Saudi Arabia fosters closer ties with China; Aramco, Chinese firms sign fresh deals
Nurluqman Suratman
12-Sep-2024
SINGAPORE (ICIS)–Energy giant Saudi Aramco has signed new agreements to advance separate expansion plans with Chinese petrochemical producers Rongsheng and Hengli.
- Signing conducted during China Premier Li’s state visit to Saudi Arabia
- Deals with the Chinese firms part of Aramco’s downstream expansion
- Aramco moves closer to acquire 10% of Hengli Petrochemical
Chinese Premier Li Qiang and Saudi Crown Prince Mohammed Bin Salman on 11 September discussed cooperation in energy, investment, and trade, according to state news agency Saudi Press Agency (SPA).
In a separate meeting with GCC secretary general Jasem Mohamed Albudaiwi in Riyadh, Li called on China and Gulf Cooperation Countries (GCC) countries to align their development strategies and “speed up free trade agreement negotiations”, according to Chinese state media Xinhua.
Li is in the Middle East on 10-13 September for state visits to Saudi Arabia and the UAE, both members of GCC.
The four other members of GCC are Bahrain, Kuwait, Oman and Qatar.
PLANS WITH RONGSHENG
The new agreements follow a previously signed
framework agreement with Rongsheng
Petrochemical for a potential joint-venture
expansion of Saudi Aramco Jubail Refinery
Company (SASREF) facilities.
SASREF operates a 305,000 barrel/day refinery complex in Al-Jubail, Saudi Arabia with downstream aromatics units that can produce 260,000 tonnes/year of toluene and 275,000 tonnes/year of benzene, according to the ICIS Supply and Demand Database.
Aramco now owns 10% of Rongsheng Petrochemical, bought for $3.4 billion, with further plans between the two companies to take stakes in each other’s subsidiaries.
Rongsheng Petrochemical manufactures and distributes a range of petrochemical and chemical fiber products, including purified terephthalic acid (PTA), polyester yarns, polyester filaments, and polyethylene terephthalate (PET).
The Saudi oil giant intends to acquire 50% of Ningbo Zhongjin Petrochemical (ZJPC), which is fully owned by Rongsheng, with plans to upgrade existing assets and jointly develop a new materials project in Zhoushan.
The proposed Chinese yuan (CNY) 67.5 billion Zhoushan new materials project would produce polyethylene (PE), propylene oxide (PO), styrene, ethylene vinyl acetate (EVA), polyolefin elastomer and bisphenol A (BPA).
Rongsheng, in turn, would acquire a 50% stake in Aramco’s SASREF, which operates a refinery in Jubail.
POTENTIAL DEALS WITH
HENGLI
With Hengli, talks have advanced relating to
Aramco’s potential acquisition of a 10% stake
in the Chinese group’s petrochemical arm,
subject to due diligence and required
regulatory clearances.’
The two companies had signed a memorandum of understanding (MoU) on the proposed transaction in in April 2024.
Hengli Group operates across the entire production chain of oil refining, petrochemicals, polyester film, and textiles. It is one of the biggest PTA producers in China.
“China is an important country in our global downstream growth strategy,” Aramco downstream president Mohammed Al Qahtani said.
“These agreements reflect our collective intention to elevate our relationships in vital sectors to advance our downstream objectives.”
Aramco is targeting a fourfold increase in its crude oil-to-chemicals conversion capacity to four million barrels/day by 2030.
Focus article by Nurluqman Suratman
Thumbnail image: Chinese Premier Li Qiang meets with Saudi Crown Prince and Prime Minister Mohammed bin Salman Al Saud, and co-chairs the Fourth Meeting of the High-Level Chinese-Saudi Joint Committee with him at Riyadh’s al-Yamamah Palace in Saudi Arabia on 11 September 2024.
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