Saudi Arabia will invest another US$10 billion in China’s refining and petrochemicals sector, this time in a partnership with state-owned military equipment manufacturer China North Industries Corp. (Norinco).
The project at Panjin in northeast Liaoning Province will comprises a 300,000 bpd refinery plus an ethylene cracker with 1.5 million tpy of capacity and a paraxylene plant with 1.3 million tpy of capacity.
Saudi Aramco said in a statement it anticipated supplying 70% of the crude oil needed for the refinery, which is slated to commence operation by 2024. State-owned Aramco is taking a 35% stake in the project, Norinco will hold 36% and local government enterprise Panjin Sincen 29%. They will form for a new operating business called Huajin Aramco Petrochemical.
The agreement was signed during last week’s visit to China by a top-level Saudi business and government team led by Crown Prince Mohammed bin Salman (MbS).
The visit also provided more details of Aramco’s pledge in October 2018 to invest at least US$300 million in Zhejiang Petrochemical and its expansion of refining capacity to 800,000 bpd. Aramco signed memoranda of understanding (MoUs) with the Zhoushan government and Zhejiang Petrochemical’s other shareholders Rongsheng Holding Group, Juhua Group and Tongkun Group to acquire a 9% interest in the grassroots refinery project.
Aramco signed a third MoU with Zhejiang Energy Group to build a large-scale retail fuel network over the next five years that will sell oil products production by Zhejiang Petrochemical’s downstream complex.
“Involvement in the project will come with a long-term crude supply agreement and the ability to utilise Zhejiang Petrochemical’s large crude oil storage facility to serve its customers in the Asian region,” Aramco said.
In his meeting with the Saudi crown prince, Chinese President Xi Jinping called on the Middle Eastern producer to sign up to the Belt and Road Initiative (BRI) of trade routes and economic development, the state-run Global Times said. Xi also urged joint co-operation in energy projects.
The Saudi delegation earlier visited Pakistan and India, where Aramco is seeking investment in oil refining. Saudi Arabia will participate in the China-Pakistan Economic Corridor (CPEC) which links northwest China with the Pakistani port of Gwadar, Global Times said.