Aramco grows downstream presence in China
Saudi Aramco, alongside partners Norinco Group and Panjin Xincheng Industrial Group Co. Ltd. (PXIG), are starting construction of their joint venture Huajin Aramco Petrochemical Co.’s (HAPCO) proposed 300,000-b/d refining and ethylene-based steam cracking complex in Panjin City, in northeast China’s Liaoning province (OGJ Online, Mar. 11, 2022).
With required administrative approvals now secured, the integrated refining complex—which also will be able to produce 1.65 million tonnes/year (tpy) of ethylene and 2 million tpy of paraxylene—is slated to begin construction during second-quarter 2023, Aramco said on Mar. 27.
The grassroots refining and petrochemical complex is scheduled to be fully operational by 2026, the company said.
Aramco previously confirmed it will supply up to 210,000 b/d of crude oil feedstock 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 first announced its intent to form HAPCO in February 2019 as part of a $10-billion agreement with partners Norinco and Panjin Sincen for development of the HAPCO-operated Panjin integrated complex, which then was to include a 1.5-million tpy ethylene cracker and 1.3-million tpy paraxylene unit (OGJ Online, Feb. 22, 2019).
As originally planned, Aramco was to hold 35% interest in the HAPCO JV, with Norinco and Panjin Sincen to hold the remaining 36% and 29% interest, respectively.
Under the current agreement, however, Norinco will own 51% interest in the JV, while Aramco and PXIG will hold 30% and 19%, respectively.
Interest acquisition
Confirmation of the HAPCO project approval comes alongside Aramco’s separate Mar. 27 announcement that subsidiary Aramco Overseas Co. signed definitive agreements to acquire a 10% interest in Rongsheng Petrochemical Co. Ltd. affiliate Zhejiang Petrochemical Co. Ltd.’s (ZPC) 800,000-b/d refining and chemical integrated complex in Zhoushan, Zhejiang Province, China (OGJ Online, Dec. 13, 2022; June 26, 2020).
As part of the $3.6-billion ZPC deal—that, pending regulatory approvals, is scheduled to close by yearend 2023—Aramco said it would supply 480,000 b/d of Arabian crude oil to the complex under a long-term sales agreement.
The proposed transaction involves an off-market secondary sale of Rongsheng shares by majority shareholder Zhejiang Rongsheng Holding Group Co. Ltd., with potential for future collaboration between the parties in trading, refining, chemicals production, and technology licensing, according to Aramco.
In addition to finished petroleum products, ZPC’s Zhoushan integrated complex—China’s largest—produces 4.2 million tpy of ethylene.
Aligned with its objective to further its role as a leader in the liquids-to-chemicals business, Aramco said both the HAPCO and ZPC JVs also support a commitment to supporting China as a growth market for energy, chemical, and everyday products.
The JVs also secure a reliable outlet for Arabian crude production. Combined, the HAPCO JV and proposed Rongsheng partnership would result in Aramco supplying a total of 690,000 b/d of crude to high chemical-conversion Chinese assets.
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.
