Saudi Aramco agrees to $10 billion joint venture deal in China

Amin Nasser, center, the president and chief executive of Saudi Aramco, Jiao Kaihe, left, the chairman of NORINCO Group, Tang Yijun, the governor of Liaoning Province, during the signing ceremonies in Beijing, China. (Aramco)
Updated 23 February 2019
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Saudi Aramco agrees to $10 billion joint venture deal in China

  • The partners will create a new company, Huajin Aramco Petrochemical Co. Ltd., as part of the project
  • Saudi Aramco will supply up to 70 percent of the crude feedstock for the complex

BEIJING: During a visit by Crown Prince Mohammed bin Salman to Beijing, Saudi Aramco on Friday signed a deal worth more than $10 billion for a refining and petrochemical complex in China.

The Saudi delegation, including top Aramco executives, arrived in China on Thursday as part of an Asian tour that included India and Pakistan.

The deal aims to set up a joint venture with Chinese conglomerate Norinco to develop a refining and petrochemical complex in the northeastern city of Panjin in Liaoning province.

The partners would form the Huajin Aramco Petrochemical Co. as part of a project that would include a 300,000-barrel-per-day (bpd) refinery with a 1.5-million-metric-ton-per-annum (mmtpa) ethylene cracker, Aramco said.

The total value of the project is more than $10 billion, making it the largest Sino-foreign joint venture, it added.

Aramco will supply up to 70 percent of the crude feedstock for the complex, which is expected to start operations in 2024.

The investments could help Saudi Arabia regain its place as the top oil exporter to China, a position Russia has held for the last three years. 

Aramco is set to boost its market share by signing supply deals with non-state Chinese refiners.

“Our agreement with Norinco and Liaoning province is a clear demonstration of Saudi Aramco’s strategy to move from beyond a buyer-seller relationship, to one where we can make significant investments to contribute to China’s economic growth and development,” said Aramco CEO Amin Nasser. 

“Our participation in the integrated refining and petrochemical project in Panjin will strengthen our collaborative efforts to enhance energy security, revitalize key growth sectors and industries in Liaoning, and also meet rising demand for products and goods in China’s northeast region.”

There are additional plans to set up a fuels retail business, which will further integrate into the value chain, Aramco said.

By the end of 2019, a three-party company is expected to be formed between Aramco, North Huajin and the Liaoning Transportation Construction Investment Group Co. Ltd. to develop a retail fuel station network in the target markets.

Aramco also signed three memorandums of understanding aimed at expanding its downstream presence in Zhejiang province, one of the most developed regions in China.

Aramco aims to acquire a 9 percent stake in Zhejiang Petrochemical’s 800,000-bpd integrated refinery and petrochemical complex, located in the city of Zhoushan.

The first deal was signed with the Zhoushan government to acquire its 9 percent stake in the project.

The second agreement was signed with Rongsheng Petrochemical, Juhua Group and Tongkun Group, which are the other shareholders of Zhejiang Petrochemical.

Aramco’s involvement in the project will come with a long-term crude supply agreement, and the ability to utilize Zhejiang Petrochemical’s large crude oil storage facility to serve its customers in the Asian region.

An integral part of the project includes a third agreement with Zhejiang Energy to invest in a retail fuel network.

The companies plan to build a large-scale retail network over the next five years in Zhejiang province.

The retail business will be integrated with the Zhejiang Petrochemical complex as an outlet for the refined products produced.

Nasser said the agreements “demonstrate our commitment to the Chinese market and help enhance the strategic integration of our downstream network in Asia. They will further strengthen our relationship with China and Zhejiang province, setting the stage for more cooperation in the future.”

The first phase of the project will include a newly built 400,000-bpd refinery with a 1.4-mmtpa ethylene cracker unit and a 5.2-mmtpa aromatics unit.

The second phase will see a 400,000-bpd refinery expansion, which will include deeper chemical integration than the first phase.


Energy giants spent $1bn on climate lobbying, PR since Paris: watchdog

Updated 23 March 2019
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Energy giants spent $1bn on climate lobbying, PR since Paris: watchdog

  • Firms under pressure to explain how greener laws will hit business models

PARIS: The five largest publicly listed oil and gas majors have spent $1 billion since the 2015 Paris climate deal on public relations or lobbying that is “overwhelmingly in conflict” with the landmark accord’s goals, a watchdog said Friday.
Despite outwardly committing to support the Paris agreement and its aim to limit global temperature rises, ExxonMobil, Shell, Chevron, BP and Total spend a total of $200 million a year on efforts “to operate and expand fossil fuel operations,” according to InfluenceMap, a pro-transparency monitor.
Two of the companies — Shell and Chevron — said they rejected the watchdog’s findings.
“The fossil fuel sector has ramped up a quite strategic program of influencing the climate agenda,” InfluenceMap Executive Director Dylan Tanner told AFP.
“It’s a continuum of activity from their lobby trade groups attacking the details of regulations, controlling them all the way up, to controlling the way the media thinks about the oil majors and climate.”
The report comes as oil and gas giants are under increasing pressure from shareholders to come clean over how greener lawmaking will impact their business models.
As planet-warming greenhouse gas emissions hit their highest levels in human history in 2018, the five companies wracked up total profits of $55 billion.
At the same time, the International Panel on Climate Change — composed of the world’s leading climate scientists — issued a call for a radical drawdown in fossil fuel use in order to hit the 1.5C (2.7 Fahrenheit) cap laid out in the Paris accord.
InfluenceMap looked at accounts, lobbying registers and communications releases since 2015, and alleged a large gap between the climate commitments companies make and the action they take.

 

It said all five engaged in lobbying and “narrative capture” through direct contact with lawmakers and officials, spending millions on climate branding, and by employing trade associations to represent the sector’s interests in policy discussions.
“The research reveals a trend of carefully devised campaigns of positive messaging combined with negative policy lobbying on climate change,” it said.
It added that of the more than $110 billion the five had earmarked for capital investment in 2019, just $3.6bn was given over to low-carbon schemes.
The report came one day after the European Parliament was urged to strip ExxonMobil lobbyists of their access, after the US giant failed to attend a hearing where expert witnesses said the oil giant has knowingly misled the public over climate change.
“How can we accept that companies spending hundreds of millions on lobbying against the EU’s goal of reaching the Paris agreement are still granted privileged access to decision makers?” said Pascoe Sabido, Corporate Europe Observatory’s climate policy researcher, who was not involved in the InfluenceMap report.
The report said Exxon alone spent $56 million a year on “climate branding” and $41 million annually on lobbying efforts.
In 2017 the company’s shareholders voted to push it to disclose what tougher emissions policies in the wake of Paris would mean for its portfolio.
With the exception of France’s Total, each oil major had largely focused climate lobbying expenditure in the US, the report said.
Chevron alone has spent more than $28 million in US political donations since 1990, according to the report.
AFP contacted all five oil and gas companies mentioned in the report for comment.
“We disagree with the assertion that Chevron has engaged in ‘climate-related branding and lobbying’ that is ‘overwhelmingly in conflict’ with the Paris Agreement,” said a Chevron spokesman.
“We are taking action to address potential climate change risks to our business and investing in technology and low carbon business opportunities that could reduce greenhouse gas emissions.”
A spokeswoman for Shell — which the report said spends $49 million annually on climate lobbying — said it “firmly rejected” the findings.
“We are very clear about our support for the Paris Agreement, and the steps that we are taking to help meet society’s needs for more and cleaner energy,” they told AFP.
BP, ExxonMobil and Total did not provide comment to AFP.

FACTOID

$ 28m

Chevron alone has spent more than $28 million in US political donations since 1990, according to the report.