Saudi Aramco signed an agreement with Chinese partners on Sunday for an oil refining and petrochemical project in northeastern China, which is expected to start in 2026 to meet the country’s growing demand for fuel and chemicals.
Saudi Aramco Oil Co. reaffirmed its support for China’s long-term energy security and development as the Riyadh-based company works closely with Chinese players to achieve sustainable goals, its CEO said.
The project, located in the city of Panjin in Liaoning Province, is Aramco’s second major investment in refining and petrochemicals in China and follows the world’s largest oil exporter’s record profit of $161 billion in 2022.
The joint venture Huajin Aramco Petrochemical Company (HAPCO) will build and operate a complex with a 300,000 barrels per day (bpd) refinery and cracker with an annual production capacity of 1.65 million tonnes of ethylene and 2 million tonnes of paraxylene. Aramco said in a statement
The project costs 83.7 billion yuan ($12.2 billion), partner Panjin Xicheng Industrial Group said in a statement on WeChat on Sunday.
Aramco said construction of the complex will begin in the second quarter after the project receives the necessary administrative approvals. He added that the facility will be fully operational by 2026.
Aramco supplies the plant with up to 210,000 barrels per day.
State-owned Chinese defence equipment maker NORINCO Group owns 51 percent of HAPCO, while Aramco and Panjin Xincheng own 30 percent and 19 percent, respectively.
Aramco signed a memorandum of understanding with southern China’s Guangdong province on Sunday to explore cooperation in areas such as energy, finance, research, and innovation, according to a post on the provincial government’s website.
Guangdong, China’s largest provincial economy, has attracted global companies such as Exxon Mobil (NYSE: XOM) and BASF, both of which are building large petrochemical complexes that produce valuable chemicals. Before the pandemic, Aramco signed two more preliminary agreements for refinery and petrochemical investments in China.
Among them is the Zhejiang provincial government, which invests 9 percent in Zhejiang Petrochemical Corp., which operates China’s largest refinery and is capable of processing 800,000 barrels a day.
The other is with Shandong Energy, which includes a potential oil supply agreement and chemical product sales agreement as well as exploring cooperation to build an integrated refining and petrochemical complex in China.
In early March, Saudi Aramco (TADAWUL: 2222) also broke ground on a $7 billion project to produce petrochemicals from crude oil at its South Korean subsidiary S-Oil Corp’s refining complex in the port city of Ulsan.