Tie-ups: Aramco and Shandong Energy collaborate on downstream projects in China; Dussur acquires stake in Italmatch Chemicals

Saudi Arabian Oil Company (Aramco), one of the world’s leading integrated energy and chemicals companies, and Shandong Energy Group, are exploring collaboration on integrated refining and petrochemical opportunities in China.

The companies have signed a Memorandum of Understanding (MoU) which includes a potential crude oil supply agreement and chemicals products offtake agreement, supporting Aramco’s role in building a thriving downstream sector in Shandong Province.

The signing ceremony, which was conducted with the participation of Shandong Provincial People’s Government, underlined the importance of Aramco’s collaboration with Chinese companies. The scope of the MoU extends to cooperation across technologies related to hydrogen, renewables and carbon capture and storage.

Mohammed Y. Al Qahtani, Aramco Senior Vice President of Downstream, said: “Through collaborations such as this in China’s energy heartland, we are creating new pathways for growth in a country that is driving the increased integration of refining and petrochemical processes. I am delighted that this spirit of cooperation is being extended across hydrogen, renewables and carbon capture and excited by the potential for further cooperation in these key areas which will shape our collective future.”

Li Wei, Chairman of Shandong Energy Group, said: “Both Shandong Energy and Aramco are important players in the international energy arena. We share a lot of common interests, complementary strategies with expansive scope for cooperation, especially in oil and gas resources development and integrated refining and petrochemicals development along the whole industrial chain.”

The announcement strengthens Aramco’s efforts to support demand for energy, petrochemicals and non-metallics in China as the company seeks to expand its liquids to chemicals capacity to up to 4 million barrels per day by 2030.

Meanwhile in other news, Dussur, the Saudi Arabian Industrial Investments Company, has signed a definitive agreement to acquire from private equity firm Bain Capital Private Equity, a stake in Italmatch Chemicals, a global specialty chemical additive manufacturer. Concurrently with this acquisition, Dussur will also invest an additional EUR100 million into Italmatch as a capital increase. Upon completion of both the stake sale and capital increase, which is currently expected to occur within the first half of 2023 subject to customary conditions, including regulatory approvals, Dussur’s interest in Italmatch is expected to be less than 20%.

Founded in 1997 by current CEO Sergio Iorio, Italmatch is a leading global manufacturer of specialty chemical additives, operating across four key business units: Advanced Water Solutions, Lubricant Performance Additives, Flame Retardants and Plastic Additives, and Personal Care and Performance Additives.

Italmatch was acquired by Bain in 2018 and has since grown significantly through R&D and new product development, with a focus on ESG positioning and applications, investment in strategic greenfield developments and synergistic M&A, which resulted in a more than twofold EBITDA increase, from EUR67 million LTM Adjusted EBITDA in September 2018 to EUR160 million in LTM September 2022.

Through the transaction with Dussur, Italmatch will re-enforce its presence and existing partnership in the Middle East and Saudi Arabia, contributing to regional economic diversification, growth and localisation of industrial value chains and capabilities to meet regional and global demand.

(PRA)

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