Saudi Aramco acquires $3.4 billion stake in a China petrochemical firm

Saudi Aramco has acquired a 10% stake in China’s Rongsheng Petrochemical Co. Ltd. for 24.6 billion renminbi ($3.4 billion), through its subsidiary Aramco Overseas Company BV, based in the Netherlands, the world’s biggest oil company announced Friday.

The deal marks the world’s biggest oil exporter making further inroads in China, which is Saudi Arabia’s top customer for crude. Saudi Arabia, which leads the influential OPEC group, recently moved to extend oil production cuts in a bid to stabilize the market, which has seen a dampened demand from China this year due to its slower-than-anticipated economic recovery from the coronavirus pandemic.

“Our strategic partnership with Rongsheng advances Aramco’s liquids to chemicals strategy while growing our presence in China and showcases our importance as a reliable supplier of crude oil,” Mohammed Al Qahtani, Aramco Downstream president, said in a statement on Friday.

"This key acquisition is an important part of Aramco's long-term growth strategy, expanding our presence in a vital market,” he continued.

Rongsheng owns 51% of Zhejiang Petroleum and Chemical Co. Ltd. (ZPC), which produces and sells crude oils, petroleum and other chemical products.

The agreement, which was first announced by Aramco in March, also includes 480,000 barrels per day of Arabian crude to ZPC’s integrated and chemicals complex.

Al-Monitor has contacted Aramco for more details on the deal.

Aramco is mostly state-owned and said it earned profits of $161.1 billion last year. It has regional headquarters in Beijing, called Aramco Asia. The company also has a research center in the Chinese capital, as well an office in Shanghai and joint ventures in Xiamen.