By completing and upgrading a planned joint venture in northeast China and purchasing a larger stake in a privately held petrochemical business, Saudi Aramco increased its multibillion-dollar commitment in China.
With the two agreements, which were announced separately on Sunday and Monday, Aramco would increase its position as China’s top crude oil supplier by providing a total of 690,000 barrels per day of crude oil to the two Chinese firms. Aramco announced on Monday that it has reached an agreement to pay around $3.6 billion for a 10% share in the privately held Rongsheng Petrochemical Co Ltd.
.According to Aramco, the agreement calls for a 20-year supply of 480,000 bpd of crude oil to the Zhejiang Petrochemical Corp. (ZPC) under the supervision of Rongsheng. It comes after a preliminary agreement Aramco made with the administration of the province of Zhejiang.
The agreements are the largest to be made public since Chinese President Xi Jinping’s December visit to the kingdom, during which he urged for the trading of oil in yuan, a move that would undercut the dominance of the U.S. dollar in international trade.
Riyadh’s growing connections with Beijing are highlighted by Aramco’s investments, which have caused security concerns in Washington, Riyadh’s longtime ally. Iran and Saudi Arabia agreed earlier this month to reestablish relations after years of antagonism that spurred wars around the region, thanks to a pact mediated by China.
The Middle East, where the United States had long been the primary dealmaker, was altered by Beijing’s covert role in the breakthrough. The Rongsheng accord follows Aramco’s Sunday agreement with Chinese partners for an oil.
The Liaoning project, which is anticipated to begin in 2026, would be Aramco’s second significant petrochemical-refining investment in China and comes after the top oil exporter in the world announced a record profit of $161 billion in 2022.