RIYADH: Saudi Arabian Oil Co. agreed to build a refinery and petrochemical plant in China, deepening ties between world’s biggest oil seller and its largest importer. Saudi Aramco, as the company is known, and state-owned China North Industries Group Corp. signed an agreement Tuesday for an integrated refining and chemical facility in Liaoning’s Panjin, according to a statement from China North. The project includes a 15 million tons-a-year (about 300,000 barrels a day) oil refinery, 1 million tons-a-year ethylene cracker, and other chemical projects.
The deal is part of Saudi Aramco’s strategy of investing in refining to help lock in demand for its crude and follows agreements earlier this year for stakes worth $13 billion in refining projects in Malaysia and Indonesia. The project makes Norinco, as China North is known, a player in the country’s energy industry from primarily being a defense manufacturer. It also allows it to invest in Saudi Arabian industries, including railways, power, mining, telecommunications and oil exploration. “It’s consistent with Saudi Arabia’s policy to diversify their customer base and lock in potential buyers as much as possible, as the global crude glut has turned the game from ‘who can produce more’ to ‘who can sell more,’” said Tian Miao, an analyst at North Square Blue Oak Ltd. in Beijing. “For Norinco, the deal can help it secure stable crude supply, while providing opportunities to sell products and services to Saudi Arabia’s market.”
