The Saudi Basic Industries Corporation (SABIC), a leading petrochemical company, has confirmed its decision to construct a new petrochemical complex in Fujian province, located in southeastern China. This move strengthens the business relationship between Saudi Arabia and China, the latter being the world’s paramount oil importer.
With an estimated investment of $6.4 billion, this project represents a joint venture with Fujian Fuhua Gulei Petrochemical, a state-owned enterprise. The collaboration was first suggested in 2018 and is the most recent in a succession of partnerships between Saudi companies and Chinese oil refiners.
This new complex is projected to produce 1.8 million metric tons of ethylene annually. SABIC aims to amplify its production footprint in the Asian market through this venture while also enhancing the diversification of its raw material supply lines.
Construction is slated to kick off in the first quarter of 2024, with the facility expected to be operational by the first quarter of 2027. This development comes on the heels of other significant investments by Saudi Aramco, Saudi Arabia’s state-owned oil company, in the Chinese refining sector.
Earlier in the year, Rongsheng Petrochemical, a privately-run Chinese refiner, entered discussions with Aramco about acquiring mutual stakes in each other’s refining operations in both China and Saudi Arabia. Aramco had previously secured a 10% share in Rongsheng, correlated with a 20-year crude oil agreement with the Zhejiang Petrochemical Corporation, finalized with a $3.4 billion valuation.
In addition, last September, Aramco announced its intentions to invest as a key player in Jiangsu Shenghong Petrochemical, another private Chinese refiner. This company operates a substantial refinery and petrochemical complex in Jiangsu province. Aramco is also negotiating for a 10% stake in Shandong Yulong Petrochemical, which is constructing a refinery capable of processing 400,000 barrels of crude oil daily in Shandong province.