China's state-owned oil giant Sinopec announced on Monday that it had signed an agreement with a subsidiary of Saudi Aramco to establish a 28.8 billion yuan joint venture focused on the second phase of the Gulei integration project in Fujian Province.

The agreement was signed by Sinopec, its subsidiary Fujian Refining & Chemical Co., Ltd., and Aramco Asia Singapore Pte. (AAS), Saudi Aramco's Singapore subsidiary. According to the agreement, the registered capital of the joint venture is 28.8 billion yuan, with Sinopec and Fujian Refining & Chemical Co., Ltd. contributing 7.2 billion yuan (25%) and 14.4 billion yuan (50%) in cash, respectively, and the remaining 7.2 billion yuan (25%) will be injected by AAS. The terms stipulate that the project will be locked up for 5 years after completion, and the equity shall not be transferred without consent (AAS can be transferred to related parties).

The joint venture, Fujian Sinopec Aramco Refining and Petrochemical Co., will carry out port operations, crude oil transportation and refining and chemical integration projects in the Gulei Port Economic Development Zone in Zhangzhou, Fujian Province. Sinopec and Saudi Aramco started construction of the project in November last year as part of Aramco's strategy to expand its overseas downstream business, which will boost China's "oil-to-chemicals" by securing an average supply of 1 million barrels per day of crude oil.

According to PetroChina's announcement, the acceptance of AAS as a partner in this transaction will help the Gulei Phase II project to ensure the supply of crude oil resources, optimize financing, integrate the technical advantages of both parties, improve the level of overall planning and optimization of regional resources, and help improve the company's refining and chemical integration operation level and regional competitiveness.

According to previous reports, the second phase of the Fujian Gulei Refining and Chemical Integration Project has a total investment of 71.1 billion yuan, which is a super-large energy investment project of the Belt and Road Initiative and an important part of the new pattern of three-dimensional energy cooperation between China and Saudi Arabia. The project plans to build more than 30 sets of refining and chemical units such as 16 million tons/year of oil refining, 1.5 million tons/year of ethylene, and 2 million tons/year of aromatics, as well as supporting facilities such as public works and berths, mainly using Sinopec's independent research and development technology, which effectively guarantees the supply of basic raw materials such as oil refining, ethylene and aromatics in Gulei Petrochemical Base.

In December 2022, during President Xi Jinping's state visit to Saudi Arabia, Sinopec and Saudi Aramco signed a cooperation framework agreement on the second phase of the Gulei Refining and Chemical Integration Project. On November 18, 2024, the project officially started and is expected to be fully operational in 2030.(This article is from the official website of Jiandao www.seetao.com it may not be reproduced without permission, otherwise it must be investigated, please indicate Jiandao.com + original link) Jiandao.com strategic column editor / Sun Fengjuan