Sinopec, Saudi Aramco sign strate­gic agree­ment

Oil gi­ants plan to ex­plore busi­ness op­por­tu­ni­ties to­gether in theMid­dle East pe­tro­leum in­dus­try

China Daily (Canada) - - XI’S VISIT - By XING ZHI­GANG in Saudi Ara­bia and LYUCHANG in Bei­jing

China Pe­tro­leum and Chem­i­cal Corp, Asia’s largest re­finer, signed a strate­gic agree­ment on Wed­nes­day with the Saudi Ara­bian Oil Com­pany, al­so­know­nas Saudi Aramco, to fur­ther ex­plore busi­ness op­por­tu­ni­ties in the Middle East coun­try’s oil and gas in­dus­try.

The agree­ment was signed dur­ing Pres­i­dent Xi Jin­ping’s three-na­tion tour of the Middle East, as the world’s sec­ond­largest econ­omy seeks closer political and eco­nomic ties with the re­gion.

The deal came af­ter con­struc­tion be­gan on the se­cond phase of a ma­jor Red Sea oil re­fin­ery, a joint ven­ture be­tween China Pe­tro­leum and Chem­i­cal Corp, or Sinopec, and Saudi Aramco with the first phase be­com­ing fully op­er­a­tional in April, Sinopec said in a state­ment.

The ven­ture, Yanbu Aramco Sinopec Refining Co, es­ti­mated to cost nearly $10 bil­lion, cov­ers an area of about 5.2 mil­lion square me­ters. It will process 400,000 bar­rels of heavy crude oil per day. Aramco will hold a 62.5 per­cent stake in the plant, and Sinopec will own the re­main­der.

China ex­ports tex­tiles, and me­chan­i­ca­lan­d­elec­tri­cal prod­ucts to Saudi Ara­bia, still in small vol­umes, but it im­ports a large quan­tity of crude oil from the pe­tro­leum-rich coun­try. China’s crude oil im­ports rose by more than 12 per­cent last year to 800,000 bar­rels per day.

Ex­perts said China has more to of­fer, since the world’s largest en­ergy con­sumer has a strong man­u­fac­tur­ing ca­pa­bil­ity in­oil refining equip­ment and highly ad­vanced tech­nolo­gies of pe­tro­leum pro­cess­ing.

Though Saudi Ara­bia, the world’s ma­jor oil ex­porter and China’s largest oil sup­plier, is rich in fos­sil-fuel re­sources, it re­lies heav­ily on re­fined oil im­ports and is de­ter­mined to ex­pand into down­stream petro­chem­i­cal busi­nesses.

Xu Xiao­jie, an eco­nom­ics re­searcher at theChi­nese Academy of So­cial Sci­ences, said China has vast ex­pe­ri­ence in oil­field ser­vice and in man­u­fac­tur­ing oil refining equip­ment, po­ten­tial fields of co­op­er­a­tion be­tween the two coun­tries.

“Saudi Ara­bia may pre­vent in­vestors from par­tic­i­pat­ing in re­source ex­plo­ration and de­vel­op­ment, but it has huge po­ten­tial for growth in tech­nol­ogy and en­gi­neer­ing ser­vices, which Chi­nese petro­chem­i­cal com­pa­nies can help pro­vide,” he said.

China’s oil pro­cess­ing ca­pac­ity reached 750 mil­lion met­ric tons in 2014, ac­count­ing for 15.6 per­cent of the world’s ca­pac­ity — se­cond only to the United States — while its eth­yl­ene pro­duc­tion hit 20 mil­lion met­ric tons, 13 per­cent in the world’s to­tal ca­pac­ity.

Xu said that ex­port of petro­chem­i­cal tech­nolo­gies and equip­ment may be­come the coun­tries next “call­ing card” as Chi­nese com­pa­nies are en­cour­aged to ex­pand over­seas pres­ence.

Con­tact the writer at lvchang@chi­nadaily.com.cn

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