Saudi Aramco said it has reached an agreement to acquire a 10 percent stake in Shenzhen-listed Rongsheng Petrochemical Co. Ltd.
The acquisition deal, at a cost of $3.6 billion, will help the Saudi energy major significantly expand its downstream presence in China.
Through the strategic arrangement, Aramco would supply 480,000 barrels per day (bpd) of Arabian crude oil to Rongsheng affiliate Zhejiang Petroleum and Chemical Co. Ltd under a long-term sales agreement.
Aramco Overseas Company (AOC), a wholly-owned subsidiary of Aramco, will acquire the interest in Rongsheng.
The transaction involves an off-market secondary sale of Rongsheng shares by majority shareholder Zhejiang Rongsheng Holding Group, with potential for future collaboration between the parties in trading, refining, chemicals production and technology licensing.
The transaction is expected to be closed by the end of 2023, and is subject to regulatory approvals.
Among other assets, Rongsheng owns a 51 percent equity interest in ZPC, which in turn owns and operates the largest integrated refining and chemicals complex in China with a capacity to process 800,000 bpd of crude oil and to produce 4.2 million metric tons of ethylene per year.
Aramco Executive Vice President of Downstream Mohammed Y. Al Qahtani said the deal demonstrated the company’s long-term commitment to China and belief in the fundamentals of the Chinese petrochemicals sector.
“It is an important acquisition for Aramco in a key market, supporting our growth ambitions and advancing our liquids to chemicals strategy. It also promises to secure a reliable supply of essential crude to one of China’s most important refiners,” he said.
Li Shuirong, Rongsheng Chairman, said Aramco’s involvement will greatly help Rongsheng implement its petrochemical growth strategy.
The investment would anchor an important association between Aramco, Rongsheng and ZPC, which operates one of the world’s most state-of-the-art chemical conversion assets.
Aramco’s latest acquisition deal followed the announcement on Sunday, March 26, about its joint venture in China, Huajin Aramco Petrochemical Company (HAPCO).
The JV is expected to start construction of a major integrated refinery and petrochemical complex in northeast China in the second quarter of 2023.
Aramco, which has a 30% stake in HAPCO, will supply up to 210,000 bpd of crude oil feedstock to the complex.
Combined, the partnership with Rongsheng and the HAPCO joint venture would see Aramco supply a total of 690,000 bpd of crude to high chemical conversion assets.
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