Saudi Aramco strengthens China ties with two refinery deals

Saudi Aramco strengthens China ties with two refinery deals

Saudi Aramco has agreed to acquire 10 per cent of a Chinese oil refiner for $3.6bn in the second in a pair of deals set to strengthen the relationship between the Middle Eastern state oil company and its biggest market.

Under the arrangement with Shenzhen-listed Rongsheng Petrochemical Co, Saudi Aramco will supply 480,000 barrels a day of Saudi crude to China’s largest integrated refining and chemicals facility in Zhejiang province.

The investment comes a day after Saudi Aramco announced a joint venture with two other Chinese companies to build a new 300,000 b/d refinery and petrochemicals complex in China’s north-east.

The combined deals promise to increase Saudi Aramco’s supply contracts with China by up to 690,000 b/d just as Saudi Arabia’s share of the world’s largest oil import market is coming under pressure from a rise in shipments of discounted crude from Russia.

Russia has offered cut-price deals to ramp up oil exports to countries including China and India after western sanctions following President Vladimir Putin’s full-scale invasion of Ukraine last year blocked access to European markets.

Russia overtook Saudi Arabia as China’s biggest supplier of crude in January and February, delivering approximately 2mn b/d, according to Chinese customs data. Saudi Arabia supplied approximately 1.7mn