- Saudi Aramco has entered into a cooperation framework agreement with Jiangsu Eastern Shenghong, which may pave the way for Saudi Arabia's oil giant to become an investor in the Chinese company's refining division. According to a statement from Aramco, this framework agreement will facilitate discussions regarding the potential acquisition of a 10% strategic equity stake by Aramco in Jiangsu Shenghong Petrochemical Industry Group, commonly known as Shenghong Petrochemical, a wholly-owned subsidiary of Eastern Shenghong.
- China is not only Aramco's largest oil market but also a crucial destination for its crude oil shipments. Earlier this year, Aramco finalized a deal to purchase a 10% stake in Shenzhen-listed Rongsheng Petrochemical for $3.4 billion. Aramco has emphasized that any potential investment in Shenghong Petrochemical will be contingent on thorough due diligence and the necessary regulatory approvals, with the financial terms of the investment remaining undisclosed.
Why it matters
As part of the agreement, Aramco is set to supply Shenghong Petrochemical with crude oil and potentially other raw matercials. Furthermore, Aramco and Shenghong Petrochemical have plans to collaborate on an expansion project, as stated in the agreement.