Saudi Aramco and Shandong Energy Group Co. Ltd. are exploring opportunities to collaborate on integrated refining and petrochemical projects in Shandong Province, China.
The collaboration agreement comes as part of a memorandum of understanding (MOU) between the companies signed on Dec. 9, which includes a potential crude oil supply agreement and chemicals products offtake agreement, Aramco said.
In line with Aramco’s goal to help build a thriving downstream sector in Shandong, the MOU extends to cooperation across technologies related to hydrogen, renewables, and carbon capture and storage (CCS), the companies said.
Alongside underlying the importance of its growing collaboration with Chinese companies, Aramco said planned collaboration with Shandong Energy also complements Aramco’s efforts to support demand for energy, petrochemicals, and nonmetallics in China as the Saudi Arabian operator seeks to expand its liquids to chemicals capacity to up to 4 million b/d by 2030.
“We share a lot of common interests, complementary strategies with expansive scope for cooperation, especially in oil and gas resources development and integrated refining and petrochemicals development along the whole industrial chain,” said Li Wei, Shandong Energy’s chairman.
Noting cooperation in key areas of hydrogen, renewables, and CCS will play a part in shaping the countries’ collective futures, Mohammed Y. Al Qahtani—Aramco’s senior vice-president of downstream—said the potential partnership will enable Saudi Arabia to help create new pathways for growth in China, “a country that is driving the increased integration of refining and petrochemical processes.”
The companies have yet to reveal details regarding the specific integrated refining and petrochemical projects or hydrogen, renewables, and CCS technologies involved under the MOU.
Aramco’s China downstream focus
Aramco’s proposed collaboration with Shandong Energy follows a series of relationships the operator is building in China’s downstream sector.
In early March, Aramco confirmed taking final investment decision (FID) to participate with partners North Huajin Chemical Industries Group Corp. (NHCIG) and Panjin Xincheng Industrial Group Co. Ltd. (PXIG) to advance development of their joint venture Huajin Aramco Petrochemical Co.’s (HAPCO) proposed 300,000-b/d refining and ethylene-based steam cracking complex to be built in Panjin City, Liaoning Province (OGJ Online, Mar. 11, 2022).
Currently slated for startup in 2024, the planned complex would receive up to 210,000 b/d of crude oil feedstock supplied by Aramco for HAPCO to process into a variety of fuels and base petrochemicals used in manufacturing to help meet China’s growing demand for energy, chemical, and everyday products.
Aramco’s FID on the HAPCO project follows subsidiary Saudi Aramco Asia Co. Ltd.’s (SAAC) Mar. 8 entrance into a memorandum of understanding (MOU) with China Petroleum & Chemical Corp. (Sinopec) to evaluate potentially expanding the partners’ downstream collaboration in China.
Though details regarding the entire scope of proposed collaboration under the MOU were few, Aramco did reveal SAAC and Sinopec have agreed to conduct a feasibility study aimed at assessing possible optimization and capacity expansion of the Sinopec (50%)-Aramco (25%)-ExxonMobil Corp. (25%) jointly held Fujian Refining and Petrochemical Co. Ltd.’s 12-million tpy integrated refining and chemical production complex at the southern coast of Meizhou Bay in Quanzhou, Fujian Province, China.
The agreement also seems to involve additional supply of Saudi Arabian crude into China, as Al Qahtani said the potential collaboration would help to support Aramco’s goal of becoming “a resilient and reliable supplier of one of the lowest upstream carbon-intensity oils to meet China’s growing demand.”
Additionally, Yu Baocai—president of Sinopec Corp.—said the Mar. 8 MOU with Aramco would further support Sinopec’s refinery feedstock optimization and downstream petrochemical development, as well as offer “new opportunities to deepen and expand activity amid an accelerating global energy transition.”
Robert Brelsford | Downstream Editor
Robert Brelsford joined Oil & Gas Journal in October 2013 as downstream technology editor after 8 years as a crude oil price and news reporter on spot crude transactions at the US Gulf Coast, West Coast, Canadian, and Latin American markets. He holds a BA (2000) in English from Rice University and an MS (2003) in education and social policy from Northwestern University.
