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Saudi Arabia and China Sign Agreement to Store Millions of Barrels of Crude Oil

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Saudi Aramco has entered into a deal with China’s Rongsheng Petrochemical Group to acquire 10% of its shares and store millions of barrels of crude oil in eastern China.

On Monday, Aramco announced it had bought a stake in Rongsheng Petrochemical, which owns a majority stake in Zhejiang Petrochemical, which operates China’s largest 800,000 bpd refinery, and entered into a 20-year oil supply agreement.

And Rong Sheng said in a disclosure to the Shenzhen Stock Exchange on Tuesday that Saudi Arabia’s first oil storage agreement in China includes Qiang providing Aramco with storage space for three million cubic meters (about 18.6 million barrels) at the port of Zhoushan. . in eastern China.

Aramco, the world’s largest exporter of crude oil, has long been seeking storage space in China to store crude oil closer to Asian buyers and be able to meet demand in the region faster.

China is also likely to import record volumes of oil this year as its economy recovers from the coronavirus pandemic.

According to the disclosure, Aramco is aiming for a minimum storage target of 1.5 million tonnes (about 11 million barrels) at Zhoushan, and if storage falls below 750,000 tonnes, Aramco will have to cut its supplies to Zhejiang.

Aramco’s only crude oil storage facility in Asia is currently located in Okinawa, Japan, where the state-owned company renewed an agreement last December to store about eight million barrels.

In addition to a 480,000 bpd deal announced on Monday, Aramco also agreed to supply petrochemical feedstocks such as naphtha and paraxylene to Rongsheng, one of China’s largest polyester producers.

Paraxylene is a raw material for the production of synthetic fibers and plastic bottles.

The disclosure states that Rongsheng will supply Aramco in exchange for 800,000 tons per year of polyethylene and polypropylene used in the plastics industry and 300,000 tons per year of other chemical products for 20 years.

Source: Reuters.

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