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Aramco in talks to buy 10% of Shandong Yulong refinery

Officials and executives from Shandong Energy Group and Aramco Asia at the signing ceremony Aramco
Officials and executives from Shandong Energy Group and Aramco Asia at the signing ceremony

Saudi Aramco, the world’s largest oil producer, is discussing buying a 10 percent stake in China’s Shandong Yulong Petrochemical Company.

Shandong Yulong is currently in the process of completing the construction of a refining and petrochemicals complex in eastern China’s Shandong province.

The facility will process 400,000 barrels per day of crude oil and produce a large volume of petrochemicals and derivatives. 

A memorandum of understanding was signed between Aramco and Nanshan Group Company, Shandong Energy Group Company and Shandong Yulong Petrochemical Company to “facilitate discussions on the possible acquisition”, the Saudi energy giant said in a statement.

Aramco may supply Shandong Yulong with crude oil and other feedstock as part of the agreement. The deal is subject to due diligence, transaction documents being negotiated, and regulatory approvals.

“We believe this collaboration has the potential to enable all parties to contribute to China’s energy security and development,” said Mohammed Al Qahtani, Aramco’s downstream president.

Aramco last month said it was considering acquiring a 10 percent stake in Jiangsu Shenghong Petrochemical, a wholly-owned subsidiary of Eastern Shenghong.

A Reuters report in September said that China’s Sinopec Corp, the world’s largest refiner by capacity, is exploring expanding the Yasref refinery in Yanbu, Saudi Arabia, following a preliminary agreement with Saudi Aramco last December.

The Wall Street Journal reported earlier that the oil major plans to sell a stake valued at $50 billion through a secondary share offering on the Saudi stock exchange.

The sale will likely happen before the end of the year after consultations with an adviser.