Saudi Aramco Considers Investment in Chinese Petrochemical Company

Saudi Arabia's oil company, Aramco, is moving forward with plans to expand its presence in China's downstream market by discussing the purchase of a minority stake in a Chinese petrochemical firm.

Aramco has engaged in talks with Hengli Group Co., Ltd. about acquiring a 10% stake in Hengli Petrochemical Co., pending necessary due diligence and regulatory approvals, as stated in a Monday announcement by the Saudi company.

On Monday, Hengli Petrochemical International Pte. Ltd and Aramco signed a Memorandum of Understanding (MoU) regarding the potential transaction. Aramco explained that this aligns with its strategy to grow its downstream presence in important markets, advance its liquids-to-chemicals program, and secure long-term crude oil supply agreements.

Hengli Petrochemical currently operates a refinery with a capacity of 400,000 barrels per day (bpd) and an integrated chemicals complex in China's Liaoning province. Additionally, it has plants and production facilities in the Jiangsu and Guangdong provinces.

Mohammed Al Qahtani, Aramco's Downstream President, expressed the company's interest in exploring new opportunities in significant markets as part of its liquids-to-chemicals strategy. He highlighted the potential for expanding Aramco's presence in China, an important market for the company.

If the deal proceeds, it won't be Aramco's first venture in China's petrochemical sector. Last year, Aramco acquired a 10% stake in Rongsheng Petrochemical for $3.4 billion, aiming to enhance its downstream footprint in China. In addition, earlier in 2023, Aramco announced two significant refinery and petrochemical deals in China, securing an additional outlet for 690,000 bpd of Saudi crude in the Chinese market while also gaining a share in China's downstream market.