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China North Industries Corporation, a defense conglomerate also invested in the petroleum industry, has signed a deal with Saudi Aramco to build a refinery and a chemicals plant in northeast China worth an estimated US$10 billion (69.5 billion yuan), Reuters reported on Tuesday, citing industry and government sources.
According to plans, Saudi Aramco and China North Industries Corporation, better known as Norinco, will cooperate in the construction of a refinery with a capacity of 300,000 bpd and an ethylene producing complex with annual capacity of 1 million tons, an industry official familiar with the framework agreement told Reuters.
The deal is one of the high-profile pacts signed at a Chinese summit, which is part of the plan of China’s President Xi Jinping to promote trade and investment.
Earlier this month, Saudi officials, including Oil Minister Khalid Al-Falih, embarked on an Asian tour to China, South Korea, and Japan.
Aramco and Norinco’s plans would give the Saudi state oil giant additional presence in the Chinese refining industry, next to Aramco’s 25 percent stake in the Fujian Refining & Petrochemical Company in China’s southeast coastal area.
In 2015, Norinco obtained regulatory approval to build the refinery complex in the northeast Liaoning province, but back then reports suggested that it could delay the actual investment decision, due to a surplus of refining capacity in the area, which is also far from the biggest consuming regions.
Aramco, apart from being a major exporter of crude oil to China and Asia as a whole, has recently made headlines with downstream projects in India. The Saudi oil group is said to be in talks to buy a stake in a planned refinery expected to be built on India’s west coast that would be the country’s biggest refinery. In addition, India’s ONGC Petrol Additions Ltd is said to be negotiating the sale of half its US$4.6-billion petrochemicals plant with Aramco.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.