Saudi Arabian Oil Co (Aramco) plans to sign preliminary deals to invest in two oil refining and petrochemical complexes in China during the Saudi Arabian crown prince’s visit this week, sources familiar with the plans said, as Beijing seeks expanded ties with Riyadh.
The Saudi Arabian delegation, including top executives from Saudi Aramco, arrived in Beijing yesterday for a two-day visit, part of Saudi Arabian Crown Prince Mohammad bin Salman’s Asia tour, during which the kingdom has pledged US$20 billion of investment in Pakistan and sought additional investment in India’s refining industry.
The prince is to meet Chinese President Xi Jinping (習近平), who has made stepping up China’s presence in the Middle East a key foreign policy objective, despite its traditional low-key role there.
China has given few details about the visit.
Saudi Aramco, the world’s top oil exporter, is to sign a memorandum of understanding (MOU) to build a refinery and petrochemical project in China’s northeastern Liaoning Province in a joint venture with Chinese defense conglomerate China North Industries Group Corp Ltd (Norinco, 中國北方工業集團), three sources with knowledge of the matter said.
Saudi Aramco is also expected to formalize an earlier plan to take a minority stake in Zhejiang Petrochemical Co Ltd (浙江石油化工), which is controlled by private Chinese chemical group Zhejiang Rongsheng Holding Group Co Ltd (浙江榮盛控股集), two sources with knowledge of that particular deal said.
Zhejiang Petrochemical is building a refinery and petrochemical complex in China’s eastern Zhejiang Province.
The investments could help Saudi Arabia regain its place as the top oil exporter to China, which it has relinquished to Russia for the past three years. Saudi Aramco is poised to bolster its market share by signing supply agreements with non-state Chinese refiners.
It is not clear what new details would be in the MOU with Norinco expected during the visit, as the two firms first announced an alliance in May 2017 during Saudi Arabian King Salman’s visit to Beijing.
Under the earlier MOU, the companies agreed to build a refinery capable of processing 300,000 barrels per day of crude and a facility that would make 1 million tonnes per year of ethylene, a building block for petrochemicals, at an estimated cost of more than US$10 billion.
A senior Saudi Aramco executive in June last year said that he expected the front-end engineering for the Norinco project to be finished by the middle of this year, following which the company would take a final investment decision.
Norinco public affairs officials were not immediately available for a comment.
Saudi Aramco officials did not reply to a request for comment sent by e-mail.
All the sources declined to be identified due to the sensitivity of the matter.
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