Aramco completes acquisition of Sasref refinery for $631m

Acquisition to support Saudi Aramco’s plan to increase refinery capacity

FILE PHOTO: An Aramco oil tank is seen at the Production facility at Saudi Aramco's Shaybah oilfield in the Empty Quarter, Saudi Arabia May 22, 2018. REUTERS/Ahmed Jadallah/File Photo

Saudi Aramco on Wednesday said it has completed the acquisition of Royal Dutch Shell’s 50 per cent stake in the Sasref refining joint venture for $631 million (Dh2.3 billion), taking complete ownership of the facility.

“The acquisition supports Saudi Aramco’s plan to increase the complexity and capacity of its refineries, as part of its long term downstream growth strategy,” the two companies said in a statement.

“For Shell, the sale is part of an ongoing effort integrating its refining portfolio with Shell Trading hubs and chemicals operations.”

The Sasref refinery at Jubail Industrial City has a capacity of 305,000 barrels per day, with its main products being liquefied petroleum gas, naphtha, kerosene, diesel, fuel oil and sulphur.

Saudi Aramco, the world’s biggest oil exporting company, has been making strategic shifts downstream as it looks to sell more products, especially in growing markets in Asia. It recently agreed to buy a 70 per cent stake in Sabic, the region’s biggest chemicals company.

The company is also investing overseas in the refining sector. Earlier this year, Saudi Aramco reached an agreement with Hyundai to acquire a 17 per cent stake in Oilbank, one of the South Korean conglomerate's subsidiaries, in a transaction valued at $1.25bn.

The oil giant is also partnering with Abu Dhabi National Oil Company to jointly invest in India’s $44bn Ratnagiri refinery on the West Coast of India. It also plans to buy 20 per cent of India's Reliance Industries' oil-to-chemicals business for an enterprise value of $75bn.

On Saturday, two of Aramco’s facilities at Abqaiq and Khurais came under attack, knocking out more than half of the kingdom’s oil output. The kingdom's energy minister, Prince Abdulaziz Bin Salman, said most of the country's capacity would be back online by the end of September.

Aramco reported a net profit of $46.9bn in the first half of 2019, down from $53 billion for the same period last year. Despite the profit decline, Aramco remains the world’s most profitable company.