TOKYO (Reuters) - Saudi Aramco has agreed to buy from Japan's Sumitomo Chemical a 22.5% stake in their petrochemical joint venture Petro Rabigh for $702 million, the companies said in a joint statement on Wednesday.

Under the deal, Aramco and Sumitomo Chemical will each provide $702 million in funding to Petro Rabigh and waive loans worth a total $1.5 billion, the statement said.

The deal shrinks Sumitomo Chemical's stake in the joint venture to 15% while increasing Aramco's share to 60%.

The funding and loan waivers are part of a remedial plan that Aramco and Sumitomo Chemical intend to explore with Petro Rabigh, the parent companies said.

The remedial plan also includes initiatives to upgrade the refinery with the aim of helping improve the profitability of the business, they said.

The deal aligns with Aramco's downstream expansion and Sumitomo Chemical's move away from commodity chemicals toward speciality chemicals, they added.

Sumitomo Chemical plans to book a pre-tax loss of 27 billion yen ($183 million) in the July-September quarter as a result of the deal, the company said in a separate statement, adding that it is sticking to its annual profit forecast it announced in April.

($1 = 147.5000 yen)

(Reporting by Yuka Obayashi; editing by Miral Fahmy)