Page 4 - AsianOil Week 11 2022

AsianOil COMMENTARY AsianOil

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

INVESTMENT STATE-BACKED Saudi Aramco last week said
that it had taken a final investment decision
WHAT: (FID) on the development of an integrated refin-
The company signed ery and petrochemical complex in north-eastern
off on a $10bn, 300,000 China in collaboration with local partners.
bpd refinery in north- The decision comes as Aramco is seeking to
eastern China which was strengthen its foothold in the Asian country as
originally announced in well as other consumer nations, expanding its
2017. global refining footprint and dedicated markets
for its crude.
WHY:
The deal follows a string Panjin plant
of other agreements to The Huajin Aramco Petrochemical Co.
invest in refineries or (HAPCO) was formed in late 2019 between the
supply them with crude. Saudi firm and China’s North Huajin Chemi-
cal Industries Group Corp. and local govern-
WHAT NEXT: ment-owned Panjin Xincheng Industrial Group.
If completed, the deals Aramco said that the JV will build a $10bn,
would nearly fulfil the 300,000 barrel per day (bpd) refinery capac-
company’s long-held ity and ethylene-based steam cracker which is Mohammed Al Qahtani, Aramco’s senior
downstream expansion expected to be commissioned in 2024. vice-president of downstream, said: “China is
goal. Originally announced in 2017 as part of Chi- a cornerstone of our downstream expansion
na’s One Belt, One Road international infra- strategy in Asia and an increasingly significant
structure initiative, Aramco agreed a deal with driver of global chemical demand.”
Huajin’s parent firm China North Industries The announcement follows last week’s deal
Group Corp. (Norinco) for the development between the Saudi firm and China’s Sinopec
of facilities with a projected refining capacity of for potential downstream collaboration and
300,000 bpd alongside 1.5mn tonnes per year of support for feasibility studies for the expansion
ethylene and 1.3mn tpy of paraxylene. of the Fujian Refining and Petrochemical Co.
In line with the company’s strategy of increas- (FREP), a 280,000 bpd facility in which Aramco
ing the number of outlets dedicated to its crude holds a 63.4% share.
production, Aramco intends to supply 70% According to Aramco, the agreement “pro-
(210,000 bpd) of the facility’s feedstock, taking vides a basis for continued downstream col-
a 35% stake in the project, with Norinco sub- laboration between Aramco and Sinopec,
sidiary Huajin holding 36% and Xincheng the capitalising on each company’s strengths and
remaining 29%. their long-term relationship through existing
The Saudi firm’s participation came to an end joint ventures, namely FREP and Sinopec Sen-
in 2020 when it slashed capital expenditure in mei (Fujian) Petroleum Co. (SSPC) in China,
response to low oil prices and the coronavirus and Yanbu Aramco Sinopec Refining Co. [YAS-
(COVID-19) outbreak, and its stake was trans- REF] in Saudi Arabia.”
ferred to Huajin, which established a JV with The latter is a 430,000 bpd joint venture (JV)
Xincheng late that year. refinery in which Aramco holds 62.5%, with
Construction was reported to have begun in Sinopec holding the remaining 37.5%.
the third quarter of 2021, with the capacity of
the petrochemical units having been expanded At home
to a planned 1.65mn tpy of ethylene and 2mn Also last week, Yemen’s Houthi militia said
tpy of paraxylene, raising the cost of the project that they had carried out an attack on Aramco’s
to just under $12bn. 130,000 bpd Riyadh refinery using three drones

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