Saudi Aramco intensifying efforts to expand into China downstream oil operations
- August 23, 2023
- Posted by: Quatro Strategies
- Categories: China, Middle East, Oil & Gas
Saudi Aramco, the world’s largest oil company, is intensifying its efforts to expand its presence in China’s downstream oil sector, targeting the robust recovery in oil product demand in the country. Mohammed Al Qahtani, the company’s Downstream President, emphasized the strategic importance of China to Aramco’s business growth, not only in Asia but worldwide. Al Qahtani stressed that Aramco aims to remain a dependable source of long-term oil supply for China.
China’s oil demand has been a driving force in the global oil market, with many analysts predicting that a substantial portion of this year’s oil demand growth could originate from China alone. The International Energy Agency (IEA) and other industry forecasters estimate that around 70% of the global oil demand increase in 2023 could come from China.
Saudi Aramco has been actively expanding its downstream business in China in recent times. The company recently completed the acquisition of a 10% stake in Rongsheng Petrochemical Co Ltd for $3.4 billion. This move not only deepens Aramco’s foothold in China’s petrochemical sector but also aligns with the company’s strategy to secure a larger share of China’s oil market.
Earlier in the year, Saudi Aramco announced significant refinery and petrochemical deals in China. One of these deals involves a joint venture with Chinese partners to construct a $10-billion refining and petrochemical complex within the next three years. This venture will not only help Aramco gain a stronger presence in China’s downstream market but also provide an additional export outlet for Saudi crude oil in China.
Moreover, as part of its expanding downstream strategy, Aramco completed its acquisition of a 10% interest in Rongsheng Petrochemical, a move that solidifies the company’s presence in the Chinese downstream sector. Under a long-term sales agreement, Aramco will also supply 480,000 barrels per day of Arabian crude oil to Zhejiang Petroleum and Chemical Co. Ltd (ZPC), an affiliate of Rongsheng Petrochemical.
Overall, Aramco’s increased focus on China’s downstream market reflects its anticipation of sustained growth in oil demand from the country and its intention to secure a prominent position within China’s evolving energy landscape.
Interested in learning more?
Sign up for Top Insights Today
Top Insights Today delivers the latest insights straight to your inbox.
You will get daily industry insights on
Oil & Gas, Rare Earths & Commodities, Mining & Metals, EVs & Battery Technology, ESG & Renewable Energy, AI & Semiconductors, Aerospace & Defense, Sanctions & Regulation, Business & Politics.
Read more insights
The geopolitics-oil “firewall” holds, but it’s not guaranteed
Half a century after the oil shocks of the 1970s rewired global macroeconomics, the prevailing assumption in markets is that Middle East conflict is tragic, destabilizing and dangerous, but rarely macro-dominant. The modern oil system has repeatedly demonstrated a kind of geopolitical shock absorption: violence can intensify, shipping can be harassed, even state-on-state exchanges can occur, and yet crude often behaves as if the world’s central premise still holds, barrels keep moving.
This “firewall” between geopolitics and energy pricing is real but contingent. It is not that the Middle East has become economically irrelevant; it is that the specific kinds of disruptions that force a sustained oil repricing, like damage to production, export terminals, or a closure of critical maritime choke points, have generally been avoided. If that restraint breaks, the macro consequences would be immediate and global.
A Black Friday CME outage reveals how tight copper and silver are
Silver and copper just staged another wild rally, and this time the move says as much about market plumbing and geopolitics as it does about simple supply and demand. On a thin Black Friday trading day in the US, a chaotic outage at CME Group’s Chicago Mercantile Exchange helped turn an already bullish setup in metals into a spike.
With parts of the world’s key futures platform down for hours, liquidity dried up and bid-ask spreads in gold briefly blew out, a classic sign that fewer players were willing, or able, to make markets. In that vacuum, prices for silver and copper ripped higher once trading resumed, extending gains already underway on the London Metal Exchange.
China wields rare earths as geopolitical weapon in trade standoff with U.S.
China has escalated its use of critical minerals as a strategic lever in the deepening trade conflict with the United States, expanding export controls on key rare earth elements in a move that could disrupt global supply chains for advanced manufacturing and defense technologies.
In response to President Donald Trump’s sweeping “reciprocal tariffs” on Chinese imports, Beijing announced on Friday it would impose tighter export restrictions on seven types of rare earths—elements crucial for a broad array of high-tech applications, from electric vehicle motors and wind turbines to advanced missile guidance systems and stealth technologies.