Saudi Aramco to sign China refinery deals during crown prince visit

Saudi Aramco is the world’s top oil exporter. (File/AFP)
Updated 21 February 2019
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Saudi Aramco to sign China refinery deals during crown prince visit

  • It will sign an MOU to build a refinery and petrochemical project in a Chinese province
  • It is also expected to formalize an earlier plan to take a minority stake in Zhejiang Petrochemical

SINGAPORE/DUBAI/BEIJING: Saudi Aramco plans to sign preliminary deals to invest in two oil refining and petrochemical complexes in China during Saudi Arabian Crown Prince Mohammed bin Salman’s state visit to Beijing this week, according to sources familiar with the plans.
Saudi Aramco, the world’s top oil exporter, will sign a memorandum of understanding (MOU) to build a refinery and petrochemical project in the northeastern Chinese province of Liaoning in a joint venture with China’s defense conglomerate Norinco, said three sources with knowledge of the matter.
Aramco is also expected to formalize an earlier plan to take a minority stake in Zhejiang Petrochemical, controlled by private Chinese chemical group Zhejiang Rongsheng Holding Group , said two sources with knowledge of this particular deal. Zhejiang Petrochemical is building a refinery and petrochemical complex in eastern Chinese province of Zhejiang.
The investments could help Saudi Arabia regain its place as the top oil exporter to China, which it has relinquished to Russia for the past three years. Saudi Aramco is poised to bolster its market share by signing supply agreements with non-state Chinese refiners.
It is not clear what new details will be in the MOU with Norinco expected during the visit, as the two companies first announced an alliance in May 2017 during Saudi ruler King Salman’s visit to Beijing.
Under that earlier MOU, the companies agreed to build a refinery capable of processing 300,000 barrels per day of crude and a facility that would make 1 million tons per year of ethylene, a building block for petrochemicals, at an estimated cost of over $10 billion.
A senior Aramco executive said last June he expected the front-end engineering for the Norinco project to be finished by mid-2019, following which the company will take a final investment decision.
Norinco public affairs officials were not immediately available for a comment.
Aramco officials did not reply to a request for comment sent by email.
Meanwhile, the Zhejiang agreement would give Saudi Aramco control of the 9 percent stake in the project held by the Zhejiang provincial government.
The agreement follows an earlier MOU that Aramco signed in October to invest in Zhejiang’s project, which is planned as a refinery to process 400,000 bpd of crude and associated petrochemical facilities in the city of Zhoushan, south of Shanghai.
Reuters was not able to immediately reach Zhoushan Ocean Development and Investment Co. Ltd, which holds the 9 percent stake in Zhejiang Petrochemical for the provincial government, for a comment.
The Saudi delegation, including top executives from Aramco, arrived in Beijing on Thursday for a two-day visit, part of the crown prince’s Asia tour, during which the kingdom has pledged $20 billion of investment in Pakistan and sought additional investment in India’s refining industry.


US-Saudi business council reports $13bn in contracts

Updated 24 May 2019
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US-Saudi business council reports $13bn in contracts

  • Improved oil prices, combined with a government focus on spending, contributed to the rise, the council said

LONDON: The value of joint Saudi-US contracts rose to $13 billion in the first quarter of 2019, according to a business council report.

That marked the highest value of awarded contracts since the first quarter of 2015, the US-Saudi Arabian Business Council said.

The value of contracts awarded during the first quarter amounted to about half of the total value in all of last year, it added.

The contracts “included many vital projects, notably in the oil, gas, water and transport sectors,” Abdallah Jum’ah, the co-chair of the council, was reported as saying by Asharq Al-Awsat.

Energy was the top sector, with $3.1 billion of the value of contracts awarded, with many struck by Saudi Aramco. 

Improved oil prices, combined with a government focus on spending, contributed to the rise, the council said.

The construction sector also looks set for a recovery after many projects were put on hold due to the oil-price crash.

“If the pace of awarding construction contracts witnessed during the first quarter of 2019 continues for the rest of the year, the index of awarding construction contracts may return to the range we witnessed before the canceling and postponing of mega projects due to lower oil revenue,” the council said.