A new deal with refinery Saudi Aramco to buy a 10% stake in Chinese chemical group Rongsheng Petrochemical includes agreements to store crude oil in eastern China and supply plastics and petrochemicals to an energy giant in the Middle East.
On Monday, Aramco announced it had bought a stake in Rongsheng Petrochemical, which owns a majority stake in Zhejiang Petrochemical, which operates China’s largest 800,000 bpd refinery, and entered into a 20-year oil supply agreement.
Saudi Aramco sets start date for construction of oil refinery and petrochemical complex in China
And Rongsheng said yesterday, Tuesday, in a disclosure to the Shenzhen Stock Exchange that Saudi Arabia’s first oil storage agreement in China includes Qiang providing Aramco with storage space for 3 million cubic meters (about 18.6 million barrels) in Port of Zhoushan in eastern China.
Aramco, the world’s largest exporter of crude oil, has long been seeking storage space in China to store crude oil closer to Asian buyers and be able to meet demand in the region faster.
China, Aramco’s biggest oil importer, is also likely to import record volumes of oil this year as its economy recovers from the coronavirus pandemic.
According to the disclosure, Aramco is aiming for a minimum storage target of 1.5 million tonnes (about 11 million barrels) at Zhoushan, and if inventory falls below 750,000 tonnes, Aramco will have to cut its supplies to Zhejiang.
Aramco’s only crude oil storage facility in Asia is currently located in Okinawa, Japan, where the company renewed a storage agreement for about eight million barrels last December.
In addition to an agreement announced on Monday to supply 480,000 barrels of crude oil per day, Aramco also agreed to supply Rongsheng, one of China’s largest polyester producers, with petrochemical feedstocks such as naphtha and paraxylene. Paraxylene is a raw material for the production of synthetic fibers and plastic bottles.
The disclosure states that Rong Sheng will supply Aramco with 800,000 tons per year of polyethylene and polypropylene used in the plastics industry and 300,000 tons per year of other chemical products for 20 years.
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