Saudi Aramco boosts China investment with two refinery deals

Saudi Aramco raised its multi-billion dollar investment in China by finalizing and upgrading a planned joint venture in northeast China and acquiring an expanded stake in a privately controlled petrochemical group, said Hydrocarbonprocessing.

The two deals, announced separately on Sunday and Monday, would see Aramco supplying the two Chinese companies with a combined 690,000 barrels a day of crude oil, bolstering its rank as China's top provider of the commodity.

Aramco said on Monday it had agreed to acquire a 10% stake in privately controlled Rongsheng Petrochemical Co Ltd for about USD3.6 billion. The deal includes the supply of 480,000 bpd of crude oil to Rongsheng-controlled Zhejiang Petrochemical Corp (ZPC) for 20 years, Aramco added.

It follows a preliminary agreement Aramco reached with the Zhejiang provincial government in 2018 for a 9% stake in ZPC. The deals are the biggest to be announced since Chinese President Xi Jinping visited the kingdom in December where he called for oil trade in yuan, a move that would weaken the U.S. dollar's dominance in global trade.

Aramco's investments highlight Riyadh's deepening ties with Beijing which have raised security concerns in Washington, Riyadh's traditional ally. In a deal brokered by China, Iran and Saudi Arabia agreed to re-establish relations earlier this month after years of hostility that had fueled conflicts across the region.

Beijing's secret role in the breakthrough shook up dynamics in the Middle East, where the United States was for decades the main dealmaker. Saudi Arabia and other Gulf states like the United Arab Emirates have said that they would not choose sides amid an increased polarization of global politics, and they were diversifying partners to serve national economic and security interests.

The deal also highlights growing competition between Saudi Arabia and its ally Russia in crude supplies to China. Western sanctions on Moscow over its war in Ukraine forced Russia to divert its oil away from Europe and to sell it at steep discounts to other markets, including China.

Russia unseated Saudi Arabia as China's top oil supplier in the first two months of the year. Aramco is already selling crude to the east China plant which operates an 800,000-bpd refinery, the single largest in China, under sales agreements renewed annually.

The Rongsheng deal comes on the heels of Aramco's agreement with Chinese partners on Sunday for an oil refinery and petrochemical project in the northeast Chinese province of Liaoning that is expected to start in 2026 to meet the country's growing demand for fuel and chemicals.

We remind, Saudi Aramco and its Chinese partners aim to start full operations at a refinery and petrochemical project in northeast China in 2026 to meet the country's growing demand for fuel and petrochemicals. The project in Liaoning's Panjin city, expected to cost USD10 B, will be Aramco's second major refining-petrochemical investment in China.

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Scandinavian Enviro Systems has been informed that the fuel company Preem has performed successful production tests of the recovered pyrolysis oil that Enviro recently supplied, said Hydrocarbonprocessing.

In November last year, the fuel company Preem placed an order with Enviro for recovered pyrolysis oil for use as a raw material in production tests to determine how suitable it is for the production of different biofuels. Since the start of deliveries in early February, Preem has been performing tests of the oil at its facility in Lysekil, Sweden, which had already been granted a permit specifically for conducting production tests of pyrolysis oil.

The supplied oil had been recovered from end-of-life tires at Enviro’s facility in Asensbruk, and Preem has now informed Enviro that the tests have been successful. A subsidiary of a leading US oil company has already carried out successful production tests of Enviro’s oil. Following the successful production test, the US oil company has placed a commercial order for Enviro’s pyrolysis oil worth a total of SEK 4.7 million, something which Enviro has also previously communicated.

“The news from Preem is further important confirmation of the commercial value of our recycling technology and the material we can extract using it. This provides additional support for our expansion plan and the anticipated profitability on which it is based,” says Thomas Sorensson, CEO of Enviro.

In addition to use in the production of biofuel, Enviro’s oil can replace fossil-based oils in the oil and chemical industries.

Enviro’s recovered pyrolysis oil has been certified under the ISCC EU global sustainability certification system and approved in accordance with the EU REACH Directive.

We remind, Russia's diesel and gasoil shipments to Brazil, Turkey and Africa were heading to new record highs in March as traders pushed into new markets following an EU ban on Russian oil products, according to traders and Refinitiv data. A full EU embargo on Russian oil products went into effect on Feb. 5, sending Russian diesel cargoes to Africa, Asia, the Middle East and ship-to-ship (STS) loadings instead of to Europe.

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Saudi Aramco is acquiring a 10% stake in Chinese producer Rongsheng Petrochemical Co for yuan (CNY) 24.6bn (USD3.6bn), the energy giant said.

As part of the deal, Aramco will supply 480,000 bbl/day of Arabian crude to Rongsheng affiliate Zhejiang Petroleum and Chemical Co (ZPC), under a long-term sales agreement, the company said in a statement.

Rongsheng owns a 51% equity interest in ZPC, which in turn owns and operates the largest integrated refining and chemicals complex in China with a capacity to process 800,000 bbl/day of crude oil and to produce 4.2m tonnes/year of ethylene.

Aramco Overseas Co, a wholly-owned subsidiary of Aramco, will acquire the interest in Rongsheng. “The transaction involves an off-market secondary sale of Rongsheng shares by majority shareholder Zhejiang Rongsheng Holding Group, with potential for future collaboration between the parties in trading, refining, chemicals production and technology licensing,” Aramco said.

Aramco earlier on Sunday announced that its joint venture firm Huajin Aramco Petrochemical Company (HAPCO) plans to start construction of refinery and petrochemical complex in China’s northeastern Liaoning province in the second quarter, with full operations expected in 2026.

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ADNOC announced today that it will explore opportunities to support the climate-neutral transformation of industry through the creation of a low-carbon ammonia value chain with state government and industry representatives in Germany’s North Rhine-Westphalia, said Hydrocarbonprocessing.

The announcement was made following the signing of a memorandum of understanding (MoU) between the Government of North Rhine-Westphalia, ADNOC and Currenta GmbH & Co. OHG (Currenta), a chemical industry services provider that manages and operates one of the largest chemical sites in Europe, Chempark, with locations in Leverkusen, Dormargen and Krefeld-Uerdingen, in North Rhine-Westphalia. Ammonia, a compound of nitrogen and hydrogen, can be used as a low-carbon fuel across a wide range of industrial applications, including transportation, power generation, and industries including steel, cement and fertilizer production.

The agreement was signed in Dusseldorf, Germany, by Her Excellency, Mona Neubaur, Deputy Prime Minister of North Rhine-Westphalia and State Minister for Economics, Industry, Climate Protection and Energy, Musabbeh Al Kaabi, Executive Director, Low Carbon Solutions and International Growth Directorate at ADNOC and Frank Hyldmar, CEO of Currenta.

Her Excellency, Mona Neubaur said: “We will do our utmost to expand the capacities for the generation of renewable energies and for the production of other climate-neutral energy carriers such as green hydrogen in this country as much as possible. However, it is also clear that we will have to import various green energy sources in large quantities in order to cover our needs and to achieve our climate protection goals. We are now building partnerships and a broad import infrastructure to supply our industry. The basis for our cooperations is diversification with many countries."

The primary focus of the agreement will be the production and transportation of low-carbon ammonia and its application as a fuel in energy generation, including industrial-scale testing at Currenta’s site in Dormagen, Germany.

We remind, Eni and ADNOC will explore potential opportunities in the areas of renewable energy, blue and green hydrogen, carbon dioxide capture and storage (CCS), in the reduction of greenhouse gas and methane gas emissions, energy efficiency, routine gas flaring reduction and the Global Methane Pledge, to support global energy security and a sustainable energy transition. In addition, they will evaluate areas of cooperation for sustainable development and promoting the spread of a culture of sustainability within the energy industry and its stakeholders.

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Domo Chemicals has broken ground for a new plant to produce Technyl polyamide (PA)-based grades in Haiyan, Jiaxing, Zhejiang, China, said the company.

The EUR 14 M PA facility, which will be based on the latest technology and equipment, will gradually be expanded to reach a total capacity of 50,000 tonnes/y. Full operation is expected by the end of 1Q 2024. The project is strategically located and will play a key role in the company's strategy to expand its presence in the Asian market.

Domo said it plans to eventually expand the plant’s initial capacity of 35,000 t/y to 50,000 t/y, with a company spokesperson telling Plasteurope.com in 2022 that the increase is expected in five to eight years.

Beyond adding to the German firm’s competitiveness in the growing Asian polyamide market, the plant is expected to create job opportunities and contribute to the development of the local economy, said Fabrizio Cochi, Domo’s general manager for Asia.

As the development zone is to host manufacturers of electronics, new energy products, new materials, and high-end equipment, Domo said it expects the investment to place it close to customers while playing a key role in expanding its Asian presence. Among other things, the sub-district also aims to become a “hydrogen valley."

Active in PA resin manufacturing as well as compounding, Domo is also expanding a nearby plant. An initial stage of the company’s plans to raise Chinese output was completed in March 2022 when capacity was pushed to 14,000 t/y from 6,000 t/y.

We remind, Domo Caproleuna GmbH, an offshoot of Domo Chemicals, has produced 5 M tonnes of caprolactam at its 176,000 tonnes/y caprolactam and polyamide (PA) facility in Leuna, Germany. This volume is equal to around 225,000 truckloads. Domo Caproleuna intends to neutral CO2 emissions growth by 2030 by decreasing the carbon content of its energy mix by 15% and lessening industrial waste by 7%. Caprolactam is mainly used to manufacture PA 6 such as Domamid and Technyl.

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