(Bloomberg) --

Saudi Aramco is buying 10% of Rongsheng Petrochemical Co., one of China’s refining giants, for 24.6 billion yuan ($3.6 billion), in a move that expands its presence in the world’s biggest energy importer.

It’s the second deal in two days that will boost Aramco’s exports to China, and adds up to commitments to ship nearly 700,000 barrels of additional oil a day to the country for conversion into chemicals.

Monday’s agreement with Rongsheng is Aramco’s biggest-ever foreign acquisition, according to data compiled by Bloomberg.

Aramco, which made $160 billion of profit last year, wants to convert 4 million barrels a day of crude into petrochemicals by the end of the decade. The Saudi company believes demand for goods such as plastics and paint — mostly made from crude-based chemicals — will continue to rise over the coming decades even as the uptake of electric vehicles potentially leads to lower consumption of fuels such as gasoline and diesel.

The stake purchase includes a commitment by Aramco to sell 480,000 barrels a day of crude oil to Rongsheng’s 800,000-barrel-a-day refinery in the eastern province of Zhejiang over 20 years, according to an exchange filling from the Shenzhen-listed company. Aramco will provide a credit line of $800 million for that.

Deals Back On

“This announcement demonstrates Aramco’s long-term commitment to China and belief in the fundamentals of the Chinese petrochemicals sector,” said Mohammed Al Qahtani, Aramco’s head of downstream operations.

On Sunday, Aramco and other Chinese companies agreed to invest in a new $12 billion refining and petrochemical plant in China’s northeastern Liaoning province, accelerating developments that were paused during the coronavirus pandemic. Aramco will supply as much as 210,000 barrels a day of crude to the project.

Aramco’s 30% stake in the Liaoning refinery would be worth about $3.6 billion, bringing its total Chinese investments announced over the past two days to over $7 billion.

Saudi Aramco in Deal With Chinese Partners to Build Refinery

The Saudi company has announced similar petrochemical investments in South Korea over the past year.

The latest agreements come with Saudi Arabia’s position as the dominant crude supplier to China coming under challenge from Russia. Moscow has been courting buyers in China as well as India since its invasion of Ukraine triggered sanctions that have shrunk its pool of customers, especially in Europe and the US. Last month, Russia was China’s top supplier of crude oil.

Aramco is “doubling-down” on its strategy to be an “all-inclusive source of energy and chemicals for China’s long-term energy security,” Chief Executive Officer Amin Nasser said in Beijing on Sunday.

The Saudi firm also signed contracts to trade oil, fuels and chemicals with Rongsheng through each of their Singapore dealing units.

Rongsheng has a 51% equity interest in Zhejiang Petroleum and Chemical Co., which in turn owns and operates the largest integrated refining and chemicals complex in China.

--With assistance from Sarah Chen and Ocean Hou.

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