Aramco expands presence in China with 10% stake in Rongsheng Petrochem; breaks ground on new refinery/petchem complex in China

Aramco, one of the world's leading integrated energy and chemicals companies, has signed definitive agreements to acquire a 10% interest in Shenzhen-listed Rongsheng Petrochemical Co. Ltd. for US$3.6 billion in a deal that would significantly expand its downstream presence in China.

Through the strategic arrangement, Aramco would supply 480,000 barrels per day (bpd) of Arabian crude oil to Rongsheng affiliate Zhejiang Petroleum and Chemical Co. Ltd (ZPC), under a long-term sales agreement. Aramco Overseas Company (AOC), a wholly-owned subsidiary of Aramco, will acquire the interest in Rongsheng.

Among other assets, Rongsheng owns a 51% equity interest in ZPC, which in turn owns and operates the largest integrated refining and chemicals complex in China with a capacity to process 800,000 bpd of crude oil and to produce 4.2 million tonnes/year of ethylene.

Mohammed Y. Al Qahtani, Aramco Executive Vice President of Downstream, said: "This announcement demonstrates Aramco's long-term commitment to China and belief in the fundamentals of the Chinese petrochemicals sector. It is an important acquisition for Aramco in a key market, supporting our growth ambitions and advancing our liquids to chemicals strategy. It also promises to secure a reliable supply of essential crude to one of China's most important refiners."

The investment would anchor an important association between Aramco, Rongsheng and ZPC, which operates one of the world's most state-of-the-art chemical conversion assets.

The transaction involves an off-market secondary sale of Rongsheng shares by majority shareholder Zhejiang Rongsheng Holding Group, with potential for future collaboration between the parties in trading, refining, chemicals production and technology licensing. The transaction is expected to close by the end of 2023, and is subject to regulatory approvals.

It follows the announcement on March 26 that the Aramco joint venture, Huajin Aramco Petrochemical Company (Hapco), planned to start construction of a major integrated refinery and petrochemical complex in northeast China in the second quarter of 2023. Aramco, which has a 30% stake in Hapco, will supply up to 210,000 bpd of crude oil feedstock to the complex.

Combined, the partnership with Rongsheng and the Hapco joint venture would see Aramco supply a total of 690,000 bpd of crude to high chemical conversion assets.

Meanwhile in related news, a ground-breaking ceremony recently took place for the integrated refinery and petrochemical complex being developed by Hapco. The joint venture between Aramco (30%), Norinco Group (51%) and Panjin Xincheng Industrial Group (19%) is developing the complex in the city of Panjin, in China’s Liaoning Province.

With an investment of US$10 billion, the complex is expected to be fully operational by 2026. Aramco is expected to supply up to 210,000 bpd of crude oil feedstock to the facility as well as operating a 1.6 million tonnes/year cracker..

Mohammed Y. Al Qahtani, Aramco Executive Vice President of Downstream, said in a speech at the event: “This complex is a cornerstone of our efforts to support a world-class, integrated Downstream sector here in China, as petrochemicals will play a vital role in our joint success. Once complete, we believe Hapco will be a model for China’s modern petrochemicals industry moving forward, able to deliver lower carbon products, chemicals, and advanced materials.”

(PRA)

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