Aramco, the world's leading integrated oil and gas company based in Saudi Arabia, is set to increase its investment in its Chinese partner as part of its strategic expansion in the country.
In a filing to the Shenzhen Stock Exchange on Wednesday, Rongsheng Petrochemical, a privately-owned refiner based in Hangzhou, revealed that Aramco is currently in talks to acquire up to a 50% stake in Rongsheng's subsidiary, Ningbo Chongjin Petrochemical.
Simultaneously, discussions are underway for Rongsheng to potentially take a 50% stake in the Saudi Aramco Jubail Refinery Company, the refining unit of the Saudi giant. A memorandum of understanding has already been signed, marking a significant step in this potential partnership.
Additionally, the companies are exploring the prospect of jointly enhancing and expanding the equipment of the Chinese subsidiary. Furthermore, they are considering collaborating on the ambitious Rongsheng New Materials (Zhoushan) project. This initiative aims to produce high-performance petrochemicals, including engineering plastics, specialized polyesters, and advanced resins for applications in electronic devices and semiconductors.
This move is part of Saudi Arabia's broader effort to strengthen its energy ties with China. In March of the previous year, Aramco had already agreed to acquire a 10% stake in Rongsheng for $3.5 billion, with a commitment to supply 480,000 barrels per day of crude oil to the Chinese company.
The energy collaboration between the two nations extends beyond Aramco and Rongsheng. Sinopec, a state-owned refining giant in China, operates a joint venture with Aramco in the Yanbu Industrial City in Saudi Arabia. The Yanbu Aramco Sinopec Refining Company, operational since 2016, utilizes 400,000 barrels per day of Arabian heavy crude oil to produce premium transportation fuels.
Recent interactions between Saudi Arabia and Hong Kong further highlight the growing partnership. Hong Kong hosted an investment conference for Saudi elites last month, while in February 2023, the city's chief executive, John Lee, engaged in discussions with Aramco's CEO in Riyadh. During the meeting, the idea of a secondary listing for Aramco in Hong Kong was floated, according to a government statement.