SINGAPORE (Reuters) – Saudi Aramco (2222.SE) signed an agreement with Chinese partners on Sunday to build an oil refinery and petrochemical project in northeast China that is expected to start in 2026 to meet the country’s growing demand for fuels and chemicals. .
The project in Panjin, Liaoning Province, will be Aramco’s second largest investment in refining and petrochemicals in China, and comes after the world’s largest oil exporter announced record profits of $161 billion in 2022.
Huajin Aramco Petrochemical Company (HAPCO) joint venture will build and operate the complex, which will include a 300,000-bpd oil refinery and cracker with an annual production capacity of 1.65 million tons of ethylene and 2 million tons of paraxylene. Aramco, which is owned by it, said in a statement.
The project is expected to cost 83.7 billion yuan ($12.2 billion), Panjin Xicheng Industrial Group said in a statement on WeChat on Sunday.
Aramco said construction work on the complex will begin in the second quarter after the project receives the required administrative approvals. It added that the plant is expected to start operating at full capacity by 2026.
Aramco will supply up to 210,000 barrels per day of crude oil as feedstock for the terminal.
State-owned NORINCO Group, a Chinese manufacturer of military equipment, owns 51% of HAPCO while Aramco and Panjin Xincheng have stakes of 30% and 19%, respectively.
Separately, Aramco on Sunday signed a memorandum of understanding with southern China’s Guangdong Province to explore cooperation in sectors including energy, finance, research and innovations, according to a post on the provincial government website.
Guangdong, China’s largest regional economy, has attracted global companies such as Exxon Mobil (XOM.N) and BASF (BASFn.DE), each building large-scale petrochemical complexes producing high-value chemicals.
Before the pandemic, Aramco signed two other preliminary agreements for refinery and petrochemical investments in China.
These include one with the Zhejiang provincial government to invest 9% in Zhejiang Petrochemical Corp., which operates the largest single refinery in China that can process 800,000 barrels per day of oil.
The other is with Shandong Energy that includes a potential crude supply agreement and a chemical products purchase deal, as well as exploration of cooperation in an integrated refining and petrochemicals complex in China.
Earlier in March, Saudi Aramco also began construction on a $7 billion project to produce petrochemicals from crude oil at its South Korean S-Oil Corp (010950.KS) refining complex in the port city of Ulsan.
($1 = 6.8778 CNY)
(Reporting by Florence Tan) Additional reporting by Chen Aizhou and Andrew Haley in Beijing; Editing by Sonali Paul and Christian Schmollinger
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