Energy News — Saudi Aramco Intends To Acquire 10 Percent Stake In China’s Petrochemical Refinery
In a news story about global energy markets that got swept under the rug, Saudi Aramco signed a cooperation framework agreement with Jiangsu Eastern Shenghong Co., Ltd., on 27 September 2023.
According to the agreement, Saudi Aramco will supply Shenghong Petrochemical with crude oil and other feedstocks, while the two companies discuss a potentinal strategic partnership that would allow for a large expansion project at the petrochemical and refinery compex in Jiangsu.
As part of this strategic partnership, Saudi Aramco seeks to acquire a 10% stake in Shenghong Petrochemical’s integrated refinery and petrochemical complex, . Yet, the agreement stopped short of this potential expansion deal.
This didn’t deter Saudi Aramco from speaking out about the importance of China to the company’s global market strategy. Aramco Downstream President Mohammed Al Qahtani, said:
“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. We see China as an important partner not only for today but for decades to come.”
It was reported earlier this year by Upstream that Saudi Aramco had reached an agreement with China’s Offshore Oil Engineering Company (COOEC) for an engineering, procurement, construction and installation (EPCI) contract at the Safaniyah oilfield in Kingdom of Saudi Arabia.
China, through companies like COOEC, is becoming a leading EPC or EPCI player in the global oilfield services industry. According to the news agency Oil & Gas Middle East the contract will be worth $1 billion as it is “the world’s biggest conventional offshore oil field…”
From a geo-political point of view, the First Arab-Chinese Summit signals a change in the thinking on Saudi Arabia’s control over oil production, and how they wish to court China as a major oil importer. That’s why it is important to understand how global energy markets are responding to geopolitical shifts.
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