Saudi Aramco to Increase Investments in Chinese Oil and Chemical Plants

Saudi Aramco is set to invest further in chemical plants in China over the next year and beyond, building on existing deals to secure long-term buyers for its crude oil. The company, the largest crude exporter in the world, aims to develop additional facilities that convert oil into chemicals, according to CEO Amin Nasser. Aramco is optimistic about the enduring demand for products like plastics, which is expected to outpace the growth in petrol and diesel consumption amid the energy transition.

“We are currently exploring several investment opportunities in China that will be announced over the next year,” Nasser mentioned during a post-earnings call on Tuesday. He also noted that South Korea and India are potential investment destinations. Aramco is in talks to purchase a 10 percent stake in China’s Hengli Petrochemical and is seeking similar agreements with two other Chinese companies. Last year, it completed a $3.4 billion investment in Rongsheng Petrochemical.

Nasser highlighted that Aramco aims to increase its chemical production capacity to about 4 million barrels a day from the current 2 million barrels. The company intends to enhance its current facilities in Saudi Arabia to increase the processing of oil into petrochemicals. Additionally, Aramco agreed to raise its stake in Saudi Arabia-based Rabigh Refining and Petrochemical for $702 million.

Nasser pointed out that China’s advancements in energy transition technologies, such as solar panels and batteries—which rely on plastics and other oil-derived products—are key factors driving Aramco’s investments. CFO Ziad Al-Murshed emphasized that Aramco’s strategy to convert crude into chemicals remains a top priority, especially in China, which is both the largest market and a hub for liquid-to-chemical expansions.

A significant aspect of Aramco’s strategy involves freeing up up to 1 million barrels a day of crude currently used domestically for power generation, aiming to increase gas production by 60 percent by the end of the decade to replace oil in power plants. The company also seeks to expand its liquefied natural gas (LNG) trading by securing global supply deals and investing in export terminals outside Saudi Arabia. Last month, Aramco signed an initial agreement for a stake in Sempra’s Texas LNG export plant, which includes fuel shipments from the project. Additionally, it has agreed to a 20-year non-binding contract to purchase 1.2 million tons annually from NextDecade Corp’s planned Texas LNG project.

Aramco’s origins date back to 1933, when Saudi Arabia and the Standard Oil Company of California (SOCAL) signed a Concession Agreement. This led to the establishment of a subsidiary, the California Arabian Standard Oil Company (CASOC), to oversee the terms of the agreement.