Saudi Aramco has agreed to buy a 70% controlling stake in SABIC from the Kingdom’s Public Investment Fund (PIF) for $69.1 billion.

“This is a win-win-win transaction and a transformational deal for three of Saudi Arabia’s most important economic entities,” said Yasir al-Rumayyan, PIF’s managing director.

SABIC’s vice chairman and CEO, Yousef Al-Benyan, added: “SABIC will benefit from the additional scale, technology, investment potential, and growth opportunities Saudi Aramco will bring as a global leader in integrated energy and chemicals production. Solidifying our relationship in this way strategically positions SABIC and Saudi Aramco to accelerate exciting developments in our global chemicals business.”

Aramco said it does not intend to acquire the remaining 30% stake in SABIC, which is traded on the Saudi Stock Exchange.

The deal comes several months after talks started last summer when Aramco confirmed that it was in early stage discussions with PIF to take a controlling stake in the Saudi chemicals giant. The talks contributed to the delay of Aramco’s planned initial public offering, which is now expected to take place in 2021.

Aramco and SABIC have petrochemicals production capacity of 17 million t/y and 62 million t/y respectively. Aramco’s long-term strategy is to expand downstream into petrochemicals by increasing its refining capacity from 4.9 million barrels per day to 8-10 million barrels per day by 2030. Out of that, 2-3 million barrels per day will be converted to petrochemical products.

The transaction remains subject to certain closing conditions, including regulatory approvals.

In separate news, SABIC’s partner in the Ar-Razi methanol joint venture, Japan Saudi Arabia Methanol (JSMC), has decided to retain its 25% share in the business.

Last December, JSMC agreed to sell half of its 50% stake to SABIC, giving the Saudi partner a majority 75% holding. However, JSMC had the right up to Mar. 31, 2019, to sell its remaining 25% share to SABIC.

Having performed a “comprehensive examination” of the new jv’s economic rationality, profitability and risk factors, JSMC said it has concluded that it should continue the business.

JSMC, part of Japan’s Mitsubishi Gas Chemical (MGC), will pay SABIC $1.35 billion to extend their cooperation for another 20 years, up to Nov. 29, 2038. JSMC said it will pay the agreed sum in equal annual installments over three years once regulatory approvals have been obtained.

MGC added that it will also discuss with SABIC the commercialization of new methanol technology, which it will consider using to revamp its own methanol plants.