Saudi Aramco, the world's largest oil company, announced an agreement with North Huajin Chemical and Panjin Xincheng to begin construction of a petrochemical and refinery complex in China's Liaoning province. The agreement was signed by Amin Nasser, chairman and chief executive of Aramco, at the China Development Forum in Beijing. The complex will produce basic chemicals such as ethylene, propylene, butane, benzene, toluene, xylene, naphthalene and hydrogen sulphide. This initiative will help China improve long-term energy security by providing a stable source of fuel for the country.
The complex is also expected to boost the economy of Liaoning Province, improve the local environment and increase employment. The complex will have a crude oil processing capacity of 400,000 barrels per day and a petrochemicals production capacity of 1.5 million tonnes per year.
The construction will mark the first time Aramco has directly operated a refining plant outside Saudi Arabia and is part of the company's long-term goal of becoming an integral source of energy and chemicals for China.
Aramco seeks to establish a win-win relationship with the Asian country by expanding its supply of energy and chemicals to meet China's long-term energy demand. The company seeks to improve production efficiency and the conversion of liquids directly into chemicals, to contribute to high-quality development.
The initial framework agreement for the Liaoning refinery was first signed during Saudi Arabian King Salman bin Abdulaziz's visit to Beijing in March 2017. This marked a major breakthrough in the relationship between the two countries and opened the door to collaboration on the development of an oil refinery. The current agreement establishes a framework for the development of joint energy projects between China and Saudi Arabia, with the aim of increasing fuel supply in the two nations.
The plant, which will be fully operational by 2026, will be owned by Aramco (30%), Norinco Group (51%) through its subsidiary North Huajin Chemical and Panjin Xincheng (19%).
In 2019, Saudi Crown Prince Mohammed bin Salman agreed to this historic investment in China through the 300,000 barrel per day ethylene cracker refinery venture, to be managed by China North Group Corp (Norinco) and a Panjin-based company. However, plans were halted in 2020 due to the effects of the COVID-19 blockade in China. But in early 2022, Aramco revived investment talks and finally last month announced the start of the joint venture.
Saudi Aramco is significantly increasing its oil and gas production capacity to meet global energy demand. The company plans to expand its oil production to 13 million barrels per day (mbd) by 2027, an increase of one million barrels per day from the current level. At the same time, the company also plans to increase its gas production by more than 50% by 2030. This adds an additional one million barrels per day of oil for export, according to executive chairman and managing director Amin Nasser. He also noted that the company signed a letter of intent to be part of a new entity being created by Renault SA and Zhejiang Geely Holding Group Co. amid efforts to develop more efficient and lower-emission hybrid engines and systems.