Saudi Aramco, the world's largest oil producer, has increased its investment in China by investing at a significant premium in Rongsheng Petrochemical, a leading private refining and chemical company in China, and investing in the construction of a large refinery project in Panjin, fully demonstrating Saudi Aramco's confidence in the development of the Chinese petrochemical industry.

On March 27, Saudi Aramco announced that it had signed an agreement to acquire 10% of the shares of Rongsheng Petrochemical for US $3.6 billion. It is worth noting that Saudi Aramco invested in Rongsheng Petrochemical at a premium of nearly 90%.

It is understood that Rongsheng Petrochemical and Saudi Aramco will cooperate in crude oil procurement, raw material supply, chemical sales, refined chemical product sales, crude oil storage, and technology sharing.

According to the agreement, Saudi Aramco will supply 480000 barrels per day of crude oil to Zhejiang Petrochemical Co., Ltd., a subsidiary of Rongsheng Petrochemical, for a period of 20 years.

Saudi Aramco and Rongsheng Petrochemical are upstream and downstream of each other in the industrial chain. As one of the world's largest integrated energy and chemical companies, Saudi Aramco is mainly engaged in oil exploration, development, production, refining, transportation, and sales. According to data, Saudi Arabia's crude oil production in 2022 was 10.5239 million barrels per day, accounting for 14.12% of global crude oil production. Saudi Aramco's crude oil production accounted for over 99% of Saudi Arabia's total crude oil production. Rongsheng Petrochemical is mainly engaged in the research, development, production, and sales of various oil products, chemicals, and polyester products. Currently, the company operates the 40 million ton/year refining and chemical integration project of Zhejiang Petrochemical, the world's largest single refinery, and has the world's largest production capacity of purified terephthalic acid (PTA), paraxylene (PX) and other chemicals. The main raw material of Rongsheng Petrochemical is the crude oil produced by Saudi Aramco.

Mohammed Katani, Executive Vice President of the downstream business of Saudi Aramco, said that this transaction demonstrated the company's long-term investment in China and confidence in the fundamentals of the Chinese petrochemical industry, while also committing to providing reliable crude oil supply to Zhejiang Petrochemical, one of China's most important refiners.

On March 26th the day before, Saudi Aramco also announced the establishment of a joint venture company in Panjin City, Liaoning Province, China, and the construction of a large-scale oil refining and chemical complex.

It is understood that Saudi Aramco, in conjunction with Northern Industrial Group and Panjin Xincheng Industrial Group, will build a large-scale integrated refinery and chemical complex in Northeast China and establish a joint venture called Huajin Aramco Petrochemical Co., Ltd., with a shareholding ratio of 30%, 51%, and 19% respectively. The joint venture will build a refinery with a processing capacity of 300000 barrels per day, a chemical plant with a capacity of 1.65 million tons per year of ethylene, and a capacity of 2 million tons per year of PX. The project will commence construction in the second quarter of this year and is expected to be fully operational in 2026.

Mohammed Katani said, "This important project will support China's growing demand for fuels and chemical products. This is not only an important milestone in our continued downstream expansion strategy in China and beyond, but also an important driving force for the growing global petrochemical demand."

On March 26, Saudi Aramco also signed a memorandum of cooperation with the People's Government of Guangdong Province. The memorandum proposes a cooperation framework for exploring investment opportunities in multiple fields such as energy.

Amin Nasser, President and CEO of Saudi Aramco, stated that Saudi Aramco and Guangdong have broad cooperation space in the fields of petrochemical, new materials, and strategic emerging industries. They are willing to strengthen cooperation in petrochemical, hydrogen energy, ammonia energy, and other fields, support Guangdong in developing a modern and more sustainable petrochemical industry, and achieve mutual benefit and win-win results between Saudi Aramco, China, and Guangdong.