SABIC has agreed to increase its stake in the Ar-Razi methanol joint venture with Japan Saudi Arabia Methanol Company (JSMC) and extend the partnership for another 20 years.

Under the agreement, SABIC will buy half of JSMC’s current stake (50%) in Ar-Razi for $150 million, giving the companies holdings of 75% and 25% respectively. 

The initial deal, which was due to expire on Nov. 29, 2018, allowed SABIC to buy JSMC’s entire stake in the methanol jv. However, the companies have decided that JSMC will retain a minority stake for another 20 years, paying SABIC $1.35 billion to extend the cooperation.

The transaction is expected to be completed in 2019, although JMSC retains the right to sell its remaining 25% stake to SABIC for another $150 million at any time prior to Mar. 31 2019.

SABIC said it will use some or all of the proceeds to fund the refurbishment or replacement of Ar-Razi’s methanol plants at Al Jubail. Ar-Razi’s complex is the biggest single methanol production site in the world producing around 5 million t/y.