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Home / NEWS / Saudi's Sabic extends JV with Japan Saudi Arabia Methanol Company

Saudi's Sabic extends JV with Japan Saudi Arabia Methanol Company

by Jack Ball on Dec 6, 2018


Sabic has increased its stake in the Saudi Methanol Company to 75%, a bourse filing has revealed.
Sabic has increased its stake in the Saudi Methanol Company to 75%, a bourse filing has revealed.

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Global petrochemicals giant Saudi Basic Industries Corporation (Sabic) has extended its joint venture with Japan Saudi Methanol Company (JSMC), renewing its partnership with the Saudi Methanol Company (Arrazi) for another 20 years.

Under the agreement, according to a filing on Tadawul, Sabic will raise its stake in Arrazi to 75% by buying half of JSMC’s share in the company – which makes up 25% of all Arrazi shares – for $150m (SAR562.7m). The previous agreement, which expired on 29 November, 2018, gave Sabic the right to buy JSMC’s share in Arrazi. JSMC owns a 50% stake in Arrazi.

READ: SABIC CEO Yousef Al-Benyan re-elected as GPCA chairman

The bourse statement revealed that Sabic “will use some or all of the above proceedings to finance the refurbishment of or replacement of Arrazi’s existing methanol plants”.

Subject to regulatory approvals, the transaction is expected to complete in 2019, following which its financial impact will start.

As per the terms and conditions of the agreement, the JSMC has the right at any time before 31 March, 2019, to sell its remaining 25% shares in Arrazi to Sabic for another $150m. Should this occur, Sabic will have full ownership of Arrazi.

The news comes amid a positive year for Sabic.

READ: Higher prices, volumes boost profits at Saudi's Sabic in Q3

In October, it reported a double-digit increase in operating profits for Q3 2018 compared to the same period in 2017. This was backed up by solid revenues, with the Riyadh-based giant bringing in $1.17bn (SAR43.71bn) in cash during the same period – an 11.5% increase on last year.

That same month saw China’s Wison Engineering announce that it had won a $150m engineering, procurement, and construction contract as part of Sabic’s Technology Centre expansion plan in Jubail.



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