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State oil giant Saudi Aramco is set to acquire a 10% stake in listed Chinese company Rongsheng Petrochemical Co. Ltd (Rongsheng) for RMB 24.6 billion ($3.6 billion).
In a statement on Monday, Aramco said it has signed definitive agreements to acquire the stake in a move that would significantly expand the company's downstream presence in China.
The deal comes after Aramco announced that its joint venture, Huajin Aramco Petrochemical Company (HAPCO), is set to start the construction of a refinery and petrochemical complex in northeast China in the second quarter of 2023.
Through the new deal, Aramco will supply 480,000 barrels per day (bpd) of Arabian crude oil to Rongsheng affiliate Zhejiang Petroleum and Chemical Co. Ltd (ZPC), under a long-term sales arrangement. Aramco Overseas Company (AOC), a wholly owned subsidiary of Aramco, will acquire the interest in Rongsheng.
The transaction, which involves an off-market secondary sale of Rongsheng's shares by majority shareholder Zheijiang Rongsheng Holding Group, is expected to close by the end of the year and is still subject to regulatory approvals.
Rongsheng owns more than half (51%) equity interest in ZPC, which in turn owns and operates the largest integrated refining and chemicals complex in China with a capacity to process 800,000 bpd of crude oil and produce 4.2 million metric tonnes of ethylene per year.
"It is an important acquisition for Aramco in a key market, supporting our growth ambtions and advancing our liquids to chemicals strategy," said Mohammed Al Qahtani, Aramco Executive Vice President of Downstream.
The deal with Rongsheng and the HAPCO joint venture would see the oil giant supply 690,000 bpd of crude oil to high chemical conversion assets, the statement said.
(Reporting by Cleofe Maceda; editing by Anoop Menon)
