SABIC to buy remaining 50% in Shell venture for $820 mn
24 Jan 2017
Saudi Basic Industries Corp (SABIC) has struck a deal to buy the 50 per cent that it does not already own in its petrochemical joint venture SADAF with Shell Arabia, a unit of Royal Dutch Shell, for $820 million.
"As per the partnership agreement between the two companies that stipulates the right of SABIC to renew or end the partnership by the end of 2020...SABIC decided to acquire the full stake of Shell, which is 50 percent," SABIC said in a statement.
SABIC, the biggest petrochemicals producer in the Middle East and Shell are ending their partnership earlier than its planned 2020 expiration and the sale would be Shell's third project it is exiting with Saudi Arabia's largest companies since 2014.
Sadaf was founded in 1980 as an equal joint venture between SABIC and Pecten Arabian Company Ltd., a subsidiary of Shell.
Shell's 50-per cent stake is currently held by Shell Chemicals Arabia, LLC an affiliate of Royal Dutch Shell.
Sadaf, the largest petrochemical complex in the Middle East, covers an area of 460-acre in the Industrial City of Jubail on the Gulf coast of Saudi Arabia, and contains six petrochemical plants with a total average output of more than 4 million metric tons per year of various chemicals.
It makes products including ethylene, crude industrial ethanol and styrene.
The acquisition is expected to be carried out before the end of this year, SABIC said, adding that it signed another memorandum of understanding with Shell Arabia on Sunday to boost the companies' cooperation in unspecified international and local investments.