Aramco revives talks to set up $10 billion oil refinery in China

Aramco is involved in preliminary negotiations with Chinese defence corporation Norinco for the project, Bloomberg reported.

Saudi Arabian oil giant Aramco has revived talks with Chinese defence corporation Norinco to set up a $10 billion oil refinery in China, Bloomberg reported on Tuesday, citing sources.

In 2019, Aramco and Norinco had signed an agreement to set up the refining and petrochemical complex in Panjin city in Liaoning province, according to Reuters.

But the deal stalled in 2020 after oil prices crashed at the beginning of the pandemic, Bloomberg reported. With oil prices now nearing $100 per barrel, Aramco has the money to invest in China.

Aramco is aiming to expand its refining network to be able handle 10 million oil barrels per day by 2030, according to Bloomberg. In 2020, the oil giant had to stay several projects to shield its annual dividend, but now its cashflow has risen.

Ties between Saudi Arabia and China have grown with the rise in the latter’s demand for oil. In 2021, Saudi Arabia was China’s biggest crude oil supplier, according to data collected by Bloomberg.

Reuters had reported in April last year that key Chinese investors were holding talks to buy a stake in Aramco.

Saudi Arabia’s crown prince Mohammed bin Salman had said that the kingdom was discussing selling 1% of Aramco to a major global energy company and could sell more shares over the next two years.

Sources had told Reuters that sovereign wealth fund China Investment Corporation was among those that could invest in Aramco.

(With inputs from Reuters)