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Aramco targets another petrochemical company in China

Aramco China Fujian Saudi Aramco
Saudi Aramco’s joint venture with ExxonMobil, China Petroleum, and the Fujian provincial government: 'China has a vitally important place in our global investment strategy,' Aramco says
  • Drive to strengthen downstream presence
  • Target had revenues of $32bn
  • Saudi company bids for 10%

Saudi Aramco has begun talks to acquire a 10 percent stake in Hengli Petrochemical Company, owner of a 400,000 barrel a day refinery and chemicals complex in Liaoning, north-east China.

Hengli Petrochemical, a subsidiary of Hengli Group, also operates plants and production facilities in Jiangsu and Guangdong provinces.

The kingdom’s state-owned oil company is looking to strengthen its global downstream presence, advance its liquids-to-chemicals programme and secure long-term crude oil supply agreements.

Last year Saudi Aramco acquired a 10 percent stake in China’s Rongsheng Petrochemical Company for $3.4 billion.

“We continue to explore new opportunities in important markets, as we seek to progress in our liquids-to-chemicals strategy,” said Mohammed Y. Al Qahtani, president of Aramco Downstream.

Hengli Petrochemical posted revenues of 235 billion yen ($32 billion) in its most recent financial report. Although this was consistent with the predictions of analysts, earnings were 11 percent down on statutory estimates, at 0.98 yen per share, according to the analytical company Simply Wall Street. 

Aramco’s CEO, Amin Nasser, told investors last month that the company had no intention of building LNG capacity in the kingdom. He said it was “discussing opportunities with different entities in the US, Australia and other parts of the world.” 

Nasser had previously maintained that Aramco was proud to be one of China’s most reliable energy suppliers and stressed that the company was committed to China’s long-term energy security.

He said that Sabic, a subsidiary of Aramco, was building on its strength in the chemicals sector, and a $6.4 billion facility in Fujian, a province in south-east China, was on track to commence construction.

Al Qahtani said: “We look forward to forging new partnerships and are excited by the prospect of expanding our presence in the important Chinese market.”

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