Saudi Aramco has announced plans to build a $10 billion refining and petrochemical complex in China over the next three years, capitalising on the country’s rising energy demand.
According to Aramco, the complex will have a capacity of 300,000 barrels of crude per day. The Saudi major will supply the facility with 201,000 barrels per day.
The project will be carried out in collaboration between Aramco and two Chinese firms. Construction work is expected to begin in the second half of this year, with the project set to be completed in 2026.
“This important project will support China’s growing demand across fuel and chemical products. It also represents a major milestone in our ongoing downstream expansion strategy in China and the wider region, which is an increasingly significant driver of global petrochemical demand,” said Mohammed Al Qahtani, Aramco’s head of downstream.
Another report from December last year stated that Aramco had reached an agreement with China’s Sinopec to build a 320,000-bpd refinery and petrochemical cracker in China, highlighting the latter’s significant role in global oil consumption once more.
Aramco has prioritized refining and petrochemical investments as it seeks to secure long-term demand for its main product while also expanding domestic refining capacity.
Petrochemicals are a good long-term bet in the oil industry, according to the International Energy Agency (IEA) and other forecasters, despite expectations of a decline in oil demand for transport fuels.
Indeed, the IEA predicts that petrochemicals will account for more than one-third of total oil demand growth by 2030, rising to 50 percent by 2050 as transportation electrifies.
However, if the expected global transport electrification does not occur on the expected scale, this increased demand for petrochemicals will simply be added to total oil demand, including demand for transportation fuels.
China is the most obvious location for new petrochemical projects: it is the world’s largest crude oil importer and one of the commodity’s top three consumers.