Saudi Aramco Turns To China After Rejecting Biden

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Sinopec and Saudi Aramco Sign Memorandum of Understanding

Sinopec Corp. ("Sinopec") signed a memorandum of understanding ("MOU") with Saudi Arabian Oil Company ("Saudi Aramco") on March 8.

According to the memorandum, the scope of cooperation includes Sinopec's existing refining and chemical projects and future expansion projects. The two parties will give full play to their advantages and further strengthen long-term cooperation. At the same time, the two parties will jointly optimize the operation of the joint venture Fujian United Petrochemical Co., Ltd. (“Fujian United Petrochemical”).

It is understood that there are currently three joint ventures between Sinopec and Saudi Aramco, namely Fujian United Petrochemical Company, Sinopec Summi (Fujian) Petroleum Company located in China, and Yanbu Aramco Sinopec Refinery Company located in Saudi Arabia.

Yu Baocai, president of Sinopec Corp., said the cooperation between Sinopec and Saudi Aramco has a long history.

The cooperation projects between the two parties include crude oil trading, refining and chemical engineering, engineering services, and scientific and technological research and development. They have a good strategic partnership, and several jointly implemented projects have become a model for energy cooperation between China and Saudi Arabia. In the context of the accelerated global energy transition, the signing of the memorandum will provide new opportunities for Sinopec refinery raw material optimization and downstream petrochemical business development to further deepen and expand.

Mohammed Y. Al Qahtani, senior vice president of Saudi Aramco's downstream business, said that the signing of the memorandum is a new chapter in the long-term cooperative relationship between Saudi Aramco and Sinopec. This will further facilitate the integration and expansion of Saudi Aramco's downstream business in Asia to meet its growing energy needs by supplying low-carbon-intensity crude oil to China.

Saudi Arabia finalizes participation in Panjin large-scale refining and chemical integration project

Saudi Aramco, the world's largest oil company, announced on March 10 that it has made a final investment decision and will participate in the development of a large-scale refining and chemical integrated complex in northeastern China. The project is located in Panjin City, Liaoning Province and is expected to be put into operation in 2024.

The main body responsible for the development and operation of the above-mentioned projects is Huajin Aramco Petrochemical Company, a joint venture established by Saudi Aramco, North Huajin Chemical Group Company and Panjin Xincheng Industrial Group. The joint venture was established as early as December 2019, with Saudi Aramco holding a 35% stake.

According to the original plan, the total investment of the Panjin project exceeds 10 billion US dollars. However, since the outbreak of the new crown epidemic has caused turmoil in the oil market, Saudi Aramco's financial situation has also been hit hard, the Panjin project has come to a standstill, and there was even a rumor that it was considering withdrawing from the project. In February of this year, Saudi Aramco restarted negotiations to build a joint oil refinery in China.

According to details disclosed by the company, the Panjin project complex includes a refinery with a crude oil processing capacity of 300,000 barrels per day and a steam cracker for ethylene, a basic petrochemical used to make a variety of daily products. Saudi Aramco will supply up to 210,000 BPD of crude for the combined unit.

Panjin is an important petroleum and petrochemical industrial base in my country, where the Liaohe Oilfield is located. The relevant person in charge of the Liaoning Provincial Government said in 2019 that the project will not only provide strong support for Panjin to build a world-class petrochemical and fine chemical industry cluster, but also promote the adjustment of Liaoning's petrochemical industry structure and local economic development, and optimize the national petrochemical industry layout. play an important role. This is the project with the largest single investment, the largest crude oil processing capacity and the largest amount of foreign investment in Panjin City.

“China is the cornerstone of our downstream expansion strategy in Asia and an important driver of global chemical demand, which is growing in importance,” said Mohammad Qahtani, senior vice president of downstream operations at Saudi Aramco.

Saudi Aramco, the state-owned oil company, is the world's largest oil company, producing about one-eighth of the world's crude oil. In 2021, Saudi Arabia will continue to be China's largest source of crude oil imports.