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Saudi Aramco To Build $10 Billion Refinery And Petrochemical Complex In China

March 28, 2023

By Paul Homewood





Saudi Aramco plans to build a $10-billion refining and petrochemical complex in China over the next three years, taking advantage of the country’s growing demand for energy.

The complex will have a capacity of 300,000 barrels of crude daily, Aramco said in a news release. The Saudi major will supply 201,000 barrels per day to the facility.

The project will be carried out in partnership between Aramco and two Chinese companies. Construction works should begin in the second half of this year, with the project scheduled for completion in 2026.

“This important project will support China’s growing demand across fuel and chemical products. It also represents a major milestone in our ongoing downstream expansion strategy in China and the wider region, which is an increasingly significant driver of global petrochemical demand,” said Aramco’s head of downstream, Mohammed Al Qahtani.

The news follows another report, from December last year, that said Aramco had struck a deal with China’s Sinopec to build a 320,000-bpd refinery and petrochemical cracker in China, highlighting the latter’s major role in global oil consumption yet again.

Refining and petrochemical investments have been a priority for Aramco as it seeks to secure long-term demand for its main product, even as it expands local refining capacity as well.

According to the International Energy Agency and other forecasters, a bet on petrochemicals is a good long-term bet in the oil industry amid expectations of a decline in oil demand for transport fuels.

Indeed, the IEA has projected that petrochemicals will account for more than a third in oil demand growth by 2030, rising to 50% of demand by 2050 as transport electrifies.

If the expected global transport electrification does not take place on the expected scale, however, this higher demand for petrochemicals will simply be added to total oil demand, including for transport fuels.

China is the most obvious destination for new petrochemical projects: the country is the world’s largest crude oil importer and one of the top three consumers of the commodity.

The focus on China’s energy consumption is usually on coal. However, its oil consumption has tripled in the last two decades, and the increasing trend shows no sign of slowing.

These two new projects will amount to about 4% of the total consumption.


BP Energy Review

  1. Mad Mike permalink
    March 28, 2023 5:27 pm

    Does anybody else see a perfect storm coming before 2030. Politicians, in their fear of Alarmists, are doing their best to stop investment in oil production which leaves the field clear for the likes of Aramaco to carry on as usual but giving more precedence to China, and probably the rest of the World as well, instead of the West. Couple that with the abrupt U-turn that is likely to happen over EV’s, it’s beginning to happen as we can see above, then the West will be scrambling around to grab as much oil as it can. Enter the storm which will boost the price of oil and make our whole economy suffer. The only good thing for us is that it won’t affect the climate one bit.

    • HotScot permalink
      March 28, 2023 5:55 pm

      The American Neocon war hawks have driven the BRICS nations together faster than ever believed possible thanks to Ukraine.

      The writing is on the wall as far as the US retaining it’s preeminent position as the global industrial/financial/military authority. It’s going to be knocked off its perch in the most humiliating fashion over the coming years.

      UK politicians had best think of a plan to ingratiate themselves with BRICS PDQ.

      • gezza1298 permalink
        March 29, 2023 11:06 am

        I think UK politicians need to think of where they can hide in the world when we come looking for them to settle the score.

  2. Douglas Dragonfly permalink
    March 28, 2023 5:30 pm

    It almost feels like the north and south poles have swapped position.
    Why are we continuingly shooting ourselves in the foot ?
    While countries such as China continue to develop the west is determined to stunt its own growth.

    • John Palmer permalink
      March 28, 2023 5:57 pm

      …In both feet, DD – and through the head too, just for good measure!
      Bloody lunatics.

    • Harry Passfield permalink
      March 28, 2023 6:36 pm

      …stunt its own growth.
      So why not take us with it so we’re not in a position to take advantage of it?

  3. John Palmer permalink
    March 28, 2023 6:00 pm

    BTW, wonder what Sir James Ratcliffe would have to say about this move? Maybe he’d think it makes perfect and pragmatic business sense🙄.

    • Ray Sanders permalink
      March 28, 2023 7:42 pm

      Nah, he’s more interested in buying Man Utd.

  4. John Hultquist permalink
    March 28, 2023 6:14 pm

    My choice would be to build in India.
    The Saudis must feel comfortable working with China.

  5. Harry Passfield permalink
    March 28, 2023 6:34 pm

    Xi Jin Ping calls Buffoon Biden: “Up yours, bozo!! We’ve got the Saudis!”
    Biden says, “Anymore chocolate chip ice-cream going…? I’m about to ban gasoline! Is this Delaware?”

  6. March 28, 2023 7:26 pm

    So the new China refinery will produce 300,000 barrels per day – whereas the total UK oil refining capacity is 1.2 million barrels per day – so this one new China refinery alone will equal about 25% of total UK capacity.

    The UK is bonkers to follow Net Zero.

    • Carnot permalink
      March 28, 2023 8:17 pm

      That might be a bit optimistic. When I started my career the UK had 16 refineries. Now there are six( 2 mini refineries excluded). We cannot produce enough diesel or jet and are slightly long on gasolien. Let me know who you recognise- Exxon, P66, Ineos, Prax, Valero, and Essar. These are the owners of the six refineries. Shell, BP, Total, Gulf , Amoco, Mobil, Phillips, Texaco are long gone. All companies I used to visit

      • It doesn't add up... permalink
        March 28, 2023 9:22 pm

        INEOS/Petrochina Grangemouth (formerly BP), Conoco/Phillips Killingholme (originally just Conoco), Lindsey Oil Refinery Prax (previously Total/Fina), Esso Fawley – the only originally owned refinery left, Essar Stanlow (previously Shell) and Valero Milford Haven (previously Chevron/Texaco, and previously 2 refineries before being linked by pipelines after Chevron bought Gulf and then Texaco), Eastham (Shell/Nynas bitumen refinery, previously just Shell).

        Closures: BP – Belfast, Grain, Llandarcy
        Shell – Shellhaven, Teesport, Heysham (plus Ardrossan bitumen)
        Esso – South Hook Milford Haven
        Mobil – Coryton (sold to Petroplus after Exxon bought Mobil)
        Amoco/Murco – Milford Haven
        Phillips/ICI – Teesside

      • gezza1298 permalink
        March 29, 2023 11:09 am

        And I wonder what a graph of rising industrial energy costs vs refining capacity looks like….

  7. Carnot permalink
    March 28, 2023 7:27 pm

    I know this project rather well because I have been involved in some of the processes. It has been 10 years inthe design stage and has been scaled back and re-configured numerous times. The original concept was way too optimisitc. Aramco are steadily forming jv ‘s with consumers to give them an outlet for their crude. They have done the same on a project in Malaysia called RAPID which I also worked on. Aramco might be an oil exporter but increasingly the oil is being exported to an affiliate. The idea that there is a free market in oil is becoming an illusion. The big oil exporter to the spot market is now the good ol’ USA. But for how long. Shale is looking a little tired – oil production is flatlining and oily wells are becoming gassy wells. By the end of this decade, US oil exports will most likely be in decline. The Chinese are playing an end game . Read the 36 strategems and you will know what I am saying. The chinese lock up all the global resources in their quest for global domination. Watch out for the yellow man, because he will dominate the world .

    • It doesn't add up... permalink
      March 28, 2023 9:51 pm

      It is a slight surprise to me to see the Saudis investing in China, compared with their earlier policy of securing investment in Saudi itself at Yanbu, Jubail and Rabigh to add to the massive Ras Tannurah refinery as export refineries: SATORP Jubail is a relatively recent project with Total. They did buy 50% of Shell Oil’s refining to form Motiva.

  8. Bill Hutchison permalink
    March 28, 2023 7:35 pm

    How will that oil get to China? The US Navy has around 66 attack submarines. Worth bearing in mind if you want to invade Taiwan.

    • March 29, 2023 1:08 pm

      The same way it gets there now. The only difference is where they refine it.

  9. Curious George permalink
    March 28, 2023 10:12 pm

    Are you sure that it is Saudis building in China, not the other way around?

    • Carnot permalink
      March 28, 2023 10:33 pm

      Aramco are a minor player in the project. Panjin Huajin is the jv and other party is ultimately Norinco, an armaments producers owned by the government. It is in a God awful place in China- freezing cold in winter. Money for investment in China is on a differnt plane to the west. The Chinese banks have no end of dud loans that willnever be repaid. Project financials are not evaluated like the west. Product prices are governemtn controlled wwhich means that gasoline prices subsidise the chemical industy. Ten yeara go I warned of the xpansion of the Chiese chemicals industty. It will soon swamp the west. Their refineries are all new build with some of the best western technology- technology that will soon be copied, if it has alrady not been done so. China is now exporting finsished fuels as they have so much refining capacity, much of which is under utilised. The new jv is not the only Saudi jv in China. There is at least one other. I will have to look it up.

  10. C Lynch permalink
    March 29, 2023 10:53 am

    Would that be the same China who the Green Left in the West are constantly praising for their green and renewable energy policies?

  11. T Walker permalink
    March 29, 2023 5:05 pm

    Fancy spending all that money – when your assets are going to be standed in the ground? Oh wait a minute!!!

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