Aramco-Sumitomo JV Makes Q1 Profit After Plant Launch
Higher margins and one-off income helped Saudi-based Rabigh Refining and Petrochemical (PetroRabigh) post its first quarterly net profit after starting operations at its $10.1 billion complex. But first-quarter operating results at the joint venture of Saudi Aramco and Japan's Sumitomo Chemical remained in the red after it inaugurated the giant plant in November and commissioned all the production units in December.
PetroRabigh swung to a net profit of 271.5 million riyals ($72.4 million) in the three months to end-March from a net loss of 28.7 million riyals a year earlier, PetroRabigh said.
"The rise in net earnings stemmed from ... improvement in the profit margin of both the refining and petrochemical sectors and to the stabilisation of the company's production operations and to non-recurring profits," PetroRabigh said, without elaborating.
The company made a net operating loss of 49.7 million riyals in the first quarter, wider than the 38.9 million riyal loss a year earlier but narrower than a 184.4 million operating loss it made during the fourth quarter of 2009. State-controlled Aramco and Sumitomo Chemical each have 37.5% stakes in the joint venture with the rest publicly held.
Chief Executive Ziad Al-Labban told Reuters in November that the company could make a profit in the fourth quarter of 2009 if refining margins improved fast enough. A month later, he said margins had not yet started to improve unlike prices of petrochemicals.
The global crisis has weighed on demand for petrochemical products, leading global players to post lower margins. 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% of Saudi Arabia's total refining capacity. It can produce an annual 18 million tons of refined products and 2.4 million tons of petrochemical products.
