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Aramco, Rongsheng Petrochemical Sign Framework Agreement to Advance SASREF Expansion

Aramco, Rongsheng Petrochemical Sign Framework Agreement to Advance SASREF Expansion
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Aramco, Rongsheng Petrochemical Sign Framework Agreement to Advance SASREF Expansion

Aramco, Rongsheng Petrochemical Sign Framework Agreement to Advance SASREF Expansion

Saudi Aramco, one of the world's leading integrated energy and chemicals companies, Aramco affiliate Saudi Aramco Jubail Refinery Company (SASREF), and an affiliate of Rongsheng Petrochemical Co. Ltd. (Rongsheng Petrochemical) signed a Development Framework Agreement in Beijing, China, that paves the way for an expansion project at SASREF in Jubail, Saudi Arabia.

The tripartite agreement outlines the cooperation mechanism and planning for the project's design and development. The project aims to expand SASREF's refining and petrochemical capabilities while fostering international collaboration, said Aramco in a statement on Tuesday.

Aramco Downstream President Mohammed Y. Al Qahtani said: "By aligning our efforts, Aramco and Rongsheng Petrochemical aim to deliver additional value to our stakeholders. This Development Framework Agreement underscores Aramco's intentions to foster closer collaboration with key partners and progress its strategic downstream expansion, both in the Kingdom of Saudi Arabia and internationally. It also highlights the potential of the Kingdom's downstream sector to attract overseas players."

Rongsheng Petrochemical Chairman Li Shuirong said: "The signing of the Development Framework Agreement sets the stage for Rongsheng Petrochemical's in-depth participation in the SASREF expansion project."

"Saudi Arabia has abundant energy resources and significant market potential, and Rongsheng Petrochemical will bring strong momentum to the partnership through our excellent operation and management capabilities and market competitiveness," he added

"This collaborative project not only has important strategic value for the future development of both companies but will also make contributions to China's Belt and Road Initiative and Saudi Arabia's Vision 2030," he stressed.

In April, Aramco and Rongsheng Petrochemical signed a Cooperation Framework Agreement relating to the planned formation of a joint venture in SASREF and significant investments in the Saudi and Chinese petrochemical sectors. Preliminary documentation relating to the Development Framework Agreement was signed in September.

The SASREF expansion project is located in Jubail Industrial City, which is along the Arabian Gulf coast in Saudi Arabia's Eastern Province. The city has a well-developed infrastructure and strategic geographical advantages.

The project, which is currently in the PREFEED stage, envisages the construction of large-scale steam crackers and the integration of associated downstream derivatives into the existing SASREF complex, enhancing its ability to meet the growing demand for high-quality petrochemical products.

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Global Markets Reel from Putin's Nuclear Threats

A Russian Yars intercontinental ballistic missile system drives in Red Square during a military parade on Victory Day, which marks the 78th anniversary of the victory over Nazi Germany in World War Two, in central Moscow, Russia May 9, 2023. Sputnik/Gavriil Grigorov/Pool via REUTERS
A Russian Yars intercontinental ballistic missile system drives in Red Square during a military parade on Victory Day, which marks the 78th anniversary of the victory over Nazi Germany in World War Two, in central Moscow, Russia May 9, 2023. Sputnik/Gavriil Grigorov/Pool via REUTERS
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Global Markets Reel from Putin's Nuclear Threats

A Russian Yars intercontinental ballistic missile system drives in Red Square during a military parade on Victory Day, which marks the 78th anniversary of the victory over Nazi Germany in World War Two, in central Moscow, Russia May 9, 2023. Sputnik/Gavriil Grigorov/Pool via REUTERS
A Russian Yars intercontinental ballistic missile system drives in Red Square during a military parade on Victory Day, which marks the 78th anniversary of the victory over Nazi Germany in World War Two, in central Moscow, Russia May 9, 2023. Sputnik/Gavriil Grigorov/Pool via REUTERS

President Vladimir Putin’s remarks on Tuesday about revising Russia’s nuclear doctrine triggered immediate reactions in global financial markets, as investors rushed to safe haven assets.

Putin issued a warning to the US lowering the threshold for a nuclear strike after the administration of Joe Biden reportedly allowed Ukraine to fire American-made long-range missiles deep into Russia.

The Russian President’s warnings sent markets to extreme volatility.

In this context, global stocks sharply fell while gold prices and the Japanese yen climbed amid rising geopolitical tensions between Ukraine and Russia.

Kremlin spokesperson Dmitry Peskov said Tuesday, “The Russian Federation reserves the right to use nuclear weapons in the event of aggression against it or the Republic of Belarus, ... with the use of conventional weapons, in a way that poses a critical threat to their sovereignty and (or) territorial integrity.”

The spokesperson further said that Russia would view the use of Western non-nuclear missiles by Ukraine as an attack by a non-nuclear state with the support of a nuclear state against the country, potentially justifying the use of nuclear weapons by Moscow, according to NBC news.

Rise of safe-haven assets

Global stocks briefly fell and investors fled to safe-haven assets on Tuesday, as global markets reacted to escalating tensions between the world's two largest nuclear powers: Russia and the US.

Investors rushed to safe-haven assets including gold and the Japanese yen.

Wall Street’s fear index, the Chicago Board Options Exchange’s CBOE Volatility Index, jumped to 17,88, its highest level since the November 5 US elections. It then fell to 16.61.

The Dow Jones Industrial Average shed 327 points, or 0.7%. The S&P 500 and Nasdaq Composite lost 0.5% each. Treasurys increased as investors moved into the safe haven, driving yields lower.

Europe's main stock index touched its lowest level in three months on Tuesday, spurring investors to head to safer havens.

The pan-European STOXX 600 closed 0.9% lower, after logging a third straight day of losses.

Metals and currencies under pressure

Meanwhile, base metals prices came under pressure on Tuesday as some investors chose safe-haven assets due to signs of escalating tensions between Russia and the United States over Ukraine.

Three-month copper on the London Metal Exchange (LME) fell 0.3% to $9,042 per metric ton in official open-outcry trading. Spot gold prices rose by about 1%.

Meanwhile, LME aluminium prices were stable at $2,607 in official activity as the market digested China's plan to remove a tax refund on exports of some aluminium products.

Lead lost 0.4% to $1,983 due to the second day of a significant inflow of the metal to the LME-registered warehouses in Singapore.

Zinc fell 0.1% to $2,947.5, tin eased 0.4% to $28,900 and nickel rose 1.2% to $15,915.

In currency markets, the Japanese yen rose 0.7% and 0.36% against the euro and US dollar respectively.

“Typical risk-off move in forex following the headline,” said Athanasios Vamvakidis, global head of forex strategy at Bofa, referring to the reaction to the Kremlin statement.

“The market has been complacent on geopolitical risks, focusing on other themes,” he added. “Positioning has been a long risk, getting even more stretched after the US elections.”

In return, crude oil futures were down slightly. A barrel of West Texas Intermediate, scheduled for delivery in December, fell 0.53% to $68.79.

Meanwhile, the price of a barrel of Brent, scheduled for delivery in January, fell 0.38% to $73.02.