Saudi Arabia's state-owned oil giant Aramco will invest billions of dollars in China's downstream petrochemicals industry, including the construction of a new refinery, the company said in deals announced Sunday and Monday.
The announcements came as the company posted a record profit of more than $160 billion in 2022 and as Saudi Arabia, a longtime U.S. ally, has developed closer ties with Beijing in recent years.
Aramco will acquire a 10% interest in China's Rongsheng Petrochemical Co. Ltd., a purchase valued at $3.6 billion. Under a long-term sales agreement, Aramco will supply 480,000 barrels per day to Rongsheng affiliate Zhejiang Petroleum and Chemical Co. Ltd., which owns and operates China's largest refining and chemicals complex.
"This announcement demonstrates Aramco's long-term commitment to China and belief in the fundamentals of the Chinese petrochemicals sector," Aramco Executive Vice President Mohammed Al Qahtani said in a statement. "It also promises to secure a reliable supply of essential crude to one of China's most important refiners."
On Sunday, Aramco announced plans to construct a new refinery and petrochemical complex in northeastern China through a joint venture. Aramco, which holds a 30% stake in the Huajin Aramco Petrochemical Company, would supply 210,000 barrels per day of crude to the complex.
Saudi Arabia has cultivated closer ties with both Russia and China in recent years. Earlier this month, Saudi Arabia and Iran agreed to restore diplomatic ties for the first time since 2016 in a deal brokered by Beijing even as Riyadh announced a massive contract to buy commercial planes from U.S. manufacturer Boeing.