Aramco to expand downstream presence in China with Rongsheng deal
Saudi Aramco is acquiring a 10% interest in Shenzhen-listed Rongsheng Petrochemical Co. Ltd. for CNY24.6 billion (USD3.6 billion), in a deal that would significantly expand its downstream presence in China.
Aramco Overseas Company (AOC), a wholly-owned subsidiary of Aramco, will acquire the interest in Rongsheng.
The transaction is expected to close by the end of 2023, and is subject to regulatory approvals.
Through the strategic arrangement, Aramco would supply 480,000 barrels per day (bpd) of Arabian crude oil to Rongsheng affiliate Zhejiang Petroleum and Chemical Co. Ltd (ZPC), under a long-term sales agreement.
Among other assets, Rongsheng owns a 51% equity interest in ZPC, which in turn owns and operates the largest integrated refining and chemicals complex in China with a capacity to process 800,000 bpd of crude oil and to produce 4.2 million metric tons of ethylene per year.
:“This announcement demonstrates Aramco’s long-term commitment to China and belief in the fundamentals of the Chinese petrochemicals sector. It is an important acquisition for Aramco in a key market, supporting our growth ambitions and advancing our liquids to chemicals strategy. It also promises to secure a reliable supply of essential crude to one of China’s most important refiners,” said Mohammed Y. Al Qahtani, Aramco executive vice president of Downstream.
“This strategic co-operation will take our long-term friendship and mutual trust to a new level, and paves the way for a bright future for the high-quality development of the world’s petrochemicals industry. I believe that Aramco’s involvement will greatly help Rongsheng implement its petrochemical growth strategy,” said Li Shuirong, Rongsheng chairman.
The investment would anchor an important association between Aramco, Rongsheng and ZPC, which operates one of the world’s most state-of-the-art chemical conversion assets.
The transaction involves an off-market secondary sale of Rongsheng shares by majority shareholder Zhejiang Rongsheng Holding Group, with potential for future collaboration between the parties in trading, refining, chemicals production and technology licensing.