Saudi Aramco signs downstream agreements with Chinese refiners
Saudi Aramco is leveraging its existing relationships with Chinese oil buyers by expanding into chemicals. The oil company also looks to invite Chinese investments to its projects in the kingdom.
DUBAI — State-run Saudi Aramco signed agreements on Wednesday with Chinese downstream companies, as the oil giant continues to look East to expand its refining and chemicals portfolio.
Aramco signed an agreement with Rongsheng Petrochemical Company to look at the potential expansion of the 305,000-bpd Saudi Aramco Jubail Refinery (SASREF) Company.
In April, the two companies planned to cooperate in the downstream industry, which refers to the refining and chemical sectors of the energy value chain.
As part of their partnership agreement in April, Rongsheng is considering a potential 50% stake in SASREF, as well as the development of a liquids-to-chemicals expansion project through the venture. Aramco also planned to acquire a 50% stake in Rongsheng-affiliated Ningbo Zhongjin Petrochemical. The Saudi company is also interested in the possible expansion at Ningbo Zhongjin Petrochemical.
The second agreement involves Aramco taking a potential 10% stake in Hengli Petrochemical Company. The deal is subject to "due diligence and required regulatory clearances," Aramco said.
Crude to chemicals
The agreements with Chinese companies align with Aramco's strategy to convert 4 million bpd of its oil production to chemicals by 2030.
Saudi Arabia has increasingly looked to develop close partnerships with Chinese and Indian refining companies to lock in long-term oil demand, particularly when European economies are looking to prioritize net-zero goals of transitioning away from fossil fuels.
In June 2023, Aramco acquired a 10% stake in Rongsheng for 24.6 billion renminbi ($3.4 billion) through its subsidiary Aramco Overseas Company BV, based in the Netherlands. Rongsheng owns 51% of Zhejiang Petroleum and Chemical, which produces and sells crude oils, petroleum and other chemical products. The agreement also includes 480,000 bpd of Arabian crude to ZPC’s integrated chemicals complex.
