Aramco in talks with Sinopec to expand Yanbu refinery

Saudi Aramco

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, a company executive told Reuters.

The Chinese state-run company’s overseas investments to date include the 400,000 barrels-per-day (bpd) Yasref refinery and the $10 billion Amur Gas Chemical Complex in East Siberia in a tie-up with Russia’s Sibur.

In December 2022, Aramco, Saudi Basic Industries Corporation (Sabic) and Sinopec signed a memorandum of understanding to study the economic and technical feasibility of developing a new petrochemical complex to be integrated with an existing refinery in Yanbu.

• Work set to start on $11bn new Saudi petrochem project
• Sinopec takes 5% stake in Qatar’s $29bn LNG project
• Saudi Arabia and Abu Dhabi bet on crude-to-chemicals

Separately, Aramco and Sinopec have signed heads of agreement for a greenfield project in Gulei, Fujian Province, which plans to include a 320,000 bpd refinery and 1.5 million tonnes-per-year petrochemical cracker complex. The project is expected to commence operations by the end of 2025.

The Chinese oil major has set up a new entity – Sinopec Overseas Investment Holding – to invest in refinery and petrochemical assets overseas, Reuters reported, citing two company executives.

Sinopec is building up the team and setting the budget for the new entity.

One of the investments will likely be in Sri Lanka, where Sinopec was shortlisted to bid for an export-oriented refinery in Hambantota.

Sinopec reported a 20.1 percent year-on-year fall in interim net profit for the first half of the year to 35.11 billion yuan ($4.82 billion) on lower crude prices despite higher refinery output and growth in fuel sales.