Saudi's Aramco To Invest Large Sums In China's Petrochemical Industry

Saudi Arabia's state-owned oil giant Aramco said in deals announced Sunday and Monday that it will invest billions of dollars in China's downstream petrochemicals industry, including the construction of a new refinery.

The announcements came as the company reported a record profit of more than $160 billion in 2022, and as Saudi Arabia, a longtime ally of the United States, has developed closer ties with Beijing in recent years.

Aramco will purchase a 10% stake in China's Rongsheng Petrochemical Co. Ltd for $3.6 billion. Aramco will supply 480,000 barrels per day to Rongsheng affiliate Zhejiang Petroleum and Chemical Co. Ltd., which owns and operates China's largest refining and chemicals complex, under a long-term sales agreement.

“This announcement demonstrates Aramco’s long-term commitment to China and belief in the fundamentals of the Chinese petrochemicals sector," Aramco executive vice president Mohammed Al Qahtani said in a statement. "It also promises to secure a reliable supply of essential crude to one of China’s most important refiners.”

Aramco announced plans for a joint venture to build a new refinery and petrochemical complex in northeastern China on Sunday. Aramco, which owns 30% of the Huajin Aramco Petrochemical Company, would supply the complex with 210,000 barrels of crude per day.

In recent years, Saudi Arabia has developed closer ties with both Russia and China. Earlier this month, Saudi Arabia and Iran agreed to reestablish diplomatic ties for the first time since 2016, thanks to a deal brokered by Beijing, even as Riyadh announced a massive contract to buy commercial planes from Boeing.