Saudi Basic Industries Corp (SABIC) has signed an agreement to acquire the 50% that it does not already own in its petrochemical joint venture with Shell Arabia, a unit of Royal Dutch Shell, for $820 million.
SABIC, now one of the world’s largest petrochemical firms, already owns 50% of the joint venture, which is known as SADAF. The partnership agreement between SABIC and Shell Arabia gives SABIC the right to renew or end the partnership by the end of 2020. However, SABIC has decided to acquire Shell Arabia’s full stake in the business, which is the remaining 50%.
SADAF was established in 1980 and operates six petrochemical plants with a total annual output of more than 4 million tons a year of chemicals. It makes a range of products, including ethylene, crude industrial ethanol and styrene, at a complex in Jubail, on the Gulf coast of Saudi Arabia.
SABIC said the $820 million figure was based on the net value of the venture’s assets. It said the acquisition was in line with a strategy to develop SABIC’s own successful investments. The acquisition agreement is expected to be carried out before the end of this year.
Meanwhile, SABIC is said to have signed another memorandum of understanding with Shell Arabia to boost the companies’ cooperation in unspecified international and local investments.
“We will continue to explore potential future opportunities with SABIC,” confirmed Graham van’t Hoff, Executive Vice President of Chemicals at Shell.