Aramco in talks to buy 10% stake in Chinese refiner

Saudi Aramco

Saudi Aramco has started talks with China’s privately owned Jiangsu Eastern Shenghong Company to acquire a 10 percent equity stake in the Chinese firm’s refiner and petrochemical subsidiary. 

Under the cooperation framework agreement, the world’s largest oil producing company intends to supply Jiangsu Shenghong Petrochemical Industry Group with crude oil and potentially other feedstocks. 

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Aramco and Jiangsu Shenghong Petrochemical also plan to cooperate on developing a large expansion project. 

“The signing of this cooperation framework agreement is another significant milestone in Aramco’s downstream strategy to increase conversion of Arabian crude oil to chemicals and to expand into the critically important Chinese market,” said Mohammed Al Qahtani, downstream president, Aramco.

Al Qahtani said the Saudi-listed oil giant sees China as an “important partner not only for today but for decades to come”.

Jiangsu Shenghong Petrochemical owns and operates a 320 million barrels per day integrated refinery and petrochemicals complex.

In addition, it operates a methanol-to-olefins and derivatives complex, as well as a purified terephthalic acid production facility through its wholly-owned subsidiaries. 

The facilities are co-located in the Xuwei Petrochemical Industrial Park in Jiangsu province. 

Jiangsu Eastern Shenghong is listed on the Shenzhen Stock Exchange.

Earlier this month, Reuters 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.

Aramco also agreed to purchase a 100 percent equity stake in Chile’s Esmax Distribución SpA (Esmax) from Southern Cross Group, the Latin America-focused private equity company.

The Wall Street Journal reported earlier that the oil giant planned 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.