Saudi’s Aramco is reportedly planning to buy a stake in an upcoming major Chinese refinery. It is the company’s new investment in the world’s largest oil market as it follows a strategy of procuring avenues for oil sales.
Abdulaziz M Al-Judaimi, Senior Vice President of downstream operations at Aramco said that Saudi Arabian Oil Co. alias Aramco, will reportedly acquire a share of a plant in China’s Zhoushan island, with a capacity of 400,000 barrels per day. The company has already inked a long-term contract to supply 120,000 barrels per day to the facility.
Reliable sources state that the stake purchase belongs to the country’s long-term strategy of investing in Asian refineries to secure demands for its petrochemical division as well as secure market share in the region. The company is also helping to finance the RAPID complex in Malaysia worth $27 billion, and last year, signed an agreement worth $6 billion with PT Pertamina of Indonesia for refinery projects, while also agreeing to build a plant in Liaoning, China.
According to sources familiar with the development, the company’s equity in the project will be 9 percent, a share that was earlier held by the government of Zhejiang province. The specifics regarding the size of the stake are not yet decided. After the completion of its first phase, the refinery is expected to produce 20 million tons of fuel a year.
Aramco’s overall plan involves an investment of one million for 1.5 million barrels per day of Chinese refining and crude capacity. The deals for the projects in Zhejiang and Liaoning will be closed by the end of next year. The Zhejiang project represents the new kind of integrated refining and petrochemical investment the future of the oil industry needs, Al-Judaimi added.
The plant will commence operations by the end of 2018 and the company intends to double its capacity by 2020, cite sources.