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Saudi Aramco said on Friday it had completed the purchase of a 10% stake in a Chinese petrochemical firm for the equivalent of $3.4 billion as the Saudi oil giant continues to expand its downstream footprint in one of its key export markets.
Aramco successfully closed the acquisition of a 10% interest in Rongsheng Petrochemical Co Ltd, which followed the signing of definitive strategic agreements in March this year.
“Our strategic partnership with Rongsheng advances Aramco’s liquids to chemicals strategy while growing our presence in China and showcases our importance as a reliable supplier of crude oil,” Mohammed Al Qahtani, Aramco Downstream President, said in a statement.
The acquisition of 10% of the petrochemical business in China is part of the Saudi oil giant’s long-term growth strategy to expand in the “vital” Chinese market, Al Qahtani added.
The world’s largest crude oil exporter, Saudi Arabia, is betting big on the growing market for crude in China, as Aramco is strengthening its downstream presence and crude supply market share in the world’s top importer.
Saudi Aramco announced earlier this year two major refinery and petrochemical deals in China, which not only give the world’s largest oil firm a share of the Chinese downstream market but also an additional export outlet for 690,000 barrels per day (bpd) of Saudi crude in China.
A Saudi Aramco joint venture plans to build a $10-billion refining and petrochemical complex in China over the next three years, while Aramco has now completed the acquisition of 10% in Rongsheng Petrochemical and will supply 480,000 bpd of Arabian crude oil to Rongsheng affiliate Zhejiang Petroleum and Chemical Co. Ltd (ZPC), under a long-term sales agreement.
The two deals give Aramco a long-term export outlet to 690,000 bpd of Saudi crude to China, which would boost Saudi Arabia’s market share by locking in contracts for the coming years and decades.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com