Saudi Aramco will start talks to buy a 10 per cent stake in a Chinese refining and petrochemical company, as it looks to boost its presence in the world’s biggest energy importer.

Aramco and Jiangsu Eastern Shenghong signed an agreement to facilitate discussions relating to the potential stake in Shenghong Petrochemical, according to a statement. A deal would give Aramco access to a 320,000 barrel-a-day integrated refinery and petrochemicals complex, and potentially lock in more long-term Saudi crude supplies to China.

Aramco is increasingly making deals in China to take advantage of the country’s huge demand. In March, it bought a 10 per cent stake in Rongsheng Petrochemical, one of the country’s largest refining firms, for 24.6 billion yuan (S$4.6 billion), in its biggest-ever foreign acquisition.

The company is also increasingly pushing into downstream industries, which convert crude oil into fuels such as petrol and diesel. It’s chasing a bigger presence in petrochemicals as it believes demand for goods such as plastics will continue to rise over the coming decades.

“The signing of this cooperation framework agreement is another significant milestone in Aramco’s downstream strategy to increase conversion of Arabian crude oil to chemicals and to expand into the critically important Chinese market,” said Mohammed Al Qahtani, president for downstream.

Aramco and Shenghong Petrochemical intend to expand the facility located in Jiangsu province, according to the statement. The Saudi company, the world’s biggest producer of crude oil, aims to roughly double its global refining network to handle as much as 10 million barrels a day by 2030. BLOOMBERG

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL