Saudi Arabia’s Aramco expands presence in China by acquiring 10% stake in Rongsheng

Saudi Arabia’s state-owned energy company, Aramco is expanding its presence in China.

According to a press release copied to Ghana Business News, Aramco has signed definitive agreements to acquire a 10 per cent interest in Shenzhen-listed Rongsheng Petrochemical Co. Ltd for RMB 24.6 billion ($3.6 billion at current exchange rates), in a deal that is said would significantly expand its downstream presence in China.

The release notes that through the strategic arrangement, Aramco would supply 480,000 barrels per day (bpd) of Arabian crude oil to Rongsheng affiliate Zhejiang Petroleum and Chemical Co. Ltd (ZPC), under a long-term sales agreement. Aramco Overseas Company (“AOC”), a wholly-owned subsidiary of Aramco, will acquire the interest in Rongsheng, it added.

“Among other assets, Rongsheng owns a 51 per cent equity interest in ZPC, which in turn owns and operates the largest integrated refining and chemicals complex in China with a capacity to process 800,000 bpd of crude oil and to produce 4.2 million metric tons of ethylene per year,” the release said.

The press release indicates that the transaction involves an off-market secondary sale of Rongsheng shares by majority shareholder Zhejiang Rongsheng Holding Group, with potential for future collaboration between the parties in trading, refining, chemicals production and technology licensing. The transaction is expected to close by the end of 2023, and is subject to regulatory approvals, it says.

The agreement follows the announcement on March 26 that the Aramco joint venture, Huajin Aramco Petrochemical Company (HAPCO), planned to start construction of a major integrated refinery and petrochemical complex in northeast China in the second quarter of 2023. Aramco, which has a 30% stake in HAPCO, will supply up to 210,000 bpd of crude oil feedstock to the complex.

“Combined, the partnership with Rongsheng and the HAPCO joint venture would see Aramco supply a total of 690,000 bpd of crude to high chemical conversion assets,” the release states.

By Peter Quarshie

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