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Petroleum

Saudi Aramco Expands Refining Business in China Amid Growing Oil Demand

Strategic Insights

— 2 min read

Chinese oil imports are expected to reach over 50 million tons per year by 2000, up from 22 million tons in 1996, making the country a major market for Saudi Aramco, which has equity in the refining business in China. During a visit by Chinese President Jiang Zemin to Saudi Arabia in November 1999, the two governments signed several cooperation agreements, including a contract to raise Saudi Aramco's crude oil sales to Beijing and a deal on a joint oil refinery to be built in China. Saudi Arabia is China's largest trading partner in the Middle East and North Africa, with two-way trade totaling $1.7 billion in 1998.

Key Takeaways:

  • Saudi Aramco has equity in the refining business in China and is studying the market with refining ventures discussed since the early 1990s.
  • Saudi Aramco is the only OPEC NOC to have invested in Chinese refining, with its first investment being a 45% interest in a small refinery at Thalin in north-east China in 1995.
  • Saudi Aramco has had protracted talks with Beijing for a new 200,000 b/d refinery to be built at Quingdao, in Shandong province, with its South Korean partner Ssangyong to be involved.
  • The State Planning Commission approved the $2 billion project in 1994, with Aramco to have 45% in the JV, Ssangyong to hold 15%, and the rest to be held by Sinochem and the Quingdao municipality.
  • Saudi Aramco has also had discussions for a refinery to be built at Koingto, in eastern China, and crude oil supply for a 100,000 b/d refinery in Dalian as a JV between TotalFina of France and the Chinese government.

Statistics:

  • Chinese oil imports: 22 million tons in 1996, expected to reach over 50 million tons per year by 2000.
  • Two-way trade between Saudi Arabia and China in 1998: $1.7 billion.
  • Capacity of the Fujian refinery: 80,000 b/d, planned to be expanded to 240,000 b/d with a related 600,000 t/y ethylene cracker built there.
  • Capacity of the Maoming refinery: 170,000 b/d, planned to be expanded to 270,000 b/d by 2000.
  • Capacity of the new refinery at Quingdao: 200,000 b/d.
  • Total investment for the Quingdao refinery: $2 billion.

Sources:

  • "Saudi Aramco Expands Refining Business in China Amid Growing Oil Demand" (no date)
  • Chinese President Jiang Zemin's visit to Saudi Arabia on November 1, 1999 (no date)
  • State Planning Commission approval of the Quingdao refinery project in 1994 (no date)
  • Agreement between Saudi Aramco, Exxon, and Fujian Petrochemical Co. for the Fujian refinery expansion (no date)
  • Agreement between Saudi Aramco, Ssangyong, and Sinochem for the Quingdao refinery project (no date)

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