saudi aramco rongsheng made in china

Saudi Aramco today signed three Memoranda of Understanding (MoUs) aimed at expanding its downstream presence in the Zhejiang province, one of the most developed regions in China. The company aims to acquire a 9% stake in Zhejiang Petrochemical’s 800,000 barrels per day integrated refinery and petrochemical complex, located in the city of Zhoushan.

The first agreement was signed with the Zhoushan government to acquire its 9% stake in the project. The second agreement was signed with Rongsheng Petrochemical, Juhua Group, and Tongkun Group, who are the other shareholders of Zhejiang Petrochemical. Saudi Aramco’s involvement in the project will come with a long-term crude supply agreement and the ability to utilize Zhejiang Petrochemical’s large crude oil storage facility to serve its customers in the Asian region.

Saudi Aramco CEO, Amin Nasser said: “The agreements demonstrate our commitment to the Chinese market and help enhance the strategic integration of our downstream network in Asia. They will further strengthen our relationship with China and the Zhejiang province, setting the stage for more cooperation in the future.”

SINGAPORE/DUBAI/BEIJING, Feb 21 (Reuters) - Saudi Aramco plans to sign preliminary deals to invest in two oil refining and petrochemical complexes in China during Saudi Arabian Crown Prince Mohammed bin Salman’s state visit to Beijing this week, according to sources familiar with the plans.

Saudi Aramco, the world’s top oil exporter, will sign a memorandum of understanding (MOU) to build a refinery and petrochemical project in the northeastern Chinese province of Liaoning in a joint venture with China’s defence conglomerate Norinco, said three sources with knowledge of the matter.

Aramco is also expected to formalise an earlier plan to take a minority stake in Zhejiang Petrochemical, controlled by private Chinese chemical group Zhejiang Rongsheng Holding Group , said two sources with knowledge of this particular deal. Zhejiang Petrochemical is building a refinery and petrochemical complex in eastern Chinese province of Zhejiang.

The investments could help Saudi Arabia regain its place as the top oil exporter to China, which it has relinquished to Russia for the past three years. Saudi Aramco is poised to bolster its market share by signing supply agreements with non-state Chinese refiners.

It is not clear what new details will be in the MOU with Norinco expected during the visit, as the two companies first announced an alliance in May 2017 during Saudi ruler King Salman’s visit to Beijing.

A senior Aramco executive said last June he expected the front-end engineering for the Norinco project to be finished by mid-2019, following which the company will take a final investment decision.

The agreement follows an earlier MOU that Aramco signed in October to invest in Zhejiang’s project, which is planned as a refinery to process 400,000 bpd of crude and associated petrochemical facilities in the city of Zhoushan, south of Shanghai.

The Saudi delegation, including top executives from Aramco, arrived in Beijing on Thursday for a two-day visit, part of the crown prince’s Asia tour, during which the kingdom has pledged $20 billion of investment in Pakistan and sought additional investment in India’s refining industry.

State oil giant Saudi Aramco plans to ink an agreement later on Thursday to take a stake in a refinery-petrochemical project in eastern China, a senior official said on Thursday.

"We will have a signing ceremony later today with the Zhejiang government to invest in the Zhejiang refinery-petrochemical project," Aramco"s Senior Vice President of Downstream, Abdulaziz al-Judaimi told an industry event.

Zhejiang Petrochemical, 51 percent owned by textile giant Rongsheng Holding Group, plans to start its 400,000-barrels-per-day refinery-petrochemical project in eastern China in late 2018.

Saudi Aramco signed three Memoranda of Understanding (MoUs) on Friday to purchase a 9 percent stake in Chinese Zhejiang Petrochemical"s integrated refinery and petrochemical complex in the city of Zhoushan, and to invest in a retail fuel network in the eastern region of China, the Saudi state-run energy giant announced.

Saudi Aramco"s involvement in the project will come with a long-term crude supply agreement and the ability to utilize Zhejiang Petrochemical"s large crude oil storage facility to serve its customers in the Asian region, according to the statement.

Saudi Aramco and Zhejiang Energy plan to build a large-scale retail network over the course of the next five years in the province, the statement added. The retail business will be integrated with the Zhejiang Petrochemical complex as an outlet for the facility"s refined products.

Saudi Aramco CEO Amin Nasser said the agreements demonstrate the company"s commitment to the Chinese market and would help enhance the strategic integration of its downstream network in Asia.

Other buyers across Asia and Europe have also said they would cut back on purchases of Iranian oil, unleashing a burst of demand for West African and other crudes rich in distillates, such as grades from Saudi Arabia or the North Sea.

Saudi Aramco has signed agreements to acquire a 9% stake in the Zhejiang petrochemical project in the Chinese province of Zhejiang for an undisclosed price.

The Arabian company has signed a second agreement with Rongsheng Petrochemical, Juhua Group, and Tongkun Group, the other shareholders of Zhejiang Petrochemical, the holding company of the Chinese petrochemical project.

Saudi Aramco said that its involvement in the project will come with a long-term crude supply agreement and the ability to use Zhejiang Petrochemical’s large crude oil storage facility to cater to its customers in Asia.

Saudi Aramco CEO Amin Nasser said: “The agreements demonstrate our commitment to the Chinese market and help enhance the strategic integration of our downstream network in Asia. They will further strengthen our relationship with China and the Zhejiang province, setting the stage for more cooperation in the future.”

Last week, Saudi Aramco entered into a joint venture agreement with NORINCO Group and Panjin Sincen to develop a fully integrated refining and petrochemical complex in Panjin in another Chinese province Liaoning.

The joint venture, called Huajin Aramco Petrochemical is expected to invest over $10bn to build what will be a 300 thousand barrel per day refinery, equipped with a 1.5 million metric tons per annum (mmtpa) ethylene cracker and a 1.3 mmtpa PX unit.

Saudi Arabian Oil Company (Saudi Aramco), one of the world"s top oil exporters, will continue to boost its downstream presence in China, after it formalized plans to build a 300,000-barrel-per-day refining and petrochemical complex along with Norinco Group and Panjin Sincen in Panjin, Northeast China"s Liaoning province, in February.

"This is a clear demonstration of Saudi Aramco"s strategy to move beyond a buyer-seller relationship to one where we can make significant investments to contribute to China"s economic growth and development," said Amin H. Nasser, president and CEO of Saudi Aramco.

It has also announced a plan to acquire a 9 percent stake in Zhejiang Petrochemical, an 800,000-bpd integrated refinery and petrochemical complex, controlled by private Chinese chemical group Zhejiang Rongsheng Holding Group.

The projects in Liaoning and Zhejiang have the potential to increase Saudi Aramco"s participated refining capacity to over 1 million bpd in China alone.

Figures from Bloomberg Intelligence reveal that Russia surpassed Saudi Arabia to become the largest crude oil exporter to China in 2016. Last year, China imported 71.49 million metric tons of oil from Russia while imports from Saudi Arabia were 56.73 million tons.

China is a strategic partner for Saudi Aramco and one of the most important customers globally, and the company is looking at both the export of oil and integration down the value chain in the Chinese market, he said.

"Integration with refining is what Saudi Aramco and our partners are looking at, and these opportunities will help to expand our presence in China, achieving a better balance between our upstream and downstream business segments, considering how much we export to China," said Nasser.

Nasser said the potential acquisition of petrochemical maker Saudi Basic Industries Corp, or SABIC, would also help the company strengthen its downstream sector in China.

Saudi Aramco aims to buy a controlling stake in SABIC, possibly the entire 70 percent owned by the Public Investment Fund - the kingdom"s top sovereign wealth fund.

"Part of the company"s strategy is to allocate 2 to 3 million bpd of crude to petrochemicals and expand our chemicals business globally," Nasser said. "China"s demand growth offers exciting opportunities for Saudi Aramco and its partners."

(Yicai Global) Feb. 25 -- The national petroleum and oil giant of Saudi Arabia will purchase a minority stake in Zhejiang Petrochemical along with two other deals to expand its downstream business in eastern China.

Saudi Arabian Oil Company, also known as Saudi Aramco, penned three memorandums of understanding in eastern Zhejiang province, one of them with the Zhoushan municipal government involving a purchase of a 9 percent stake in ZP, the Asian division of the Dhahran-based parent posted on its official WeChat account on Feb. 23.

The deals show Saudi Aramco"s commitment to the Chinese market and will help to enhance the strategic integration of its downstream business network in Asia, Amin Nasser, the president and chief executive of Saudi Aramco said in the post.

Saudi Aramco will provide ZP with crude oil for refining in the latter"s new plant in Zhoushan for the long-term while making use of ZP"s large storage facilities to serve customers in Asia. ZP aims to provide 6 million tons of refined oil each year at the project in its hometown with with an investment of CNY173 billion (USD25.8 billion). The target firm can process 800,000 barrels of crude oil a day, Saudi Aramco"s post added.

Saudi Aramco also agreed with Zhejiang Provincial Energy Group to establish a large refined oil retail network in Zhejiang province within five years to integrate resources and make the Chinese firm into a competitive distribution channel.

Founded in 2015, ZP has a mixed ownership structure. Privately owned Rongsheng Petrochemical has a 51 percent stake while the two state-owned shareholders include Zhejiang Juhua Investment with a 20 percent stake as well as Zhoushan Ocean Comprehensive Development and Investment with a 9 percent stake.

Apparently confirming the view of Saudi Crown Prince Mohammed bin Salman (MbS) that the U.S. is now regarded as just another one of its partners in a new global order that would see Beijing and its allies share the leadership position with Washington, Saudi Arabia last week reiterated its commitment to China as its “most reliable partner and supplier of crude oil,” along with broader assurances of its ongoing support in several other areas. That MbS seemingly now sees the U.S. as a partner just for its security considerations, with no meaningfulquid pro quoon Saudi Arabia’s part, whilst regarding China as its key partner economically and Russia as its key partner in energy matters, should not surprise the U.S. Back inMarch last year it was made clearenough at the annual China Development Forum hosted in Beijing, when Aramco chief executive officer, Amin Nasser said: “Ensuring the continuing security of China’s energy needs remains our highest priority - not just for the next five years but for the next 50 and beyond.” And yet, the U.S. is surprised by the apparent finalisation of the transition of Saudi Arabia away from Washington and towards China, which effectively marks the end of the1945 core agreementbetween the U.S. and Saudi Arabia that defined their relationship up until extremely recently. This transition has been seen most recently in therefusal of MbS to take a telephone callfrom President Joe Biden in which he was to ask for his help inbringing down economy-crimping high energy pricesand then in thehuge cut in collective OPEC oil productionthat has only added to energy-driven inflationary fears for global economies.

Given the peremptory way in which the core 1945 agreement was ended by MbS, Washington is angry too, as was evidenced in thehighly pointed commentsfrom several senior U.S. officials at the time of the OPEC cut, including from Biden himself, who said that: “There’s going to be some consequences for what they’ve done, with Russia [supporting oil prices by leading OPEC’s 2 million barrel per day (bpd) collective output cut]…I’m not going to get into what I’d consider and what I have in mind. But there will be – there will be consequences.” Just before Biden’s comments, John Kirby, the national security council spokesperson, echoed official doubts on the future of the U.S.-Saudi security relationship, as he said that Biden believed that the U.S. ought to “review the bilateral relationship with Saudi Arabia and take a look to see if that relationship is where it needs to be and that it is serving our national security interests,…in light of the recent decision by OPEC, and Saudi Arabia’s leadership [of it].”

Apparently careless of these ramifications, Saudi Arabia last week stated that, in addition to continuing in its role as China’s partner of choice in the oil market, the two countries would continue “close communication and strengthen co-operation to address emerging risks and challenges,” according to a joint communique from Saudi Energy Minister, Prince Abdulaziz bin Salman and Beijing"s National Energy Administrator, Zhang Jianhua. In the context of crude oil, according to Chinese Customs data, Saudi Arabia delivered 1.76 million bpd in shipments to China over the January to August period, marking an increase in its market share to 17.7 percent from 16.9 percent a year earlier.

Additionally, last week saw the two countries pledge to continue discussions on developing joint integrated refining and petrochemical complexes and to cooperate on the use of nuclear energy. Although flagged by Saudi Arabia and China as being ‘the peaceful use of nuclear energy’, the news just before Christmas 2021 that U.S. intelligence agencies had found that Saudi Arabia is now manufacturing its ownballistic missiles with the help of China– and given China’s long-running and extensive ‘assistance’ to Iran’s nuclear ambitions, as analysed in full inmy latest book on the global oil markets- ongoing U.S. fears about what Beijing’s endgame might be in building out the nuclear capabilities of key states in the Middle East will not have been alleviated.

This latest round of talks and agreements comes very shortly after the signing of amulti-pronged memorandum of understanding(MoU) between the Saudi Arabian Oil Company – formerly the Saudi Arabian American Oil Company – ‘Aramco’, and the China Petroleum & Chemical Corporation (Sinopec), which can be regarded as a critical step in China’s ongoing strategy to secure Saudi Arabia as a client state. As the president of Sinopec, Yu Baocai, himself put it: “The signing of the MoU introduces a new chapter of our partnership in the Kingdom…The two companies will join hands in renewing the vitality and scoring new progress of the Belt and Road Initiative [BRI] and [Saudi Arabia’s] Vision 2030.”

Crucially for China’s long-term plans in Saudi Arabia, it also covers opportunities for the construction of a huge manufacturing hub in King Salman Energy Park that will involve the ongoing, on-the-ground presence on Saudi Arabian soil of significant numbers of Chinese personnel: not just those directly related to the oil, gas, petrochemicals, and other hydrocarbons activities, but also a small army of security personnel to ensure the safety of China’s investments. At that point in early 2021, Aramco had a 25 percent stake in the 280,000 bpd Fujian refinery in south China through a joint venture with Sinopec (and the U.S.’s ExxonMobil) and had also earlier agreed (in 2018) to buy a 9 percent stake in China’s 800,000 bpd ZPC refinery from Rongsheng. Several other joint projects between China and Saudi Arabia that had been agreed in principle were delayed due to a combination of the ongoing effects of Covid-19, Aramco’scrushing dividend repayment schedule, and concern from both countries – especially China – on how Washington might react to this clear threat to the U.S.’s own long-running interests in, and geopolitical relationship with, Saudi Arabia.

Just prior to this, June saw Saudi Aramco’s senior vice president downstream, Mohammed Y. Al Qahtani, announce the creation of a‘one-stop shop’provided by his company in China’s Shandong. “The ongoing energy crisis, for example, is a direct result of fragile international transition plans which have arbitrarily ignored energy security and affordability for all,” he said. “The world needs clear-eyed thinking on such issues. That’s why we highly admire China’s 14th Five Year Plan for prioritising energy security and stability, acknowledging its crucial role in economic development,” he added. The megaproject in Shandong, which is home to around 26 percent of China’s refining capacity and is a key destination for Saudi Aramco’s crude oil exports, will broadly involve the flagship Saudi oil and gas giant creating “stronger ties with the world’s largest oil exporter [that] would enhance China’s energy security, especially as we work on increasing our production capacity to 13 million barrels per day,” according to Al Qahtani. Aside from thefact that Saudi Arabia still cannot produceanywhere near 13 million barrels per day of crude oil, closer cooperation between Aramco and China will mean Saudi Arabia investing heavily in the build-out of a large, integrated downstream business across the country in tandem with its Chinese partners

Given the transition of Saudi Arabia away from the U.S. and towards China – and the senior Saudis do look at the issue in these terms, whatever they say publicly – there is also every reason to expect Riyadh to continue to back China’s efforts to undermine the power of the U.S. dollar in the global energy markets as well. Not only is Saudi Arabia now a prime mover in advancing the China-GCC Free Trade Agreement (FTA) – a key aim of which is to forge a “deeper strategic cooperation in a region where U.S. dominance is showing signs of retreat” – but also the Kingdom is now a prime advocate forswitching away from the hegemony of U.S. dollarsin the pricing of global oil and gas.

Just after China made a crucial face-saving offer to MbS to privately buy the entire 5 percent stake in Saudi Aramco that he originally wanted to float but could not entice Western investors to buy, the then-Saudi Vice Minister of Economy and Planning, Mohammed al-Tuwaijri, told a Saudi-China conference in Jeddah that: “We will be very willing to consider funding in renminbi and other Chinese products.” He added: “China is by far one of the top markets’ to diversify the funding…[and] we will also access other technical markets in terms of unique funding opportunities, private placements, panda bonds and others.” Moreover,recent reportsstate that long-running talks between Saudi Arabia and China for Saudi to price and receive payments for some of its oil sales in Chinese renminbi rather than in U.S. dollars have intensified in the past few months.

Saudi Aramco no longer intends to build a refinery and ethylene plant with China Northern Industry Co. (Norinco), as the giant oil company adjusts its downstream investment plans in line with cuts in its overall capital spending. Aramco and Norinco signed a framework agreement in 2017 to invest $10 billion in construction of a 300,000 barrel per day refinery and a 1.5 million ton per year ethylene plant in China"s northeastern province of Liaoning (IOD May17"17). But the project with Norinco -- a company with close ties to China"s armed forces -- has made little progress since then. Aramco was not available to comment, but a well-informed source at Norinco told Energy Intelligence that the refinery-petrochemical project was considered "dead," rather than suspended, because Aramco does not currently have the funds needed to invest in it. The profitability of the project was also questionable. Aramco had wanted to set up a network of retail fuel stations, but China National Petroleum Corp. and Sinopec have a monopoly on retail fuel sales in China. Furthermore, the proposed refinery would not be allowed to export its products and would have to compete in the domestic market, the source said. A senior official at China"s state-run petrochemical association said the project also faced the risk of US sanctions, because of the involvement of Norinco, with its ties to the Chinese military. The Norinco project is one of several proposed joint-venture refineries in China involving foreign investors that could face problems as a result of the economic fallout from the coronavirus pandemic. Bloomberg was the first to report that the Aramco-Norinco project had stalled. Aramco is reviewing its international investment plans at a time when it has a diminished appetite for big projects after its acquisition of Saudi Basic Industries Corp., which greatly increased its debt (IOD Jun.18"20). Sources familiar with the matter say Aramco is now primarily focused on fulfilling its dividend commitments to shareholders after its initial public offering of shares late last year. The Saudi oil giant has already trimmed its capital spending for this year, targeting the lower end of a previously announced capex range of $25 billion-$30 billion. And it is weighing additional cuts next year, according to Aramco CEO Amin Nasser (IOD Aug.10"20). Aramco"s decision on the proposed plant in Liaoning is unlikely to mark the end of its downstream ambitions in China, however. Sources say the company is now expected to focus on plans to acquire a 9% stake in the third phase of Zhejiang Petrochemical"s giant refinery and petrochemical complex in eastern China. Private company Rongsheng, which runs Zhejiang, is currently working on doubling its existing 400,000 b/d of refining capacity by year"s end, while a third phase would add another 400,000 b/d (IOD Aug.13"20). In recent years, Gulf Arab national oil companies such as Aramco have pursued a strategy of investing in downstream projects in Asia to secure guaranteed outlets for their crude oil and add value to it, amid fierce competition for market share. However, the industry crisis brought about by the Covid-19 pandemic has forced them to reconsider such plans. Dawn Lee, Beijing, and Oliver Klaus, Dubai

State oil giant Saudi Aramco signed an agreement on Thursday to invest in a refinery-petrochemical project in eastern China, part of its strategy to expand in downstream operations globally.

Zhejiang Petrochemical, 51 percent owned by textile giant Zhejiang Rongsheng Holding Group, is building a 400,000-barrels-per-day refinery and associated petrochemical facilities that was expected to start operations by the end of this year.

This is the third such project in China that Saudi Aramco has set its sight on as it seeks to lock in long-term outlets for its crude oil and produce fuel and petrochemicals to meet rising demand in Asia and cushion the risk of a slowdown in oil consumption.

The oil giant had not yet finalised the size of its stake in the project and still needed to complete due diligence, Aramco’s Senior Vice President of Downstream, Abdulaziz al-Judaimi, told Reuters on the sidelines of the event.

Aramco also owns part of the Fujian refinery-petrochemical plant with Sinopec and Exxon Mobil Corp, and has plans to build a 300,000-bpd refinery with China’s Norinco. It is also in talks with PetroChina to invest in a refinery in Yunnan.

State oil giant Saudi Aramco said it had signed an agreement with a provincial government in China to acquire a stake in the new refinery project of top industrial group Zhejiang Petrochemicals.

Abdulaziz Al Judaimi, the Senior VP (Downstream), said: "We are exploring opportunities for new refining and petrochemicals facilities, making further investments in China. Saudi Aramco has recently signed a crude oil supply agreement with Zhejiang Petrochemical (Rongsheng)."

Since 2006 to date, no one delivered more oil to China than Saudi Aramco. Helping China meet its critical energy needs shows Aramco’s commitment to key global markets," he noted.

Saudi Aramco signed a Memorandum of Understanding (MoU) with China’s Zhejiang Free Trade Zone last week, solidifying Saudi Aramco’s participation in the 400,000 barrel-per-day refinery from Phase III of the Zhoushan Petrochemical Greenfield project in China. The MoU also allows the two parties to evaluate potential opportunities for investment in other parts of the value chain, including refining and petrochemical production, storage and trade of crude oil and natural gas, retail, as well as the distribution of oil products within the Zhejiang Free Trade Zone.

The Zhoushan Government emphasized its support for incentivizing Saudi Aramco’s greater investment in Zhejiang’s future downstream growth. The MoU was signed in conjunction with a visit to Saudi Aramco’s headquarters in Dhahran, Saudi Arabia, by Yuan Jiajun, governor of the Zhejiang province, China.

Together with prior agreements signed during HRH Crown Prince Mohammed Bin Salman’s visit to China in February this year, this MoU facilitates Saudi Aramco’s planned acquisition of a 9% stake in the Zhejiang integrated refinery and petrochemical complex. It will also include a long-term crude oil supply agreement and the ability to utilize Zhejiang Petrochemical’s large crude oil storage facility to serve its customers in Asia. These activities reflect Saudi Aramco’s strategy to expand its presence in the Chinese energy sector.

In February, Saudi Aramco signed three MoUs aimed at expanding its downstream presence in the Zhejiang province, one of the most developed regions in China. The first agreement was signed with the Zhoushan government to acquire its 9% stake in the project. The second agreement was signed with Rongsheng Petrochemical, Juhua Group, and Tongkun Group, who are the other shareholders of Zhejiang Petrochemical. Saudi Aramco’s involvement in the project will come with a long-term crude oil supply agreement.

The changing roles played by China’s independent refineries are reflected in their relations with Middle East suppliers. In the battle to ensure their profitability and very survival, smaller Chinese teapots have adopted various measures, including sopping up steeply discounted oil from Iran. Meanwhile, Middle East suppliers, notably Saudi Aramco, are seeking to lock in Chinese crude demand while pursuing new opportunities for further investments in integrated downstream projects led by both private and state-owned companies.

In 2016, during the period of frenzied post-licensing crude oil importing by Chinese independents, Saudi Arabia began targeting teapots on the spot market, as did Kuwait. Iran also joined the fray, with the National Iranian Oil Company (NIOC) operating through an independent trader Trafigura to sell cargoes to Chinese independents.[27] Since then, the coming online of major new greenfield refineries such as Rongsheng ZPC and Hengli Changxing, and Shenghong, which are designed to operate using medium-sour crude, have led Middle East producers to pursue long-term supply contracts with private Chinese refiners. In 2021, the combined share of crude shipments from Saudi Arabia, UAE, Oman, and Kuwait to China’s independent refiners accounted for 32.5%, an increase of more than 8% over the previous year.[28] This is a trend that Beijing seems intent on supporting, as some bigger, more sophisticated private refiners whose business strategy aligns with President Xi’s vision have started to receive tax benefits or permissions to import larger volumes of crude directly from major producers such as Saudi Arabia.[29]

The shift in Saudi Aramco’s market strategy to focus on customer diversification has paid off in the form of valuable supply relationships with Chinese independents. And Aramco’s efforts to expand its presence in the Chinese refining market and lock in demand have dovetailed neatly with the development of China’s new greenfield refineries.[30] Over the past several years, Aramco has collaborated with both state-owned and independent refiners to develop integrated liquids-to-chemicals complexes in China. In 2018, following on the heels of an oil supply agreement, Aramco purchased a 9% stake in ZPC’s Zhoushan integrated refinery. In March of this year, Saudi Aramco and its joint venture partners, NORINCO Group and Panjin Sincen, made a final investment decision (FID) to develop a major liquids-to-chemicals facility in northeast China.[31] Also in March, Aramco and state-owned Sinopec agreed to conduct a feasibility study aimed at assessing capacity expansion of the Fujian Refining and Petrochemical Co. Ltd.’s integrated refining and chemical production complex.[32]

Commenting on the rationale for these undertakings, Mohammed Al Qahtani, Aramco’s Senior Vice-President of Downstream, stated: “China is a cornerstone of our downstream expansion strategy in Asia and an increasingly significant driver of global chemical demand.”[33] But what Al Qahtani did notsay is that the ties forged between Aramco and Chinese leading teapots (e.g., Shandong Chambroad Petrochemicals) and new liquids-to-chemicals complexes have been instrumental in Saudi Arabia regaining its position as China’s top crude oil supplier in the battle for market share with Russia.[34] Just a few short years ago, independents’ crude purchases had helped Russia gain market share at the expense of Saudi Arabia, accelerating the two exporters’ diverging fortunes in China. In fact, between 2010 and 2015, independent refiners’ imports of Eastern Siberia Pacific Ocean (ESPO) blend accounted for 92% of the growth in Russian crude deliveries to China.[35] But since then, China’s new generation of independents have played a significant role in Saudi Arabia clawing back market share and, with Beijing’s assent, have fortified their supply relationship with the Kingdom.

As Chinese private refiners’ number, size, and level of sophistication has changed, so too have their roles not just in the domestic petroleum market but in their relations with Middle East suppliers. Beijing’s import licensing and quota policies have enabled some teapot refiners to maintain profitability and others to thrive by sourcing crude oil from the Middle East. For their part, Gulf producers have found Chinese teapots to be valuable customers in the spot market in the battle for market share and, especially in the case of Aramco, in the effort to capture the growth of the Chinese domestic petrochemicals market as it expands.