Saudi Aramco to build $10bn petrochemical project in China

Saudi Aramco, the Saudi Arabian national petroleum and natural gas company, will form a joint venture with Chinese entities NORINCO Group and Panjin Sincen, called Huajin Aramco Petrochemical, to build a $10 billion worth petrochemical project in China.

Huajin Aramco Petrochemical will develop what will be a fully integrated refining and petrochemical complex in the city of Panjin in the Liaoning province.

The new petrochemical project in China will comprise a refinery with a capacity of 300 thousand barrels per day along with an ethylene cracker with a capacity of 1.5 million metric tons per annum (mmtpa) and a PX unit that will have a capacity of manufacturing 1.3 mmtpa Paraxylene.

Saudi Aramco will hold a 35% stake in Huajin Aramco Petrochemical, NORINCO Group will hold 36% stake while the remaining stake of 29% will be held by Panjin Sincen.

Under the joint venture terms, Saudi Aramco will provide up to 70% of the crude oil as feedstock for the petrochemical project in China, which is slated to commence operations in 2024.

Saudi Aramco said that the joint venture has additional plans to develop a fuels retail business, which is going to be further integrated into the value chain.

A three-party marketing joint venture company is expected to be formed by the end of 2019 by Saudi Aramco, North Huajin and Liaoning Transportation Construction Investment Group to set up a retail fuel stations network in the target markets.

Commenting on the new petrochemical project in China, Amin Nasser – CEO of Saudi Aramco, said: “Our agreement today with NORINCO and the Liaoning province is a clear demonstration of Saudi Aramco’s strategy to move from beyond a buyer-seller relationship, to one where we can make significant investments to contribute to China’s economic growth and development.

“Our participation in the integrated refining and petrochemical project in Panjin will strengthen our collaborative efforts to enhance energy security, revitalize key growth sectors and industries in Liaoning and also meet rising demand for products and goods in China’s Northeast region.”

The new petrochemical project in China follows the signing of an agreement by Saudi Aramco last October with the Zhejiang government to acquire a stake in a new refinery project in China to be built by Zhejiang Petrochemical.

It also follows an investment commitment worth $1.6 billion made by Saudi Aramco to buy a stake of up to nearly 20% in South Korean refiner Hyundai Oilbank from Hyundai Heavy Industries.