November 20, 2024 [Rigzone]- Saudi Arabian Oil Co. (Aramco) and Rongsheng Petrochemical Co. Ltd. signed an agreement Tuesday that brings them closer to greenlighting a planned expansion project at a refinery in the kingdom’s port city of Jubail.
Earlier this year the Saudi oil giant and the Hangzhou, China-based company penned deals toward a potential joint venture within Aramco affiliate Saudi Aramco Jubail Refinery Co. (SASREF), which operates the 305,000-barrel-per-day (bpd) refinery.
On Tuesday in Beijing, Aramco, SASREF and Rongsheng Petrochemical inked an agreement that “outlines the cooperation mechanism and planning relating to the design and development of the project, which aims to expand SASREF’s refining and petrochemical capabilities while fostering international collaboration”, Aramco said in a statement online.
The announcement comes a day after Aramco and two other Chinese companies broke ground for an integrated refining and petrochemical facility in the Chinese province of Fujian. Aramco has said China is key to its downstream growth and has been seeking partnerships with local players including through stake acquisitions.
“This Development Framework Agreement underscores Aramco’s intentions to fostering closer collaboration with key partners and progressing its strategic downstream expansion, both in the Kingdom of Saudi Arabia and internationally”, Aramco downstream president Mohammed Y. Al Qahtani said about the agreement with Rongsheng Petrochemical. “It also highlights the potential of the Kingdom’s downstream sector to attract overseas players”.
Rongsheng Petrochemical chair Li Shuirong commented, “Saudi Arabia has abundant energy resources and significant market potential, and Rongsheng Petrochemical will bring strong momentum to the partnership through our excellent operation and management capabilities and market competitiveness”.
“This collaborative project not only has important strategic value for the future development of both companies but will also make contributions to China’s Belt and Road Initiative and Saudi Arabia’s Vision 2030”, Li added.
Currently in the pre-front-end engineering design stage, the SASREF expansion project “envisages construction of large-scale steam crackers and the integration of associated downstream derivatives into the existing SASREF complex, enhancing its ability to meet growing demand for high-quality petrochemical products”, Aramco said.
On Monday Aramco, China Petroleum & Chemical Corp. (Sinopec) and Fujian Petrochemical Co. Ltd. (FPCL) launched the construction of a complex with a refinery that can produce 16 million tons per annum (MMtpa) or 320,000 bpd, a 1.5 MMtpa ethylene unit, a plant to produce two million tons of paraxylene and derivatives, and a 300,000-ton petroleum terminal. The partners expect full operation by the end of 2030.
FPCL, a 50:50 joint venture between Sinopec and Fujian Petrochemical Industrial Group Co., will hold a 50 percent stake in the complex. Aramco and Sinopec will each own 25 percent.
“We will supply in excess of one million barrels per day of our crude oil to these high chemical conversion assets in China, reinforcing Aramco’s role as a reliable and long-term partner in China’s development”, Al Qahtani said.
“This also advances our liquids-to-chemicals strategy, through which we intend to direct more of our crude towards helping meet rising global petrochemicals demand”.
In 2023 Aramco and its co-venturers in Huajin Aramco Petrochemical Co. (HAPCO) launched construction for a refining and petrochemicals complex in the Chinese city of Panjin, as announced May 9, 2023. Aramco will supply up to 210,000 bpd of crude to the facility, owned by HAPCO, where Aramco has 30 percent ownership. The Panjin complex is planned to reach full operation by 2026.
Earlier in 2024 Aramco signed deals with Rongsheng Petrochemical and another Chinese refiner laying the groundwork for potential stake acquisitions.
Signed as part of the visit to the kingdom of a delegation led by Premier Li Qiang, the agreements included “preliminary documentation relating to a Development Framework Agreement with Rongsheng Petrochemical Co. Ltd. (Rongsheng) and a Strategic Cooperation Agreement with Hengli Group Co., Ltd.”, Aramco said in a press release September 11, 2024.
The Development Framework Agreement with Rongsheng Petrochemical, executed Tuesday, follows a Cooperation Framework Agreement signed by the two companies April 27. The Cooperation Framework Agreement provides for Rongsheng Petrochemical’s potential acquisition of a 50 percent interest in SASREF and Aramco’s potential purchase of a 50 percent stake in Rongsheng Petrochemical’s Ningbo Zhongjin Petrochemical Co. Ltd.
Aramco already holds a 10 percent stake in Rongsheng Petrochemical, after last year’s completion of an acquisition deal that involves the supply of 480,000 bpd of petroleum from Saudi Arabia to what Aramco said was China’s biggest integrated refining and chemicals plant.
Rongsheng holds a 51 percent interest in the owner of the plant, Zhejiang Petroleum and Chemical Co. Ltd. The plant can process up to 800,000 bpd of crude and produce up to 4.2 million metric tons of ethylene a year.
The other agreement signed during the Chinese delegation’s visit “advances talks relating to Aramco’s potential acquisition of a 10 percent stake in Hengli Petrochemical Co. Ltd., subject to due diligence and required regulatory clearances”, Aramco said.
“China is an important country in our global downstream growth strategy, and we look forward to building on a relationship that spans more than three decades to unlock new opportunities in this crucial market”, Al Qahtani said then.
Also in 2023 Aramco signed agreements securing talks for potential acquisition in two more Chinese downstream players. Aramco plans to have a 10 percent stake in Shandong Yulong Petrochemical Co. Ltd., as announced October 11, 2023, and another 10 percent stake in Jiangsu Shenghong Petrochemical Industry Group Co. Ltd., as announced September 27, 2023.
Free Trial: Access 13,300 Tank Terminal and Production Facilities
13,300 tank storage and production facilities as per the date of this article. Click on the button and register to get instant access to actionable tank storage industry data
