year.
By Natasha Alperowicz
Source: Chemical Week
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