Saudi Aramco signs deals to build refinery in China

Saudi Aramco, the world’s biggest energy company, has signed agreements with Chinese partners to build a state-of-the-art refining complex in the northeast region of the Asian nation.

Aramco agreed to the deal with North Huajin Chemical and Panjin Xincheng to start construction on the refinery and petrochemical complex in Liaoning Province, Amin Nasser, the Saudi company’s president and chief executive officer, said at the China Development Forum in Beijing on Sunday.

“We see a major win-win opportunity to build a world-leading, integrated downstream sector in China, with special emphasis on the high conversion of liquids directly into chemicals as part of our broader liquid-to-chemicals business expansion plans,” Nasser said.

Aramco wants to be an all-inclusive source of energy and chemicals for China’s long-term energy security and China’s high-quality development, he said.

An initial framework agreement for the Liaoning refinery was first signed during Saudi Arabian King Salman bin Abdulaziz’s visit to Beijing in March 2017.

In 2019, Aramco agreed to set up a venture with two Chinese partners when Crown Prince Mohammed bin Salman was in Beijing in what was seen as a landmark deal with a key ally. However, the Saudis briefly paused investment in the refinery venture in 2020 amid an uncertain market outlook when Covid lockdowns in China throttled downstream demand.

After reviving talks of investments in early 2022, Aramco said last March that it would go ahead and invest in a 300,000 barrel-a-day refinery with ethylene cracker with China North Group Corp., known as Norinco, the parent company of North Huajin Chemica and a Pajin-based company.

Aramco is expanding oil production capacity by a million barrels per day to 13 million barrels by 2027 and will increase gas production by more than 50 per cent by 2030, which would add an extra one million barrels a day of oil for export, Nasser said.

The Saudi company is also partnering with Baoshan Iron & Steel Co. to produce steel plates in Saudi Arabia with a lower carbon footprint, he said. The company also signed a letter of intent to be part of a new entity being created by Renault SA and Zhejiang Geely Holding Group Co. amid efforts to develop more efficient and lower-emission engines and hybrid systems, he said.