Aramco buys 10% of Chinese petrochemical firm for $3.6bn

Saudi Aramco has signed definitive agreements to acquire a 10 percent interest in Shenzhen-listed Rongsheng Petrochemical Co. Ltd. (Rongsheng) for $3.6 billion.

Aramco Overseas Company (AOC), a wholly-owned subsidiary of Aramco, will acquire the interest in Rongsheng, the Saudi oil producer said in a statement.

The deal seeks to expand the oil major’s downstream presence in China.

Aramco will 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.

Rongsheng owns a 51 percent equity in ZPC, which operates the largest integrated refining and chemicals complex in China with a capacity to process 800,000 bpd of crude oil and produce 4.2 million metric tons of ethylene per year.

Aramco executive vice president of downstream Mohammed Y. Al Qahtani said: “It is an important acquisition for Aramco in a key market, supporting our growth ambitions and advancing our liquids to chemicals strategy.”

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, subject to regulatory approvals.

Last week, Aramco’s joint venture, Huajin Aramco Petrochemical Company (HAPCO), announced plans to start the construction of a $10 billion integrated refinery and petrochemical complex in northeast China in the second quarter of 2023.

Aramco will supply 690,000 bpd of crude to high chemical conversion assets through its partnership with Rongsheng and HAPCO.