Parent firms decide to cut marketing fees
Saudi Arabias Rabigh Refining & Petrochemical Company (PetroRabigh) is expecting to increase this years revenue by about SR1bn ($266.6m), after its two parent companies decided to reduce the commission they take for marketing the companys products.
PetroRabigh is a joint venture between Saudi Aramco and Japans Sumitomo Chemical Company and the two firms are responsible for the international marketing of the companys products.
The new agreement will see the two firms reduce the commission they take by one-third of current rates. The commission for PetroRabighs refined products has been cancelled.
The agreement is being backdated to April this year, boosting 2013 revenues and further increasing revenues next year by an estimated SR1.3bn. The agreement will stay in place for five years before it is reviewed.
PetroRabighs revenues have been dented in 2013 by various maintenance problems.
The company posted a net loss of SR880.7m for the first nine months of 2013, which compared to a profit of SR420.8m for the same period last year. It blamed these losses specifically on two blackout incidents at its independent water, steam and power project (IWSPP) in April and May this year, which reduced the volume of sales. As a result, PetroRabigh announced it intended to terminate an agreement with Japans Marubeni Corporation and the local Acwa Power to operate an associated facility as an IWSPP.
This series of events has alarmed creditors and investors in the scheme, but most are taking comfort that Aramco stands behind the IWSPP and is in a position to bail out the joint venture if required.
The power outages and current uncertainty surrounding the existing facility are also expected to delay plans to raise about $7bn in project financing to fund the expansion of the IWSPP.
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