During Crown Prince Mohammed bin Salman’s visit to Beijing, Saudi Aramco signed a deal for a refining and petrochemical complex in China worth more than $ 10 billion.
By signing supply deals with non – state Chinese refiners, Aramco is set to boost its market share.
Saudi Aramco has signed a $ 10-billion joint venture agreement with China North Industries Group Corp. (Norinco) and Panjin
The partners will create a new company under the agreement – Huajin Aramco Petrochemical Co.
Aramco will hold 35% interest in the newly formed company, while Norinco and Panjin have 36% and 29% of the remaining equity respectively.
Aramco will supply 70% of required crude feedstock for the proposed complex, which is expected to start operations in 2024.
The JV agreement also includes plans to set up a retail fuel business to further integrate it into the value chain.
By the end of 2019, Aramco, North Huajin and the Liaoning Transportation Construction Investment Group Co are scheduled to form a
“Our agreement with Norinco and Liaoning province is a clear demonstration of Saudi Aramco’s strategy to move from beyond a buyer-seller relationship, to one where we can make significant investments to contribute to China’s economic growth and development,” said Aramco CEO Amin Nasser.
“Our participation in the integrated refining and petrochemical project in Panjin will strengthen our collaborative efforts to enhance energy security, revitalize key growth sectors and industries in Liaoning, and also meet rising demand for products and goods in China’s northeast region.”
Other Agreements Signed
Aramco also signed three MOUs to expand its presence downstream in Zhejiang Province, one of China’s most developed regions.
Aramco aims at a 9% stake in the 800,000 b/d integrated refinery and petrochemical complex of Zhejiang Petrochemical located in the province of Zhoushan.
The first deal to acquire a 9 percent stake in the project was signed with the Zhoushan government. The second agreement was signed with the other shareholders of Zhejiang Petrochemical, namely Rongsheng Petrochemical, Juhua Group
Aramco’s involvement in the project will include a long-term agreement on crude supply and the ability to use the large crude oil storage facility of Zhejiang Petrochemical to serve its customers in the Asian region.
A third agreement with Zhejiang Energy to invest in a retail fuel network is an integral part of the project.
Nasser said the agreements “demonstrate our commitment to the Chinese market and help enhance the strategic integration of our downstream network in Asia. They will further strengthen our relationship with China and Zhejiang province, setting the stage for more cooperation in the future.”
The companies are planning to build a large retail network in Zhejiang province over the next five years. The retail business will be integrated as an outlet for the refined products produced in the Zhejiang Petrochemical complex.
The first phase of the project will include a newly built refinery of 400,000 b/d with a 1.4 million
In the second phase, the refinery will expand to 400,000 b/d, including a deeper chemical integration than in the first phase.