Saudi oil giant Aramco is proceeding with plans to boost its downstream presence in its most important export market, China, with discussions to buy a minority stake in a Chinese petrochemical company.
Aramco has entered into discussions with Hengli Group Co., Ltd. regarding the potential acquisition of a 10% stake in Hengli Petrochemical Co., subject to due diligence and required regulatory clearances, the Saudi firm said in a statement on Monday.
Hengli Petrochemical International Pte. Ltd and Aramco signed on Monday a Memorandum of Understanding (MoU) regarding the proposed transaction, which “aligns with Aramco’s strategy to expand its downstream presence in key high-value markets, advance its liquids-to-chemicals program, and secure long-term crude oil supply agreements,” the Saudi oil giant said.
Hengli Petrochemical currently owns and operates a 400,000 barrel per day (bpd) refinery and integrated chemicals complex in the Liaoning province in China, as well as several plants and production facilities in the Jiangsu and Guangdong provinces.
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“We continue to explore new opportunities in important markets, as we seek to progress in our liquids-to-chemicals strategy,” said Mohammed Al Qahtani, Aramco Downstream President.
“We look forward to forging new partnerships and are excited by the prospect of expanding our presence in the important Chinese market.”
The potential deal would not be the first transaction in the petrochemicals sector for Aramco in China.
Last year, Saudi Aramco completed the purchase of a 10% stake in Rongsheng Petrochemical for the equivalent of $3.4 billion as the Saudi oil giant continues to expand its downstream footprint in one of its key export markets.
Earlier in 2023, Aramco announced two major refinery and petrochemical deals in China, which not only give the world’s largest oil firm a share of the Chinese downstream market but also an additional export outlet for 690,000 bpd of Saudi crude in China.
By Charles Kennedy for Oilprice.com