Saudi Aramco to pursue more investments in oil, chemical plants in China, CEO says

The world’s largest crude exporting company is targeting additional facilities that can turn oil into chemicals, CEO Amin Nasser said. Aramco sees demand for goods such as plastics outlasting the growth in consumption for petrol and diesel amid the energy transition.

“We are looking currently at a number of investments in China that will be announced in due course this year and next year,” he said Nasser in a post-earnings call on Tuesday. South Korea and India are as potential investment destinations, he added.

Aramco is already in talks to buy a 10 per cent stake in China’s Hengli Petrochemical, and is seeking similar deals with two other Chinese companies. It completed a US$3.4 billion deal for a stake in Rongsheng Petrochemical last year.

The Saudi state-run company aims to eventually turn about 4 million barrels a day of crude into chemicals, from about 2 million currently, Nasser said. It’s looking to upgrade existing facilities in Saudi Arabia to be able to process more oil into petrochemicals, he added.

On Wednesday, Aramco agreed to boost its stake in Saudi Arabia-based Rabigh Refining and Petrochemical for US$702 million.

Nasser pointed to China’s push into energy transition technologies like solar panels and batteries that use more plastics and other products derived from oil as factors attracting investment.

“Our strategic drive to convert liquid into chemicals remains unchanged,” CFO Ziad Al-Murshed said on the same call on Tuesday. “Our highest priority is to do this in China for two reasons. One is it is the biggest market and, two, it is where the liquid-to-chemical expansions are happening.”

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A big part of that push involves freeing up for exports as much as 1 million barrels a day of crude that it uses domestically for electricity generation. Aramco wants to ramp up gas production by 60 per cent by the end of the decade, in part, for use in power plants in place of oil.

The company is also looking to boost trading in liquefied natural gas by tapping into supply deals globally and buying more stakes in export terminals outside Saudi Arabia, Nasser said.

Aramco last month signed an initial agreement for a stake in Sempra’s Texas LNG export plant in a deal that would include fuel shipments from the project. It has also agreed a 20-year non-binding contract to take 1.2 million tons annually of the liquefied fuel from NextDecade Corp’s planned project in Texas.