Saudi Aramco, the world’s largest oil-exporting company, has closed a deal to acquire a 10 per cent stake in Shenzhen-listed Rongsheng Petrochemical for $3.4 billion.
Under the terms of the deal, Aramco will supply 480,000 barrels per day of Arabian crude oil to Rongsheng affiliate Zhejiang Petroleum and Chemical Co (ZPC) under a long-term sales agreement, the company said on Friday.
“Our strategic partnership with Rongsheng advances Aramco’s liquids-to-chemicals strategy while growing our presence in China, and showcases our importance as a reliable supplier of crude oil,” said Mohammed Al Qahtani, Aramco's downstream president.
“This key acquisition is an important part of Aramco’s long-term growth strategy, expanding our presence in a vital market.”
Aramco has increasingly looked at refining and petrochemical investments in China, the world's biggest consumer of oil.
Rongsheng owns a 51 per cent equity stake in ZPC, whose refining and chemicals complex can process up to 800,000 bpd of crude oil and produce 4.2 million metric tonnes of ethylene per year.
China’s crude imports hit a record 16 million bpd in March as its economy continued to recover following the lifting of Covid-19 restrictions earlier this year, the International Energy Agency said in its April oil market report.
The Asian country was the largest importer of oil from Saudi Arabia last year, buying about 1.75 million bpd.
In December, Aramco and the China Petroleum and Chemical Corporation, better known as Sinopec, signed an initial agreement to build a refinery and a petrochemical plant in the world's second-largest economy.
The 320,000-bpd refinery and 1.5 million tonne-per-year petrochemical cracker complex will be operational by the end of 2025.
Aramco is looking for investment opportunities in India amid a surge in crude demand in the South Asian country, Amin Nasser, the company’s president and chief executive, said during an event this month.
In terms of crude imports, both China and India – two large oil-consuming countries – have surpassed pre-coronavirus levels, Mr Nasser said.
“The completion of this transaction marks the entry of Rongsheng and Aramco into a new era together, and also signifies an important step forward in Rongsheng's internationalisation strategy,” said Rongsheng chairman Li Shuirong.
China’s gross domestic product expanded by an annual 6.3 per cent from April to June, after growing by 4.5 per cent in the previous three months, according to the National Bureau of Statistics.
However, the pace of growth in the second quarter missed the 7.1 per cent estimate of economists polled by Bloomberg and the 7.3 per cent forecast of those surveyed by Reuters.
Aramco said in March that construction of a major integrated refinery and petrochemical complex in China would begin in the second quarter of this year.
The project was announced last year and the Huajin Aramco Petrochemical Company is developing the complex that can process 300,000 bpd of oil and a petrochemical plant capable of producing 1.65 million tonnes of ethylene and two million tonnes of paraxylene a year.
Aramco will supply up to 210,000 bpd of crude oil to the plant, which is being built in China’s Liaoning province. It is expected to be fully operational by 2026.