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Integration moves progress in Qatar, Saudi

qatar/sauDI STATE-OWNED Qatar Petroleum has Saudi moves
announced it will integrate Qatari petrochemi- Meanwhile State-owned Saudi Aramco bought
cals marketer Muntajat into its operations, under 2.1 billion shares of Saudi Basic Industries
efforts to strengthen its downstream business. (SABIC) on the stock market on Sunday as it
Muntajat markets polyethylene (PE) and completed its deal agreed last year to buy 70 per
other petrochemical products such as methanol, cent of the petrochemical giant.
methyl tert-butyl ether (MTBE) and linear alkyl Four transactions were executed on the Saudi
benzene (LAB), as well as fertilisers and metals. exchange, known as Tadawul, involving SABIC
QP aims to integrate the company within the shares worth 259,125 billion riyals ($69.1) bil-
next few months, it said in a statement on June lion, Tadawal data showed, without naming the
11. buyer.
“The integration of Muntajat into QP is a Four sources confirmed the transactions
strategic move that will further strengthen our were part of the Aramco acquisition agreed in
downstream capabilities and enhance the state of 2019 and which will be one of the biggest in the
Qatar’s global competitive position in the down- global chemical industry once completed.
stream sector,” QP CEO Saad Sherida Al-Kaabi The shares are being sold by the Saudi sov-
said. ereign fund, the Public Investment Fund (PIF),
QP’s main business is LNG production, but giving it more cash to invest in the government
the company is looking to build up its down- programme to diversify the economy away from
stream division to serve as a hedge against gas oil.
market volatility. Sources told Reuters in May that Aramco
Two months ago, it also integrated petro- had been looking to restructure the deal after
chemicals firm SEEF into its operations. SEEF SABIC’s market value fell more than 40 per cent
is a joint venture between QP and Qatar’s UDC due to an oil price slump. Sunday’s transactions
that operates a 100,000 tonne per year (tpy) LAB suggested the deal price had not changed but it
plant in Mesaieed. was unclear whether the structure for making
Petrochemicals firms in Qatar have also been payments to the PIF had been revised.
consolidating in recent years to benefit from Sunday’s share trades involved cross trans-
lower costs and become more competitive inter- actions, also known as special deals on the
nationally, at a time when prices are low and the Tadawul, which are executed at an agreed price
market is crowded with suppliers. Among the between a buyer and seller.
major deals, state-owned Qatar Vinyl merged its “The deal completion is on-track with expec-
operations with Qapco in 2017. tations to be finalised before the end of the
The same thing is happening in other Middle second quarter,” Aramco told Reuters in a state-
Eastern states. Oman last year integrated state- ment when asked about the transactions. “We
owned oil company OOC, refiner Orpic and will make a completion announcement in due
several other domestic energy firms. course.”
Meanwhile Saudi Arabia’s Sipchem, which Aramco has been boosting investments in
produces methanol, polymers and acetic acid, refining and other downstream industries.
last year merged with polypropylene (PP) pro- Three of Sunday’s deals were completed at
ducer Sahara Petrochemicals. 123.40 riyals per share and the fourth at 123.20
QP is also investing in new Qatari petro- riyals, prices that were similar to last year’s
chemicals capacity, striking a deal with Chevron agreed price of 123.39 riyals per share.
Phillips Chemical of the US last year to develop SABIC shares ended at 88.50 riyals on
a 1.9mn tpy ethane cracker in Ras Laffan. The Sunday.
plant will consist of two high-density PE units Aramco raised $10 billion in a loan this year
with a combined output of 1.68mn tpy. They are to help with the SABIC acquisition, sources pre-
scheduled for launch in 2025. viously said.™

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