Top crude producer Saudi Aramco has signed an initial agreement with China’s Shandong Energy Group to supply crude oil and chemical products.
The scope of the agreement also extends to co-operation across technology related to hydrogen, renewables and carbon capture and storage, Aramco said on Friday.
China, the world’s second-largest economy and the biggest crude importer, has been signing long-term agreements with energy exporters amid rising volatility in crude and natural gas prices.
Last month, QatarEnergy signed a 27-year deal to supply China Petroleum & Chemical Corporation, better known as Sinopec, with four million tonnes per annum (mtpa) of liquefied natural gas.
“Through collaborations such as this in China’s energy heartland, we are creating new pathways for growth in a country that is driving the increased integration of refining and petrochemical processes,” said Mohammed Al Qahtani, Aramco's senior vice president of downstream operations.
Shandong Energy Group is the largest coal mining group in China’s Shandong province and the third-largest coal mining group in the Asian country in terms of production volume.
The company’s operations also include logistics, trading, power generation and the manufacture of machinery.
“Both Shandong Energy and Aramco are important players in the international energy arena,” said Li Wei, chairman of Shandong Energy Group.
“We share a lot of common interests, complementary strategies with expansive scope for co-operation, especially in oil and gas resources development, and integrated refining and petrochemicals development along the whole industrial chain,” said Mr Li.
Last month, Saudi Aramco said it would build a $7 billion refinery-integrated petrochemical steam cracker in South Korea through its S-Oil unit.
The petrochemicals industry is expected to be a big driver of crude oil demand in the next few decades as consumers increasingly switch to electric vehicles.
Petrochemicals are set to account for more than a third of the growth in oil demand to 2030, and about half to 2050, ahead of the lorry, aviation and shipping sectors, according to the International Energy Agency.
Petrochemicals are also poised to consume an additional 56 billion cubic metres of natural gas by 2030, equivalent to about half of Canada’s total gas consumption today, the agency said.
Aramco aims to increase its liquids to chemicals capacity to up to four million barrels per day by 2030.