Energy - - Jan 23,2017
Saudi Basic Industries Corp (SABIC) has signed an agreement to take over 50 percent stake in Shell Arabia, a unit of Royal Dutch Shell for $820 million.
SABIC said that the deal is subject to final approval from regulators and is expected to be completed by the end of 2017. One of the largest petrochemical firms in the world, SABIC, added that the amount of the agreement is based on the net value of the venture’s assets.
It said that as per the initial agreement between the two companies, SABIC has the right to renew or end the partnership by the end of 2020. Thus, it has decided to take over the full stake of Shell, which is 50 percent.
Shell Arabia and SABIC’s earlier venture, known as SADAF, was established in 1980 and it runs 6 petrochemical plants with a total annual output of more than 4 million tonnes. It makes chemical products such as ethylene, styrene and crude industrial ethanol at a station in Jubail, located on the Gulf coast of Saudi Arabia.
The complete acquisition will terminate the older strategic partnership as the full venture will function under the name SABIC and will allow it to optimize and invest in the operating stations and integrate them with other affiliates.
Royal Dutch Shell, commonly referred to as Shell, has been supplementing itself with several joint ventures around the world as it targets to raise $30 billion from asset sales by the end of 2018. It completed a $1.4 billion deal by withdrawing from its Snow Shell refining partnership plant in Japan last month.
Shell is also involved in other downstream activities in the Saudi kingdom, as it owns a crude oil refinery with Saudi Aramco in Jubail itself. The company has other ventures with Saudi partners that produce lubricating oil and work on aviation refueling operations.