Rabigh Refining & Petrochemical Company (PetroRabigh), a Riyadh-listed petrochemicals producer, has reported an almost 80 per cent decline in second-quarter net income as product prices fell and refinery margins deteriorated.

PetroRabigh, a joint venture between the world’s biggest oil exporter, Saudi Aramco, and Japan’s Sumitomo Chemical, reported a profit of SR103m ($27.46m) for the three months ending 30 June. This compares with SR504.9m quarterly income for the corresponding period in 2015. The gross profit for the period also slipped 46.86 per cent, the company said in a statement to Saudi Stock Exchange (Tadawul), where its shares are traded.

The company, which had reported a net loss of SR32.7m for the first three months of this year, said the reasons for a profit in the second-quarter was mainly due to “recovered operation and sales after total complex shutdown in the fourth quarter of 2015 and increase of crude oil price, despite deterioration in refinery margin,’’ it said the statement.

The first half net income for the petrochemicals giant also shrunk to SR70.5m, more than 90 per cent drop from SR710.3m recorded for the first six months of 2015.

However, despite reduced profitability, the company is still going ahead with selective expansion projects. It awarded a construction contract to Italy’s Saipem for the second-phase expansion project.  The 30-month deal to expand PetroRabigh’s chemicals complex is worth $208.5m and includes a plant to process and recover vanadium and a unit to dispose of caustic soda, the company said in a statement at that time.

The total project cost is estimated at about $8.1bn and the PetroRabigh has already raised $5.2bn to support the second-phase expansion, on which Japan’s Sumitomo Mitsui Banking Corporation and the local Sabb were the financial advisers.

The project involves PetroRabigh expanding its ethane cracker and building a new aromatics complex that will enable it to process 30 million cubic feet a day (cf/d) of ethane and about 3 million tonnes a year (t/y) of naphtha as a major feedstock to produce chemicals.

The company, however, has cancelled two of the three packages on its planned Clean Fuels Project, sources familiar with the scheme told MEED last month.

PetroRabigh tendered three engineering, procurement and construction (EPC) packages in October 2015 and received bids from international companies in February.