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Aramco signs MoU with Sinopec

for downstream collaboration

PROJECTS & FOLLOWING reports that it was considering opportunities to deepen and expand activity
COMPANIES further investments in China, Saudi Aramco amid an accelerating global energy transition.”
this week signed a memorandum of understand- The announcement comes just weeks after
ing (MoU) with China Petroleum & Chemical Aramco’s president and CEO Amin Nasser
Corp. (Sinopec) for potential downstream confirmed that the company was considering
collaboration. investments in China and follows reports that it
The deal, signed through Aramco’s Asian has resumed talks to build a $10bn refining and
subsidiary, will also see the companies seek to petrochemicals complex at Panjin in north-east-
support feasibility studies for the expansion ern China’s Liaoning Province.
of the Fujian Refining and Petrochemical Co. Originally announced in 2017 as part of
(FREP), a 280,000 barrel per day (bpd) facility in China’s One Belt, One Road international infra-
which Aramco holds a 63.4% share. structure initiative, Aramco agreed a deal with
According to Aramco, the agreement “pro- China North Industries Group Corp. (Norinco)
vides a basis for continued downstream col- for the development of facilities with a projected
laboration between Aramco and Sinopec, refining capacity of 300,000 bpd alongside
capitalising on each company’s strengths and 1.5mn tonnes per year of ethylene and 1.3mn
their long-term relationship through existing tpy of paraxylene.
joint ventures, namely FREP and Sinopec Sen- In line with the company’s strategy of increas-
mei (Fujian) Petroleum Co. (SSPC) in China, ing the number of crude outlets dedicated to its
and Yanbu Aramco Sinopec Refining Co. [YAS- crude production, Aramco intends to supply
REF] in Saudi Arabia”. 70% of the facility’s feedstock, taking a 35% stake
The latter is a 430,000 bpd joint venture (JV) in the project, with Norinco subsidiary Huajin
refinery in which Aramco holds 62.5% with Sin- holding 36% and the local-government owned
opec holding the remaining 37.5%. Sincen the remaining 29%.
Aramco’s senior-vice president of down- The Saudi firm’s participation came to an end
stream Mohammed Al Qahtani said: “Such in 2020 when it slashed capital expenditure in
collaborations promote our downstream inte- response to low oil prices and the coronavirus
gration and expansion strategy in Asia and sup- (COVID-19) outbreak, and its stake was trans-
port our broader objectives of becoming a global ferred to Huajin, which established a joint ven-
leader in liquids-to-chemicals and a resilient and ture with Sincen late that year.
reliable supplier of one of the lowest upstream Quoting sources close to the project, Argus
carbon intensity oils to meet China’s growing Media said that the JV kicked off construc-
demand.” tion of the facility in Q3 2021, with the petro-
Meanwhile, Sinopec President Yu Baocai chemical units having now been expanded to
said: “The signing of this MoU will support our a planned 1.65mn tpy of ethylene and 2mn tpy
refinery feedstock optimisation and downstream of paraxylene, raising the cost of the project to
petrochemical development, while offering new just under $12bn.™

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