The two deals, announced separately on Sunday and Monday, would see Aramco supplying the two Chinese companies with a combined 690,000 barrels a day of crude oil, bolstering its rank as China’s top provider of the commodity.
It follows a preliminary agreement Aramco reached with the Zhejiang provincial government in 2018 for a 9% stake in ZPC.
Aramco’s investments highlight Riyadh’s deepening ties with Beijing which have raised security concerns in Washington, Riyadh’s traditional ally.
In a deal brokered by China, Iran and Saudi Arabia agreed to re-establish relations earlier this month after years of hostility that had fuelled conflicts across the region.
Beijing’s secret role in the breakthrough shook up dynamics in the Middle East, where the United States was for decades the main dealmaker.
Saudi Arabia and other Gulf states like the United Arab Emirates have said that they would not choose sides amid an increased polarisation of global politics, and they were diversifying partners to serve national economic and security interests.
Western sanctions on Moscow over its war in Ukraine forced Russia to divert its oil away from Europe and to sell it at steep discounts to other markets, including China.
Russia unseated Saudi Arabia as China’s top oil supplier in the first two months of the year.
Aramco is already selling crude to the east China plant which operates an 800,000-bpd refinery, the single largest in China, under sales agreements renewed annually.
The Rongsheng deal comes on the heels of Aramco’s agreement with Chinese partners on Sunday for an oil refinery and petrochemical project in the northeast Chinese province of Liaoning that is expected to start in 2026 to meet the country’s growing demand for fuel and chemicals.
The Liaoning project, in the city of Panjin, will be Aramco’s second major refining-petrochemical investment in China and follows the world’s top oil exporter reporting a record profit of $161 billion in 2022.
Joint venture Huajin Aramco Petrochemical Company (HAPCO) will build and operate the Panjin complex that will house a 300,000 barrels per day (bpd) oil refinery and a cracker with annual production capacity of 1.65 million tonnes of ethylene and 2 million tonnes of paraxylene, Aramco said in a statement.
UPGRADE
The Liaoning province project is expected to cost 83.7 billion yuan ($12.2 billion), partner Panjin Xicheng Industrial Group said in a statement on Sunday.
It is an upgrade from the joint venture’s plan announced in early 2022 to build a $10 billion plant that includes a 1.5 million tpy ethylene alongside the 300,000-bpd refinery.
Construction at the Panjin complex will start in the second quarter after the project secures the required administrative approvals, Aramco said. The plant is expected to be fully operational by 2026, it added.
Aramco will supply up to 210,000 bpd of crude oil as feedstock for the plant.
State-owned NORINCO Group, a Chinese military equipment maker, owns 51% of HAPCO while Aramco and Panjin Xincheng hold stakes of 30% and 19%, respectively.
Separately, Aramco on Sunday signed a memorandum of understanding with the southern Chinese province of Guangdong to explore cooperation in sectors including energy, finance, research and innovations, according to a post on the provincial government’s website.
Guangdong, China’s largest provincial economy, has drawn global firms like Exxon Mobil and BASF, each building large-scale petrochemical complexes producing high-value chemicals.
Aramco has been ramping up its China presence. In another deal reached last year, Aramco agreed with Shandong Energy an initial pact to explore a potential crude supply agreement and chemical products offtake deal.
Earlier this month, Saudi Aramco also broke ground on a $7 billion project to produce petrochemicals from crude oil at its South Korean affiliate S-Oil Corp’s refining complex in the port city of Ulsan.
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