Saudi Aramco eyes stake in Hengli Petrochemical; prowls for more China investments

SINGAPORE (ICIS)–Saudi Aramco continues its quest for downstream petrochemical investments in the world’s second-biggest economy, adding Hengli Petrochemical in a list of target companies in which the global energy giant intends to acquire a strategic stake.

The acquisitions in China are in line with Aramco’s Vision 2030 of expanding its downstream business.

Aramco is currently in discussion to acquire a 10% stake in Hengli Petrochemical as the companies signed a memorandum of understanding (MOU) on 22 April covering supply of crude and raw material, product sales and technology licensing.

Hengli Petrochemical owns and operates a refinery and petrochemical complex at Liaoning province with 400,000 bbl/day of refining and 1.5 million tonnes/year ethylene capacities.

The Chinese producer also operates several chemical plants in Jiangsu and Guangdong provinces.

The deal “aligns with Aramco’s strategy to expand its downstream presence in key high-value markets, advance its liquids-to-chemicals program, and secure long-term crude oil supply agreements”, Aramco said in a statement on 22 April.

Since 2022, Aramco has embarked on major investments in China, which involved taking strategic stakes in companies with major petrochemical projects under way.

Chinese companies	Planned investments	Date of announcement	Remarks
Hengli Petrochemical	10% stake	22 Apr 2024
Rongsheng Petrochemical	Cross acquisition talks – Rongsheng to acquire 50% stake in Saudi Aramco Jubail Refinery Co (SASREF); Aramco to take a maximum 50% stake in Rongsheng’s Ningbo Zhongjin Petrochemical	2 Jan 2024	To jointly develop Zhongjin’s upgrading/expansion and a new advanced materials project in Zhoushan
Shandong Yulong Petrochemical	10% stake	11 Oct 2023	Shandong Energy is currently building a refining and petrochemical complex in Yantai called Shandong Yulong Petrochemical – a joint venture project with Chinese conglomerate Nanshan Group
Shenghong Petrochemical	10% stake	27 Sept 2023
Rongsheng Petrochemical	10% stake	27 Mar 2023	Deal completed in Jul ’23
Huajin Aramco Petrochemical Co (HAPCO)	a $12 billion joint venture, Aramco holds 30%	11 Mar 2022, final investment decision made	Project broke ground in Mar ’23; to come on stream in 2026

Aramco CEO Amin Nasser in late March indicated that the company intends to continue making further investments in China’s chemicals sector with local partners, noting that the country has a “vitally important” place in the company’s global investment strategy.

The energy giant aims to increase its liquids-to-chemicals throughput to 4 million barrels per day by 2030, which will require a wider footprint in China, the world’s biggest chemical market, analysts said.

The investments will fuel further growth in the Chinese economy, they added.

Focus article by Fanny Zhang

Thumbnail image: The Guoyuan Port Container Terminal in Chongqing, China, on 29 February 2024. (Costfoto/NurPhoto/Shutterstock)