July 23, 2018 / 6:52 AM / in 3 months

Saudi Aramco aims to buy controlling stake in SABIC - sources

DUBAI (Reuters) - Saudi Aramco aims to buy a controlling stake in petrochemical maker SABIC (2010.SE), possibly taking the entire 70 percent stake owned by Saudi Arabia’s sovereign wealth fund, two sources familiar with the matter told Reuters.

FILE PHOTO: General view of Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. REUTERS/Ahmed Jadallah/File Photo

Late last week Aramco IPO-ARMO.SE confirmed a Reuters report that it was working on a possible purchase of a “strategic stake” in Saudi Basic Industries Corp (SABIC) (2010.SE) from the Public Investment Fund, the kingdom’s top sovereign wealth fund.

FILE PHOTO: The logo of Saudi Aramco is seen at Aramco headquarters in Dhahran, Saudi Arabia May 23, 2018. REUTERS/Ahmed Jadallah/File Photo

Aramco’s initial thinking is to buy the full stake owned by the Public Investment Fund (PIF), but if that fails to materialise Aramco could end up with a stake in SABIC of more than 50 percent, making it a majority owner, the sources said.

No final decision has been made on the size of the stake as the discussions are still at a very early stage, they added.

Aramco declined to comment. The PIF did not respond to a Reuters request for comment.

Riyadh-listed SABIC, the world’s fourth-biggest petrochemicals firm, has a market capitalisation of 385.2 billion Saudi riyals (£78 billion).

The potential acquisition would affect the time frame of Aramco’s planned initial public offering set for later this year, the state oil giant’s chief executive, Amin Nasser, said in a TV interview on Friday.

Aramco plans to boost investments in refining and petrochemicals to secure new markets and sees growth in chemicals as central to its downstream strategy to cut the risk of an oil demand slowdown.

Aramco plans to raise its refining capacity to between 8 million and 10 million barrels per day, from around 5 million bpd now, and double its petrochemicals production by 2030.

Aramco, the world’s largest oil producer, pumps around 10 million bpd of crude oil.

Writing by Rania El Gamal, editing by Louise Heavens

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