Saudi Aramco is set for a major offshore investment as it plans to build a $10-billion refining and petrochemical complex in China over the next three years, taking advantage of the country’s growing demand for energy.
The complex will have a capacity of 300,000 barrels of crude daily, Aramco said in a news release. The Saudi major will supply 201,000 barrels per day to the facility.
The project will be carried out in partnership between Aramco and two Chinese companies. Construction works should begin in the second half of this year, with the project scheduled for completion in 2026.
“This important project will support China’s growing demand across fuel and chemical products. It also represents a major milestone in our ongoing downstream expansion strategy in China and the wider region, which is an increasingly significant driver of global petrochemical demand,” said Aramco’s head of downstream, Mohammed Al Qahtani.
The news follows another report from December last year, that said Aramco had struck a deal with China’s Sinopec to build a 320,000-bpd refinery and petrochemical cracker in China, highlighting the latter’s major role in global oil consumption yet again.
Refining and petrochemical investments have been a priority for Aramco as it seeks to secure long-term demand for its main product, even as it expands local refining capacity as well.
According to the International Energy Agency and other forecasters, a bet on petrochemicals is a good long-term bet in the oil industry amid expectations of a decline in oil demand for transport fuels.
Indeed, the IEA has projected that petrochemicals will account for more than a third in oil demand growth by 2030, rising to 50 per cent of demand by 2050 as transport electrifies.
If the expected global transport electrification does not take place on the expected scale, however, this higher demand for petrochemicals will simply be added to total oil demand, including for transport fuels.
China is the most obvious destination for new petrochemical projects: the country is the world’s largest crude oil importer and one of the top three consumers of the commodity.
