DMEA: Aramco takes Panjin FID

This week’s DMEA covers Saudi Aramco’s investment decision on the development of a major integrated downstream unit in China.

The company said last week that it had taken a final investment decision (FID) on the establishment of an integrated refinery and petrochemical complex in north-eastern China in collaboration with local partners.

The Huajin Aramco Petrochemical Co. (HAPCO) was formed in late 2019 between the Saudi firm and China’s North Huajin Chemical Industries Group Corp. and local government-owned Panjin Xincheng Industrial Group. Aramco said that the JV will build a $10bn, 300,000 barrel per day (bpd) refinery capacity and ethylene-based steam cracker which is expected to be commissioned in 2024.

Originally announced in 2017 as part of China’s One Belt, One Road international infrastructure initiative, Aramco agreed a deal with Huajin’s parent firm China North Industries Group Corp. (Norinco) for the development of facilities with a projected refining capacity of 300,000 bpd alongside 1.5mn tonnes per year of ethylene and 1.3mn tpy of paraxylene.

In line with the company’s strategy of increasing the number of crude outlets dedicated to its crude production, Aramco intends to supply 70% (210,000 bpd) of the facility’s feedstock, taking a 35% stake in the project, with Norinco subsidiary Huajin holding 36% and Xincheng the remaining 29%.

The Saudi firm’s participation came to an end in 2020 when it slashed capital expenditure in response to low oil prices and the coronavirus (COVID-19) outbreak, and its stake was transferred to Huajin, which established a JV with Xincheng late that year.

Construction was reported to have begun in Q3 2021 with the capacity of the petrochemical units having been expanded to a planned 1.65mn tpy of ethylene and 2mn tpy of paraxylene, raising the cost of the project to just under $12bn.