Aramco Displays Further Downstream Intent with China Refinery Talks

Aramco will start talks to buy a 10% stake in a Chinese refining and petchem company according to joint statements out this week in a move that will tie up more long-term Saudi crude volumes to the region.

• Aramco and Jiangsu Eastern Shenghong signed an agreement to begin discussions in a deal that would give Aramco access to a 320,000 bpd integrated refinery in China.
• The companies also intend to cooperate on a large expansion project, although Aramco did not provide details. The companies said they are also willing to cooperate in areas such as long-term crude supply and marketing of refined fuel and chemical products.
• Earlier this year, Aramco bought a 10% stake in Rongsheng Petrochemical in China – its biggest ever foreign acquisition.
• The Rongsheng deal came along with a 20-year Saudi crude supply deal.
• It shows Aramco’s intent to increase its global downstream refining presence. The Saudi company, the world’s biggest producer of crude oil, aims to roughly double its global refining network to handle as much as 10 million barrels a day by 2030.
• Aramco also purchased a stake in a 211,000 bpd refinery in Poland as it looks to take advantage of Europe’s pivot away from Russian energy.