(Bloomberg) -- Saudi Aramco and its Chinese partners will start building a huge refining and petrochemical complex in the Asian nation, accelerating a development that was paused during the pandemic.
Aramco agreed to start construction on the complex in Liaoning Province with North Huajin Chemical and Panjin Xincheng, Chief Executive Officer Amin Nasser said at the China Development Forum in Beijing on Sunday. In a separate statement, the Saudi company said development is due to begin in the second quarter and the project is expected to be fully operational by 2026.
Talks on what was meant to be a $10 billion venture were revived early last year after Aramco decided to stop investing in the facility in 2020 due to an uncertain outlook caused by the pandemic. The venture was agreed in 2019 during Crown Prince Mohammed bin Salman’s visit to Beijing in what was seen as a landmark deal with a key ally.
“We see a major win-win opportunity to build a world-leading, integrated downstream sector in China, with special emphasis on the high conversion of liquids directly into chemicals as part of our broader liquid-to-chemicals business expansion plans,” Nasser said.
Aramco wants to be an all-inclusive source of energy and chemicals for China’s long-term energy security and high-quality development, he said.
The refining complex will include a 300,000 barrels-a-day refinery and a petrochemical plant with annual production capacity of 1.65 million tons of ethylene and 2 million tons of paraxylene. Aramco will supply as much as 210,000 barrels per day of crude feedstock to the project.
Aramco will own 30%, Norinco Group — the parent company of North Huajin Chemical — will hold 51% and Panjin Xincheng will hold the balance.
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Aramco is expanding oil production capacity by a million barrels per day to 13 million barrels by 2027 and will increase gas production by more than 50% by 2030, which would add an extra one million barrels a day of oil for export, Nasser said.
The Saudi company is also partnering with Baoshan Iron & Steel Co. to produce steel plates in Saudi Arabia with a lower carbon footprint, he said. The company also signed a letter of intent to be part of a new entity being created by Renault SA and Zhejiang Geely Holding Group Co. amid efforts to develop more efficient and lower-emission engines and hybrid systems, he said.
--With assistance from Serene Cheong and Dana Khraiche.
(Updates with capacity details in 6th paragraph.)
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