Rongsheng/Aramco to buy stakes in each other’s units
Chinese petchem firm Rongsheng Petrochemical Co Ltd in Zhejiang province and Saudi Aramco are in talks to buy stakes in each other’s units, according to a memorandum of understanding (MOU) the two firms signed recently.
The MOU is another milestone following the agreement the two parties reached in March last year, marking an important step forward in fostering cross-border investment, said Saudi Aramco. It has acquired a 10% stake in Rongsheng, an investment attached to a 20-year crude oil supply deal with Rongsheng-controlled Zhejiang Petrochemical Corp., at a valuation of US$3.4 billion.
Under the latest MOU, Saudi Aramco and Rongsheng are in talks for the Chinese private refiner to buy a 50% stake in Saudi Aramco Jubail Refinery Company (SASREF), the Saudi company’s refining unit.
SASREF, located in Jubail Industrial city, processes crude oil into petroleum products and has a production capacity of 305,000 barrels per day (bpd). It would be the first investment by a private Chinese firm in a significant Saudi refining asset. State refining giant Sinopec Corp is so far the only Chinese company that owns a refinery stake in Saudi Arabia.
Meanwhile, Rongsheng is also negotiating to sell Aramco an up to a 50% stake in its unit Ningbo Zhongjin Petrochemical, allowing two sides to upgrade the existing facilities and jointly develop Rongsheng new materials (Zhoushan) project, it said. Planned complex at Zhoushan will include an air separation unit and plants producing aromatics, EO, PO, styrene, ABS, BPA, polycarbonate.
The deal will help Aramco achieve its strategic goals of expanding its chemical industrial chain and provide Rongsheng with reliable feedstock and advanced technology and expertise.
It has also been in talks to buy a 10% stake in Shandong Yulong Petrochemical Co, which is building a refinery complex that can process 400,000 bpd in eastern China’s Shandong province.
In September, Aramco announced plans to become a strategic investor in another private Chinese refiner Jiangsu Shenghong Petrochemical, which operates a 320,000 bpd refinery and petrochemical complex in the eastern province of Jiangsu.
In a separate filing to the stock exchange, Rongsheng said it plans to invest US$9 billion in new materials at its base Zhoushan in east China that makes products such as high-performing plastic material ethylene vinyl acetate (EVA)and polyolefin elastomers used in solar panels.
