ARAMCO - NORINCO AGREEMENT $10 BLN

OGJ - Saudi Aramco has signed a $10-billion agreement to form a joint venture with China North Industries Group Corp. (Norinco) and Panjin Sincen to develop a fully integrated, grassroots refining and petrochemical complex in Panjin, in China's Liaoning province.

Under the agreement—the largest Sino-foreign JV to date—the partners will create a new company—Huajin Aramco Petrochemical Co. Ltd.—as part of a project that will include a 300,000-b/d refinery as well as a 1.5 million-tonne/year ethylene cracker and 1.3 million-tpy paraxylene unit, Aramco said.

Alongside supplying up to 70% of required crude feedstock for the proposed complex, Aramco will hold 35% interest in the newly formed company while Norinco and Panjin will hold the remaining 36% and 29% interest, respectively.

The new complex is scheduled for commercial startup sometime in 2024.

"Our participation in the integrated refining and petrochemical project in Panjin will strengthen our collaborative efforts to enhance energy security, revitalize key growth sectors and industries in Liaoning, and also meet rising demand for products and goods in China's northeast region," said Amin Nasser, Aramco's chief executive officer.

The JV agreement also includes additional plans to establish a fuels retail business, which will further integrate into the value chain, Aramco said.

By yearend, Aramco said it expects to form a three-party marketing JV company with North Huajin Chemical Industries Co. Ltd. and Liaoning Transportation Construction Investment Group Co. Ltd. to develop a retail fuel stations network in target markets.

Additional Chinese agreements

Separately, Aramco also signed three memoranda of understand aimed at expanding its downstream presence in China's Zhejiang province.

Aramco signed the first MOU with the government of Zhoushan to acquire its 9% ownership interest in Zhejiang Petrochemical Co. Ltd.'s (ZPC) grassroots 800,000-b/d refining and chemical integrated complex currently under construction in Zhoushan, with a second MOU signed with ZPC's other shareholders Rongsheng Holding Group Co. Ltd., Juhua Group Corp., and Tongkun Group Co. Ltd.

Aramco inked a third MOU with Zhejiang Energy Group to invest in construction of a large-scale retail fuel network to be built during the next 5 years in Zhejiang province that will be integrated with ZPC's complex as an outlet for refined products produced at the site.

The new MOUs follow Aramco's previous agreements with ZPC under which Aramco agreed to acquire ownership interest in and supply crude on a long-term basis to the new complex, as well as use ZPC's crude storage at the site to serve Aramco customers in the Asia-Pacific region.

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.

Previously scheduled for commercial startup by yearend 2018, Phase 1 of ZPC's project include a newly built 400,000-b/d refinery, a 1.4 million-tpy ethylene cracker unit, and a 5.2 million-tpy aromatics unit.

Phase 2 of the project—which will double processing and production capabilities at the site, as well as include deeper chemical integration than Phase 1—most recently was scheduled for commissioning during first-quarter 2021.

 -----