Saudi Aramco has signed a Memorandum of Understanding (MoU) with China’s Zhejiang provincial government to acquire a stake in Zhejiang Petrochemical’s new oil refinery project. The size of the stake has not yet been finalized, pending due diligence.

“We are exploring opportunities for new refining and petrochemicals facilities, making further investments in China,” said Saudi Aramco’s Senior Vice President for Downstream Abdulaziz Al Judaimi.

Zhejiang Petrochemical, which is 51% owned by textile giant Zhejiang Rongsheng Holding Group, is building a 400,000-barrel-per-day (bpd) oil refinery and associated petrochemical facilities that were expected to start operations by the end of this year.

The MoU also includes cooperating in crude oil supply, storage, and trading. Last month, Saudi Aramco signed a long-term deal with the Zhejiang project’s operator Zhejiang Rongsheng to supply crude oil to the refinery. Saudi Aramco expects to supply 170,000 bpd of Saudi crude oil to the refinery in Zhoushan in eastern China when it starts operations.

Saudi Arabia’s state-owned oil and gas company Saudi Aramco is working to achieve a better balance between its upstream and downstream business. The company’s downstream strategy seeks to enhance the value of the hydrocarbon resource base by targeting increased horizontal and vertical integration across the hydrocarbon value chain. The successful execution of the downstream strategy would deliver a world-leading, strategically integrated downstream network and a robust portfolio that is more resilient to market turbulence.

Major refining, marketing, and petrochemicals joint ventures are being created in leading oil consuming countries such as China and India, besides Malaysia, in addition to existing assets in the U.S., South Korea, and Japan.

Aramco also owns part of the Fujian refinery-petrochemical plant with Sinopec and ExxonMobil Corp. and has plans to build a 300,000-bpd refinery with China’s Norinco. It is also in talks with PetroChina to invest in a refinery in Yunnan.