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Saudi Aramco plans to sign preliminary deals to invest in two oil refining and petrochemical complexes in China during Saudi Arabian Crown Prince Mohammed bin Salman’s state visit to Beijing this week. according to sources familiar with the plans.
The world’s top oil exporter would sign a memorandum of understanding (MOU) to build a refinery and petrochemical project in the northeast province of Liaoning in partnership with China’s defence conglomerate Norinco. said three sources with knowledge of the matter.
Aramco was also expected to formalise an earlier plan to take a minority stake in Zhejiang Petrochemical. controlled by private Chinese chemical group Zhejiang Rongsheng Holding Group. said two sources with knowledge of the deal.
Zhejiang Petrochemical is building a refinery and petrochemical complex in the east China province of Zhejiang.
The investments could help Saudi Arabia regain its place as the top oil exporter to China. which it has relinquished to Russia for the past three years. Saudi Aramco is poised to bolster its market share by signing supply agreements with non-state Chinese refiners.
It is not clear what new details will be in the MOU. as the two companies first announced an alliance in May 2017 during Saudi ruler King Salman’s visit to Beijing.
Under that agreement. the firms agreed to build a refinery capable of processing 300.000 barrels per day (bpd) of crude and a facility that would make 1 million tonnes per year of ethylene. a building block for petrochemicals. at an estimated cost of more than US$10 billion.
A senior Aramco executive said in June he expected the front-end engineering for the Norinco project to be finished by the middle of this year. after which the company would take a final investment decision.
Norinco public affairs officials were not immediately available for a comment.
Aramco officials did not reply to a request for comment.
Meanwhile. the Zhejiang agreement would give Saudi Aramco control of the 9 per cent stake in the project held by the Zhejiang provincial government.
The agreement follows an earlier MOU that Aramco signed in October to invest in Zhejiang’s project. which is planned as a refinery to process 400.000 bpd of crude and associated petrochemical facilities in the city of Zhoushan. south of Shanghai.
Zhoushan Ocean Development and Investment. which holds the 9 per cent stake in Zhejiang Petrochemical for the provincial government. was not immediately available for comment.
The Saudi delegation. including top executives from Aramco. arrived in Beijing on Thursday for a two-day visit. part of the crown prince’s Asia tour. during which the kingdom has pledged US$20 billion of investment in Pakistan and sought additional investment in India’s refining industry.
The crown prince arrived in China on Thursday morning on the latest stop of a sweep through Asia that aims to expand the kingdom’s influence on the continent. following earlier visits to India and Pakistan.
He is due to meet Chinese President Xi Jinping and other officials on Friday. highlighting Saudi Arabia’s importance as one of China’s top oil suppliers and a market for its exports. including military drones.
