Petro Rabigh: Detailed Report on Financial and Operational Performance

Petro Rabigh was established as part of an ambitious vision to transform Saudi Arabia into a global hub for petrochemical manufacturing. The company launched in 2005 as a joint venture between Saudi Aramco, the world's largest oil company, and Sumitomo Chemical, a giant in the chemical industry. The establishment of Petro Rabigh was a response to the Kingdom's need to maximize the added value of its natural resources, particularly crude oil, by developing an integrated industrial chain that starts with refining and ends with final products that enter most consumer and industrial sectors worldwide.

The Petro Rabigh industrial complex consists of a massive refinery with a refining capacity of hundreds of thousands of barrels per day, in addition to production units for key chemicals such as ethylene, propylene, polyethylene, and polypropylene. These products form the foundation for the plastic, textile, adhesive, and other essential industries. The company has been listed on the Saudi financial market (Tadawul) for years and holds a significant weight within the energy and chemical industries index in the Saudi market.

The importance of Petro Rabigh extends beyond operational profitability, as it represents a model for localizing the industrial value chain, providing thousands of direct and indirect jobs, and supporting the development of local communities in the Rabigh area. The company is also one of the main pillars in achieving the goals of Saudi Vision 2030, which seeks to reduce dependence on crude oil revenues by developing advanced industrial sectors. The partnership between Aramco and Sumitomo has given Petro Rabigh a global dimension in terms of technology and management, contributing to building advanced local capabilities in the petrochemical industry.

The investment structure of Petro Rabigh is based on a strategic partnership between two of the world's leading industrial players: Saudi Aramco and Sumitomo Chemical. Since the company's establishment until 2024, the shares have been distributed between the two parties in close proportions, with Aramco retaining the larger share due to its role as the main supplier of crude oil and logistical supporter of the project.

The year 2024 witnessed a significant turning point in the ownership structure after Aramco announced plans to increase its stake to approximately 60% of the capital by purchasing 22.5% of Sumitomo's stake for 2.63 billion Saudi Riyals ($701.8 million). Thus, Sumitomo's stake decreased to about 15%, while the remaining percentage is distributed among individual and institutional investors through stock trading in the Saudi financial market.

This shift in the investment structure reflects Aramco's commitment to supporting the company and providing it with financial stability in the face of operational challenges. The additional financing injected in August 2024 (702 million dollars from both Aramco and Sumitomo) was a rescue step aimed at enhancing working capital and alleviating pressures on cash flows. The continued presence of Sumitomo as a strategic partner reflects the Japanese partner's confidence in the long-term potential of the industrial complex, despite current financial difficulties.

From a management perspective, Petro Rabigh's board of directors consists of representatives from Aramco and Sumitomo, in addition to independent members, and is subject to the oversight of the Saudi Capital Market Authority. This administrative structure ensures the transfer of global expertise and the application of best practices in governance, with a particular focus on developing Saudi talent and localizing leadership and technical jobs within the industrial complex.

The Petro Rabigh complex is one of the largest integrated industrial projects in the Middle East, combining a massive crude oil refinery with advanced petrochemical production units. The refinery's capacity reaches several hundred thousand barrels per day, allowing for the production of large quantities of gasoline, diesel, fuel oil, and other essential petroleum products.

In terms of petrochemicals, the complex includes units for producing ethylene, propylene, polyethylene, polypropylene, ethylene glycol, and a range of monomers and olefins that are fundamental to the plastic, textile, and adhesive industries. These capabilities enable the company to meet local market needs and export to global markets in Asia and Europe.

The Petro Rabigh complex features the latest Japanese and Saudi technologies in refining and chemical conversion processes, contributing to achieving high operational efficiency and product quality. Development projects completed since the initial operation of the complex (Rabigh 1 and Rabigh 2) have contributed to expanding the product portfolio and introducing specialized petrochemical products with higher profit margins.

The complex also includes integrated logistical facilities, including a dedicated port for exporting products, a network of pipelines and massive storage tanks, in addition to technical support and maintenance units and quality testing laboratories. The integration between refining and petrochemical units helps reduce costs and increase flexibility in adapting to changes in demand and prices.

The availability of raw materials from Saudi Aramco gives Petro Rabigh a competitive advantage in securing crude oil and gas at preferential prices, enhancing its ability to compete in global petrochemical markets. However, market challenges have highlighted the importance of continuing to develop the complex and improving efficiency to overcome periods of weak demand or rising costs.

Petro Rabigh faced significant financial challenges during 2024 and 2025, which directly impacted its operational and financial results. The announced data for the first half of 2024 showed accumulated operating losses, with the company recording a net loss of 1.37 billion Saudi Riyals in the first quarter alone, leading to a wave of decline in the stock price by over 4% in a single trading session. These losses are attributed to declining refining and petrochemical margins globally, along with pressures from falling oil prices and rising operational and financial costs.

These losses were not surprising given the volatile global environment and the difficulty of competing with companies that have lower production costs or broader export markets. Concurrently, the company's cash flows remained negative, prompting management to freeze dividend distributions and refrain from announcing any distribution plans during 2024 and 2025.

Despite these challenges, the results of the second half of 2024 showed initial signs of operational improvement due to the commencement of internal restructuring measures and the injection of new investments from key partners. This improvement was limited and did not reach the level of achieving net profits, but it helped reduce losses compared to previous periods.

Management expects that restructuring plans and operational updates will gradually bear fruit during 2025, especially with the completion of capital increase deals and Aramco's acquisition of a larger stake. However, the company's results remain closely tied to the recovery of global demand for petrochemicals and improvements in oil prices, meaning that financial performance continues to be highly sensitive to market fluctuations.

From a financial metrics perspective, it is noted that the price-to-earnings (P/E) ratio is negative or insignificant during this period due to the absence of net profits, while the market value has significantly declined. The main objective during the upcoming period remains financial stability and improving operational efficiency to overcome the loss phase.

In response to operational losses and financial challenges, Petro Rabigh and Saudi Aramco took decisive actions in 2024 and 2025 to support capital and enhance financial stability. In August 2024, Aramco and Sumitomo announced a joint financing injection exceeding $2.64 billion, with each party contributing approximately $702 million to support the project.

This financial injection was not just an additional investment but came as part of a comprehensive plan to rescue the company from the repercussions of accumulated losses and ensure the continuity of its vital industrial operations. The agreement also included Aramco purchasing an additional stake from Sumitomo, raising Aramco's total stake to about 60% while Sumitomo's stake decreased to only 15%. This step reflects Aramco's deep commitment to supporting Petro Rabigh as a strategic arm in the Saudi petrochemical sector.

Capital increase measures were not limited to liquidity injection but also included a comprehensive review of the company's financial structure, including reassessing loans and supplier debts, improving supply terms, and updating liquidity management policies. New programs were also launched to improve cash flows by rescheduling capital expenditures and deferring some non-urgent projects.

Alongside these developments, the company announced that it would continue to freeze dividend distributions until it ensures sufficient net profits and provides the necessary liquidity for reform and modernization plans. The substantial investment support has given the company an opportunity to catch its breath and begin implementing structural measures aimed at improving financial and operational performance in the medium and long term, with a focus on cost control and maximizing the added value of final products.

Petro Rabigh's stock experienced sharp fluctuations during 2024 and 2025 due to the announcement of operational losses and declining investor confidence. In May 2024, the stock dropped by over 4% in a single day following the announcement of first-quarter losses, reaching historically low levels and reflecting the prevailing anxiety among market participants. This sharp decline was a direct reaction to the rising magnitude of losses and the declining expectations regarding the company's ability to achieve profits in the near future.

Despite this negative performance, the stock saw some temporary recovery in September and August 2024 after Aramco and Sumitomo announced new investment injections and capital increases. Stock movements during this period demonstrate the close correlation with substantive news and market expectations regarding the company's future. However, the improvement remained limited, and the stock returned to a clear volatility path amid ongoing operational challenges.

Regarding market value, it recorded a significant decline at the end of 2024 and the beginning of 2025, estimated at several billion Riyals only, compared to its previous record values. This decline is attributed to the drop in stock price and the uncertainty surrounding future profitability. It is noteworthy that the price-to-earnings (P/E) ratio has become insignificant or negative due to the absence of net profits, reflecting the difficulty of evaluating the company using traditional tools.

It is worth mentioning that the company's suspension of dividend distributions since 2023 has increased investor conservatism, as the stock prices of petrochemical companies often depend on expectations of cash distributions. The movements of Petro Rabigh's stock remain contingent on improving financial results and successfully implementing reform plans, with investors closely monitoring any developments in operational performance or government support.

The Saudi petrochemical sector is one of the largest and most influential industrial sectors in the national economy, serving as a key lever for diversifying income sources and providing job opportunities. Since the establishment of SABIC in the 1970s, the sector has witnessed rapid growth with the entry of new companies such as Yansab, National Petrochemical Company, and Petro Rabigh.

Saudi petrochemical companies, including Petro Rabigh, benefit from the availability of crude oil and natural gas at competitive prices, in addition to government support and investment incentives aimed at enhancing the local value chain. Despite these advantages, the sector faces significant challenges represented by fluctuations in oil and petrochemical product prices, declining global demand due to economic slowdowns, and increased competition from Asian companies with lower production costs.

Petro Rabigh is distinguished by its geographical location on the Red Sea, facilitating the export of its products to Asian and European markets. Additionally, the integration of its operations between refining and chemical production provides it with flexibility in adapting to changes in demand. However, the company faces intense competition from companies like SABIC, which has a broader product portfolio and greater financial capabilities, as well as Yansab, which focuses on similar products of olefins and polyethylene.

Competition in the sector is characterized by strong global and regional companies such as Dow Chemical, BASF, and Gulf Chemicals, necessitating the maintenance of high levels of efficiency and quality and the development of specialized, higher-margin products. The Saudi government bets on the petrochemical sector as a fundamental pillar of Vision 2030 and seeks to enhance investments and localize related industries, which underscores the importance of the continued success of projects like Petro Rabigh despite temporary challenges.

Petro Rabigh operates in a highly competitive environment that includes many major companies both locally and internationally. In the Saudi market, the most prominent competitor is SABIC (SAFCO), which represents the national petrochemical giant and produces a wide range of high-value chemicals and polymers. SABIC possesses massive financial and technical capabilities and benefits from a global marketing network that allows it to reach diverse markets.

Yansab, the National Petrochemical Company, is another significant competitor as it focuses on producing ethylene and its derivatives and enjoys the support of Aramco and international partners. There is also the National Industrialization Company (Tasnim), which competes in ethylene and polyethylene products, as well as the Saudi-Kuwaiti Petrochemical Company (Ittihad), which focuses on plastic products for packaging.

Internationally, Petro Rabigh faces major competitors such as Dow Chemical, BASF, Bayer, and OMV, which hold a significant share of global markets due to their research and technical capabilities, as well as their ability to produce large quantities at low costs in some emerging markets. In the Gulf region, there is competition from Emirati and Bahraini companies such as Gulf Chemicals and Bahrain Petrochemicals.

Petro Rabigh has a strategic advantage due to its partnership with Aramco, which provides raw materials and logistical support, along with Japanese expertise from Sumitomo in management and technology. However, sector challenges such as fluctuations in raw material prices and changes in global demand require the company to develop specialized products, improve operational efficiency, and invest in research and development to maintain its competitiveness. The ability to quickly adapt to market changes will be crucial in maintaining Petro Rabigh's market share in both the Saudi and global markets.

In light of the financial and operational challenges faced by Petro Rabigh during 2024 and 2025, senior management has developed a comprehensive strategy for restructuring and improving financial and operational performance. This strategy focuses on several key areas aimed at enhancing efficiency, reducing costs, and achieving long-term financial sustainability.

One of the most prominent measures was reviewing contracts with gas and industrial fuel suppliers, where the company sought to improve supply terms and secure better prices for production inputs. Maintenance plans for production facilities were also updated, resulting in reduced unplanned downtime and improved operational readiness of the plants.

In terms of operations, Petro Rabigh has introduced new technologies in digitization and automation, contributing to waste reduction and increased productivity. The product portfolio was also reassessed to focus on higher-margin products, such as specialized petrochemicals that see stable demand in global markets.

Financially, the company worked on rescheduling debts and improving cash flow management, deferring some non-essential capital projects to alleviate liquidity pressure. Expanded training programs were also launched to develop employee skills and enhance their efficiency, as part of the effort to localize and empower national talent.

All these measures fall within a long-term plan aimed at returning the company to profitability and sustainability, while continuing to monitor markets and adapt the strategy according to changes in demand and raw material prices. Ongoing support from Aramco and Sumitomo has provided the company with a solid foundation to implement these reforms, but ultimate success will depend on the ability to achieve tangible results and improve operational indicators in the coming years.

Following a critical restructuring phase in 2024-2025, Petro Rabigh is focusing on implementing future plans aimed at restoring growth and enhancing competitiveness in the petrochemical sector. Among the most important of these directions is updating production facilities and raising operational efficiency by adopting the latest industrial technologies, including digital transformation and artificial intelligence to improve maintenance and operational processes.

The company also aims to diversify its product portfolio by developing new production lines for specialized petrochemicals that achieve higher profit margins and enjoy stable demand in global markets such as pharmaceuticals, automotive, and electronics. The company's research and development team is studying opportunities to enter new areas that align with global shifts in sustainability and the circular economy, such as producing recyclable plastics and environmentally friendly petrochemicals.

On the partnership front, Petro Rabigh is preparing to expand collaboration with Aramco and Sumitomo to support the supply chain and leverage global networks for marketing products. There is also a trend towards forming strategic partnerships with global and local companies to increase the localization of industrial operations and deepen integration in the value chain.

In the long term, the company is considering launching major expansion projects such as "Rabigh 3," which includes adding refining units and producing new chemicals, although these projects are still in the study phase and have not been officially announced yet. The success of these future plans will heavily depend on the improvement of the global market environment and the continued support from key partners. Flexibility in adapting to market changes and continuously seeking growth opportunities will be critical factors in ensuring the company's sustainability.

Petro Rabigh plays a pivotal role in achieving the goals of Saudi Vision 2030 related to diversifying the national economy and increasing local content in the industrial value chain. The company's performance directly reflects on the sectors linked to energy and industry in the Kingdom, as it contributes to enhancing exports of petrochemical products and creating direct and indirect job opportunities in Rabigh and the western region in general.

Through the investments of Aramco and Sumitomo in developing the industrial complex, advanced technologies have been transferred to the Kingdom, leading to the establishment of local capabilities in operating and maintaining refining and petrochemical facilities. The company also contributes to training and employing Saudi personnel, supporting localization and raising technical skill levels in the industrial sector.

Petro Rabigh is a model for public-private partnership projects, benefiting from government support in providing raw materials at preferential prices and tax exemptions during the establishment phases. The company's success in overcoming challenges and achieving financial sustainability enhances the Kingdom's position as a regional industrial hub and increases its ability to export high-value-added products.

At the macroeconomic level, any improvement in Petro Rabigh's results positively reflects on the Saudi financial market index (TASI) and boosts investor confidence in the manufacturing sector. This also supports government efforts to reduce dependence on crude oil as a primary source of income and stimulates new investments in related industries. The company's continued development of innovative products and expansion of its global customer base will remain a key factor in achieving the economic and social goals of the Kingdom's Vision.

Despite the strategic advantages enjoyed by Petro Rabigh, it faces a range of complex challenges on both internal and external levels. The first of these challenges is fluctuations in oil and petrochemical product prices, which directly affect profit margins and revenue flows. During periods of declining prices, the ability to achieve operational profits diminishes, placing pressure on liquidity and the ability to cover operational and capital expenses.

The second challenge is the intense competition in local and global markets, especially from Asian companies that have massive production capacities and lower costs, in addition to major Saudi companies like SABIC and Yansab. This competition requires Petro Rabigh to continue developing high-quality products and improving operational efficiency to reduce costs.

Internally, the company faces challenges in managing costs and cash flows, especially with ongoing operational losses in 2024-2025. This includes the need to reschedule debts, improve supply terms, and defer some non-urgent projects. Additionally, the ability to maintain liquidity without distributing dividends may affect the attractiveness of the stock among individual and institutional investors.

Another challenge is the necessity to keep pace with technological and environmental transformations in the petrochemical industry, where sustainability and reducing carbon emissions are becoming increasingly important. This requires additional investments in research and development and adopting clean production technologies, which may increase costs in the short term. Overall, Petro Rabigh's success in overcoming these challenges depends on the effectiveness of restructuring plans, continued support from key partners, and the ability to quickly adapt to global market changes.

The dividend distribution policy represents an important part of the strategy of any publicly listed company, reflecting its ability to generate cash returns for its shareholders. In the case of Petro Rabigh, the company has suspended dividend distributions since 2023 due to ongoing operational losses and the erosion of net profits caused by pressing financial challenges.

Dividend distribution policies typically depend on the company achieving sufficient net profits to cover its financial obligations and provide reserve liquidity for capital and operational expenses. In light of the accumulated losses recorded by Petro Rabigh during 2024 and early 2025, management preferred to retain profits and freeze distributions as part of the financial restructuring plan. This decision aims to strengthen the company's financial position and ensure its ability to continue vital industrial operations without resorting to costly external financing.

From an investment perspective, the non-distribution policy negatively impacts the attractiveness of the stock among investors seeking regular income, especially in the petrochemical sector known for its regular cash distributions during profitable times. However, this policy remains temporary and is linked to improving financial performance and the company's return to achieving sufficient operational and net profits.

If the reform measures succeed and financial results improve in the coming years, the company may reconsider its dividend distribution policy and announce a new distribution schedule. Monitoring quarterly financial reports and observing management trends regarding distributions are essential for any investor interested in Petro Rabigh's stock.

Petro Rabigh witnessed several significant developments during 2024-2025 that impacted its financial and operational performance. Among the most notable news was the company's announcement of massive operational losses in the first quarter of 2024, where the loss reached 1.37 billion Saudi Riyals, negatively reflecting on the stock price, which dropped by 4.2% in one day. This was followed by a wave of media pressure and pessimistic analyses regarding the future of the joint venture between Aramco and Sumitomo.

In August 2024, Aramco and Sumitomo announced a massive rescue plan that included injecting over $2.64 billion as joint financing to support the company's capital, with Aramco purchasing an additional stake from Sumitomo to raise its stake to 60%. This step temporarily boosted market confidence and gave the company an opportunity to restructure its operations and begin implementing wide-ranging reform measures.

By October 2025, the acquisition deal was completed, and Aramco announced taking on greater responsibility in managing the company and implementing a comprehensive financial and operational reform program. The additional support measures included reviewing contracts with suppliers, updating maintenance, and adopting new production technologies to reduce costs and increase flexibility.

Despite ongoing financial challenges, credit rating agencies maintained a stable outlook on the company due to government support and Aramco's backing, keeping the risk rating within a relatively good range. The company remains in a critical transitional phase, with continued focus on implementing reform plans and monitoring its operational and financial results in the coming years.