Aramco-Sumitomo JV Q2 profit halves
It made a loss in Q2 2009 before start of full operations.
July 21, 2010 9:13 by Reuters
Saudi-based Rabigh Refining and Petrochemical Co (PetroRabigh) swung to a second-quarter net profit but it was 55.1 percent below earnings in the first quarter, when it booked one-off gains.
The joint venture of state-owned oil company Saudi Aramco and Japan’s Sumitomo Chemicals made 121.8 million Saudi riyals ($32.48 million) in the three months to end-June against a net loss of 236 million a year earlier, it said in a statement to the bourse’s website.
It had first-quarter net profit of 271.5 million riyals.
Chief Executive Ziad Labban said the quarter-to-quarter net profit drop was due to non-recurring gains the firm made during the first quarter of 2010. He did not elaborate on the size and nature of these gains.
Second-quarter earnings were “positive in terms of operations, growth and net profit … We expect this to be the norm going forward,” he told Reuters.
The firm started operations at its $10.1 billion complex in November and commissioned all the production units in December.
Operating profit stood at 82.9 million in the second quarter, up from an operating loss of 264.6 million riyals in the same period in 2009, it said.
Analysts say PetroRabigh relies on petrochemical products profitability to offset low margins from its refined oil products, most of which are destined for the Saudi market and sold at a giveaway price.
PetroRabigh said in June its naphtha output was back to normal after it found the gasoline-additive methyl tertiary butyl ether (MTBE) had contaminated some production slated for use as a petrochemical feedstock. Its plant does not produce MTBE.
It did not disclose the quantity of naphta that was contaminated but traders said some 200,000 tonnes of Rabigh-grade naphtha was found to contain a high amount of MTBE.
Aramco and Sumitomo Chemical each have 37.5 percent stakes in the joint venture, with the rest publicly held.
PetroRabigh, which caters mainly to the Saudi market and Europe and North Africa, can process 400,000 barrels of crude per day, accounting for about 19 percent of Saudi Arabia’s total refining capacity.
It can produce an annual 18 million tonnes of refined products and 2.4 million tonnes of petrochemical products.
(Reporting by Souhail Karam and Asma Alsharif; Editing by Michael Shields)