Saudi Arabian Oil Co. (Aramco) and Jiangsu Eastern Shenghong Co. Ltd. signed an agreement on Wednesday to facilitate talks on Aramco’s plan to acquire a 10% stake in a refining and petrochemicals operator in China’s Jiangsu province owned by the latter.
The planned acquisition is part of the majority state-owned energy giant’s downstream expansion in China. This year, Aramco bought a 10% stake in Rongsheng Petrochemical Co. Ltd. and signed an agreement to build a refining and petrochemical complex through its joint venture Huajin Aramco Petrochemical Co. (HAPCO) which participates in 30%.
In the so-called framework cooperation agreement with Eastern Shenghong, Aramco plans to own Jiangsu Shenghong Petrochemical Industry Group Co. Ltd. under which the Saudis would supply crude oil and other raw materials.
“Aramco and Shenghong Petrochemical also intend to cooperate in the development of a major expansion project, subject to further discussions between the parties and the execution of definitive agreements,” Aramco said announcing the pact in a statement press wednesday
Shenghong Petrochemical owns and operates a refinery and petrochemical complex with a capacity of 320,000 barrels per day (bpd), as well as a methanol to olefins and derivatives complex and a purified terephthalic acid factory. The facility is located in the Xuwei Petrochemical Industrial Park in the eastern coastal province of Jiangsu.
“Aramco looks forward to working with Eastern Shenghong to supply the reliable energy needed for China’s long-term growth, development and energy security,” Aramco’s downstream president Mohammed said in a statement Y. Al Qahtani. “The signing of this cooperation framework agreement is another important milestone in Aramco’s Downstream strategy to increase the conversion of Arab crude into chemical products and expand into the important Chinese market. We see China as a important partner not only for today, but for decades to come.”
Aramco Chairman and Chief Executive Officer Amin H. Nasser previously said the company is working on “three main strategies” in China, which he said shares with Aramco a similar vision for the future of the energy industry.
“First, expanding our oil production capacity by one million barrels per day to 13 million barrels by 2027 will strengthen China’s long-term energy security. This will increase our gas production by more than a fifty percent by 2030, which should free up an additional million barrels of oil per day for export,” Nasser told the China Development Forum in Beijing on March 26, according to a transcript on the site Aramco website.
The second strategy envisages Aramco reducing carbon and methane emissions in its oil production. The third is expanding its low-carbon energy portfolio, “especially blue hydrogen and blue ammonia, electrofuels and renewables,” Nasser told the meeting. “And we are also evaluating the entrance to liquefied natural gas”, added the head of Aramco.
On July 21, Aramco announced the completion of a purchase of a 10 percent interest in Rongsheng, a transaction it had announced earlier this year. “It represents the continued growth of Aramco’s downstream presence in China and includes the supply of 480,000 barrels per day of Arabian crude to China’s largest integrated chemical and refining complex, owned by Rongsheng subsidiary Zhejiang Petroleum and Chemical Co. Ltd.”, Aramco said it announced the closing of the $3.4 billion (CNY 24.6 billion) acquisition.
In another downstream project in China, Aramco and its partners broke ground in March on the Panjin Refining and Petrochemical Complex, Aramco announced on May 9. a company in which Aramco has 30 percent ownership. The complex is expected to be fully operational by 2026.
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