Aramco, Partners to Construct Major Refinery, Petrochemical Complex in China

Officials sign an agreement to kick off construction of an integrated refinery and petrochemical complex in northeast China. (Aramco)
Officials sign an agreement to kick off construction of an integrated refinery and petrochemical complex in northeast China. (Aramco)
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Aramco, Partners to Construct Major Refinery, Petrochemical Complex in China

Officials sign an agreement to kick off construction of an integrated refinery and petrochemical complex in northeast China. (Aramco)
Officials sign an agreement to kick off construction of an integrated refinery and petrochemical complex in northeast China. (Aramco)

Aramco and joint venture partners NORINCO Group and Panjin Xincheng Industrial Group plan to start constructing a major integrated refinery and petrochemical complex in northeast China.

Huajin Aramco Petrochemical Company (HAPCO) is a joint venture between Aramco, NORINCO Group, and Panjin Xincheng Industrial Group.

It is developing a complex that would combine a refinery that produces 300,000 barrels per day and a petrochemical plant with an annual production capacity of 1.65 million metric tons of ethylene and 2 million metric tons of paraxylene.

Construction will start in the second quarter of 2023 after the project secures the required administrative approvals. It is expected to be fully operational by 2026.

Aramco will supply up to 210,000 bpd of crude oil feedstock to the complex, built in Panjin, in China’s Liaoning province.

Aramco Executive Vice President of Downstream Mohammed al-Qahtani said it was an important project to support China’s growing demand for fuel and chemical products.

“It also represents a major milestone in our ongoing downstream expansion strategy in China and the wider region, an increasingly significant driver of global petrochemical demand,” he added.

NORINCO Group Deputy General Manager Zou Wenchao said a large-scale refinery and petrochemical complex is a crucial project of NORINCO Group to implement and realize the joint development of the high-quality Belt and Road initiative, promote industrial restructuring, and enhance the oil and petrochemical sector to become stronger, better, and larger.

He noted that it would be necessary to deepen economic and trade cooperation between China and Saudi Arabia and achieve joint development and prosperity.

Panjin Xincheng Chairman of the Board Jia Fei indicated that the project is significant for Panjin to promote increasing chemicals and specialty products, strengthening the integration of the refining and chemical industry.

It is a symbolic project for Panjin as it seeks to accelerate the development of an essential national petrochemical and fine chemical industry base.

Meanwhile, Aramco CEO Amin Nasser stressed that China’s long-term energy security and high-quality development were among the company’s highest priorities.

Speaking at the China Development Forum 2023, Nasser said expanding Aramco’s oil production capacity by a million to 13 million barrels per day by 2027 will strengthen China’s long-term energy security.

He also noted that increasing gas production by more than fifty percent by 2030 should release an additional million barrels of oil daily for export.

The official said the global energy transition desperately needs realism and clarity, adding: “We welcome the pragmatic thoughts of Chinese President Xi Jinping on this.”

Aramco is already working on three major strategies to support China’s energy and development priorities.

The company recently launched a $1.5 billion venture capital sustainability fund to invest in advanced technologies to help all move closer to a net-zero emissions future.

“We are also evaluating an entry into liquified natural gas,” Nasser announced.

He highlighted the excellent example of the multiple and desirable opportunities for Chinese companies in the Kingdom in various energy and non-energy areas.

“More broadly, we are developing advanced, more sustainable materials such as those based on polymers and carbon to complement conventional ones while reducing their high cost,” he remarked.



Oil Prices Rise as Concerns Grow over Supply Disruptions

Oil Prices Rise as Concerns Grow over Supply Disruptions
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Oil Prices Rise as Concerns Grow over Supply Disruptions

Oil Prices Rise as Concerns Grow over Supply Disruptions

Oil prices climbed on Tuesday reversing earlier declines, as fears of tighter Russian and Iranian supply due to escalating Western sanctions lent support.

Brent futures were up 61 cents, or 0.80%, to $76.91 a barrel at 1119 GMT, while US West Texas Intermediate (WTI) crude climbed 46 cents, or 0.63%, to $74.02.

It seems market participants have started to price in some small supply disruption risks on Iranian crude exports to China, said UBS analyst Giovanni Staunovo.

In China, Shandong Port Group issued a notice on Monday banning US sanctioned oil vessels from its network of ports, according to three traders, potentially restricting blacklisted vessels from major energy terminals on China's east coast.

Shandong Port Group oversees major ports on China's east coast, including Qingdao, Rizhao and Yantai, which are major terminals for importing sanctioned oil.

Meanwhile, cold weather in the US and Europe has boosted heating oil demand, providing further support for prices.

However, oil price gains were capped by global economic data.

Euro zone inflation

accelerated

in December, an unwelcome but anticipated blip that is unlikely to derail further interest rate cuts from the European Central Bank.

"Higher inflation in Germany raised suggestions that the ECB may not be able to cut rates as fast as hoped across the Eurozone, while US manufactured good orders fell in November," Ashley Kelty, an analyst at Panmure Liberum said.

Technical indicators for oil futures are now in overbought territory, and sellers are keen to step in once again to take advantage of the strength, tempering additional price advances, said Harry Tchilinguirian, head of research at Onyx Capital Group.

Market participants are waiting for more data this week, such as the US December non-farm payrolls report on Friday, for clues on US interest rate policy and the oil demand outlook.