Saudi Aramco Plans China Distribution Hub

27.09.2017 -

Saudi Aramco subsidiary, Aramco Asia, has agreed with Chinese Communist Party officials to build a chemical distribution hub for products it manufactures in the Chinese provinces of Fujian and Yunnan.

This latest step in the Saudi group’s plan to expand its downstream engagement in the country is the outcome of talks between Aramco’s president and CEO, Nabil Al-Nuaim, and Pei Jinjia, secretary of the party’s China Xiamen Municipal Committee. Nuaim said it aligns the “Saudi Vision 2030” diversification and job creation drive spearheaded by crown prince Mohammad Bin Salman Al Saud with China’s “Belt and Road” initiative.

“Xiamen is one of the prime candidates for this chemical hub as we can leverage the benefits from China’s Free Trade Zone (FTZ) initiative,” Nuaim said following the meeting. Aramco’s chemical sales office is based in the coastal city of Xiamen in southeast Fujian province. The CEO noted that it is in close proximity to Fujian Refining & Petrochemical Company (FREP), in which the Saudis hold a 25% stake.

“Considering the strong alignment between the Belt and Road initiative and Saudi Vision 2030, our two countries have made significant progress toward strategic partnerships, including the development of a special industrial park for Chinese investors in Jazan Economic City,” Nuaim said, adding that Xiamen could play an important part in this development, given its role in the Maritime Silk Road.

Aramco’s Xiamen office is the hub from which the company sells its share of polyolefin products from FREP. Altogether, the Saudi producer markets around 400,000 t/y to direct customers and distributors in Fujian, as well as the southern, eastern and northern regions of China.

Aramco is currently pursuing a partnership with China National Petroleum Corporation (CNPC) to take a stake in the Anning refinery, regarded as a key project for Yunnan’s economic development. The scope includes a 260,000 bbl/d refinery, a network of 637 retail stations and 10 terminals.

Nuaim said the project has “great potential” to expand his firm’s basic chemical slate, which currently includes polypropylene, aromatics and benzene. According to figures provided by Aramco, bilateral Saudi-Yunnan trade totaled $107 million in 2016, which the company said highlights its already important economic relationship with Yunnan province.

The planned joint venture would not only focus on the refining sector, but would involve the entire downstream value chain, from refining and petrochemicals to retail fuel stations. Expanding the petrochemical facilities at the site will support the province’s plan for industrial park development as well as integrating with Aramco’s global chemicals portfolio, the Saudi chemical and plastics producer said. Key market for the output will be southeast Asia.