Page 4 - DMEA Week 11 2022

DMEA COMMENTARY DMEA

Aramco maintains

expansion with

Chinese FID

Saudi Aramco has finally taken the decision to move ahead with a major
new refinery in China as it continues to expand its global refining footprint.

MIDDLE EAST STATE-BACKED Saudi Aramco last week said units having been expanded to a planned 1.65mn
that it had taken a final investment decision tpy of ethylene and 2mn tpy of paraxylene, rais-
(FID) on the development of an integrated refin- ing the cost of the project to just under $12bn.
WHAT: ery and petrochemical complex in north-eastern Mohammed Al Qahtani, Aramco’s senior
The company signed China in collaboration with local partners. vice-president of downstream, said: “China is a
off on a $10bn, 300,000 The decision comes as Aramco is seeking to cornerstone of our downstream expansion strat-
bpd refinery in north- strengthen its foothold in the Asian country as egy in Asia and an increasingly significant driver
eastern China which was well as other consumer nations, expanding its of global chemical demand.”
originally announced in global refining footprint and dedicated markets The announcement follows last week’s deal
2017. for its crude. between the Saudi firm and China’s Sinopec for
potential downstream collaboration and support
WHY: Panjin plant for feasibility studies for the expansion of the
The deal follows a string The Huajin Aramco Petrochemical Co. Fujian Refining and Petrochemical Co. (FREP),
of other agreements to (HAPCO) was formed in late 2019 between the a 280,000 bpd facility in which Aramco holds a
invest in refineries or Saudi firm and China’s North Huajin Chemi- 63.4% share.
supply them with crude. cal Industries Group Corp. and local govern- According to Aramco, the agreement “pro-
ment-owned Panjin Xincheng Industrial Group. vides a basis for continued downstream col-
WHAT NEXT: Aramco said that the JV will build a $10bn, laboration between Aramco and Sinopec,
If completed, the deals 300,000 barrel per day (bpd) refinery capac- capitalising on each company’s strengths and
would nearly fulfil the ity and ethylene-based steam cracker which is their long-term relationship through existing
company’s long-held expected to be commissioned in 2024. joint ventures, namely FREP and Sinopec Sen-
downstream expansion Originally announced in 2017 as part of mei (Fujian) Petroleum Co. (SSPC) in China,
goal. China’s One Belt, One Road international infra- and Yanbu Aramco Sinopec Refining Co. [YAS-
structure initiative, Aramco agreed a deal with REF] in Saudi Arabia.”
Huajin’s parent firm China North Industries The latter is a 430,000 bpd joint venture (JV)
Group Corp. (Norinco) for the development refinery in which Aramco holds 62.5%, with Sin-
of facilities with a projected refining capacity of opec holding the remaining 37.5%.
300,000 bpd alongside 1.5mn tonnes per year of
ethylene and 1.3mn tpy of paraxylene. At home
In line with the company’s strategy of increas- Also last week, Yemen’s Houthi militia said
ing the number of outlets dedicated to its crude that they had carried out an attack on Aramco’s
production, Aramco intends to supply 70% 130,000 bpd Riyadh refinery using three drones
(210,000 bpd) of the facility’s feedstock, taking while also targeting company facilities at Jazan
a 35% stake in the project, with Norinco sub- and Abha near the border.
sidiary Huajin holding 36% and Xincheng the The Saudi Press Agency (SPA) reported only
remaining 29%. that there had been an attack, noting that sup-
The Saudi firm’s participation came to an end plies were not affected.
in 2020 when it slashed capital expenditure in Jazan refinery remains in the commissioning
response to low oil prices and the coronavirus phase, running at around half of its 400,000 bpd
(COVID-19) outbreak, and its stake was trans- capacity, with full operations anticipated later
ferred to Huajin, which established a JV with this year to produce 209,900 bpd of ultra-low
Xincheng late that year. sulphur diesel, 71,400 bpd of 91 RON and 95
Construction was reported to have begun in RON gasoline, 48,500 bpd of high sulphur fuel
Q3 2021, with the capacity of the petrochemical oil and 6,700 bpd of LPG, according to Aramco.

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