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Saudi Aramco Announces Two Investments in China

According to Chinese state media, on March 28, Xi Jinping spoke by telephone with Crown Prince and Prime Minister Mohammed bin Salman of Saudi Arabia claiming that China-Saudi Arabia relations are now at their best ever and that China is willing to work with the Saudi side so that the two countries support each other firmly on issues concerning their core interests. According to the Saudi Press Agency, Saudi Crown Prince and Prime Minister Mohammed expressed appreciation for China’s support for “efforts to develop good neighborly relations.”

On March 26, Saudi oil giant Saudi Aramco announced that it had joined forces with China’s North Industries Group (Norinco) and the Panjin Xincheng Industrial Group to build a large integrated refinery and chemical complex in Panjin city of Liaoning Province. The three parties will jointly fund the establishment of Huajin Aramco Petrochemical Company (HAPCO), with Aramco, Norinco and Panjin Xincheng holding 30 percent, 51 percent and 19 percent respectively. The joint venture will include an oil refinery with a daily processing capacity of 300,000 barrels and a chemical plant with an annual capacity of 1.65 million tons of ethylene and 2 million tons of paraxylene. Construction will begin in the second quarter of 2023 and is expected to be fully operational in 2026. Aramco will supply up to 210,000 barrels of crude oil per day to the venture.

Earlier this month, Saudi Aramco reported annual profits of $161 billion in 2022, the highest annual profit ever recorded by a global energy company. Norinco is China’s largest producer of military equipment.

On March 27, Saudi Aramco signed another definitive agreement to acquire a 10 percent stake in Rongsheng Petrochemical Company Limited (Rongsheng Petrochemical) based in Hangzhou, Zhejiang Province for 24.6 billion yuan ($US 3.6 billion). Under the agreement, Aramco will supply 480,000 barrels of crude oil per day to Rongsheng Petrochemical’s subsidiary Zhejiang Petrochemical Co. The two sides plan to cooperate in trading, refining, chemical production, crude oil storage and technology licensing. The deal is expected to be completed by the end of 2023.

In addition to the above two agreements, on March 26, the Guangdong provincial government and Saudi Aramco signed a memorandum of cooperation proposing a framework for cooperation in exploring investment opportunities in a number of areas, including energy cooperation, research and innovation, industrial projects, financial cooperation, and talent exchange.

Source: Deutsche Welle, March 28, 2023