Saudi Aramco, the world’s largest oil-exporting company, has signed an initial agreement with three Chinese entities as it aims to buy a 10 per cent stake in Shandong Yulong Petrochemical, the Saudi Press Agency reported on Monday.
The possible acquisition, which is subject to regulatory clearance, will further boost Aramco’s investments in China.
The state-owned oil company has signed an agreement with Nanshan Group, Shandong Energy Group and Shandong Yulong Petrochemical.
As per the agreement, Aramco could possibly supply Shandong Yulong with crude oil and other feedstock.
“As one of China’s largest refining and chemical centres, Aramco values Shandong for its current strength and future prospects,” SPA reported, quoting Aramco downstream president Mohammed Al Qahtani.
“We believe this collaboration has potential to enable all parties to contribute to China’s energy security and development, and aid in navigating the energy transition.”
Shandong Yulong is finalising the construction of a refining and petrochemicals complex that is planned to process about 400,000 barrels per day of crude oil and produce a large volume of petrochemicals and derivatives. The facilities are located at Longkou and Yantai cities in China’s Shandong province.
Aramco is the third most valuable company in the world, with a market value of $2.08 trillion, behind Microsoft ($2.44 trillion) and Apple ($2.86 trillion) as of August 6. It is the second-largest company by revenue behind Walmart, which has held the top position since 2014.
The company has been expanding its presence in vital markets globally and bolstering its downstream operations.
Last month, it also started preliminary discussions with Jiangsu Eastern Shenghong, to acquire a 10 per cent equity stake in the China-based energy company's petrochemical subsidiary.
In August, the company said its second-quarter net profit softened due to voluntary production cuts and lower crude prices, although the results were in line with analyst expectations.
Net profit after zakat for the three-month period to the end of June fell 38 per cent to about $30.1 billion, from its record $48.4 billion in the year-earlier period, the company said at the time.
In August, it agreed to buy a 100 per cent equity stake in Esmax Distribuscion, a downstream fuels and lubricants retailer in Chile, from private equity company Southern Cross Group.
In July, Saudi Aramco closed a deal to acquire a 10 per cent stake in Shenzhen-listed Rongsheng Petrochemical for $3.4 billion.