June 6, 2023

Dubai Week

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Saudi Aramco is reaching its goal… a place to store millions of barrels of oil in Asia

Saudi Aramco’s new refining deal to buy a 10 percent stake in Chinese chemical group Rongsheng Petrochemical Co. includes deals to store crude oil in eastern China and supply plastics and petrochemicals to an energy company in the Middle East.

Aramco announced on Monday that it was buying a controlling stake in Zhejiang Petrochemical Co., which operates China’s largest refinery with a capacity of 800,000 barrels per day, and that a deal to supply crude oil had ended. For a period of 20 years.

And Rongsheng said yesterday, Tuesday, on the Shenzhen Stock Exchange, in the first Saudi deal to store oil in China, Jiang’s company is offering Aramco three million cubic meters (about 18.6 million barrels) of storage space at the Sushan port. In eastern China.

Aramco, the world’s largest crude oil exporter, has long sought storage space in China to store crude closer to Asian customers and quickly meet demand in the region.

China, Aramco’s biggest crude importer, is likely to import a record amount of oil this year as its economy recovers from the coronavirus pandemic.

According to the disclosure, Aramco will maintain a minimum storage target level of 1.5 million tons (about 11 million barrels) at Zhoushan, and if the storage level falls below 750,000 tons, Aramco Zhejiang will have to reduce its supplies.

Aramco’s only crude oil storage facility in Asia is currently in Okinawa, Japan, where the state-run company last December renewed a contract to store about eight million barrels.

In addition to a deal announced on Monday to supply 480,000 barrels of crude oil a day, Aramco also agreed to supply Rongsheng, one of China’s largest polyester producers, with petrochemical feedstocks such as naphtha and paraxylene. Paraxylene is a raw material for making synthetic fibers and plastic bottles.

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It revealed that Rongsheng will replace Aramco with 800,000 tonnes per year of polyethylene and polypropylene used in the plastics industry and 300,000 tonnes per year of other chemicals over 20 years.