The Saudi Arabian Oil Company (Aramco), one of the world’s leading integrated energy and chemicals companies, and Shandong Energy Group, are exploring collaboration on integrated refining and petrochemical opportunities in China.

The companies have signed a Memorandum of Understanding (MoU) which includes a potential crude oil supply agreement and chemicals products offtake agreement, supporting Aramco’s role in building a thriving downstream sector in Shandong Province, an eastern province on the Yellow Sea.

Shandong Energy Group is the third-largest coal mining group in China in terms of production volume. The province is home to most of the country's independent refiners, and aims to increase oil infrastructure investments to improve crude and products trade flow over the next few years.

The signing ceremony, which was conducted with the participation of Shandong Provincial People’s Government, underlined the importance of Aramco’s collaboration with Chinese companies. The scope of the MoU extends to cooperation across technologies related to hydrogen, renewables and carbon capture and storage.

Through collaborations such as this in China’s energy heartland, we are creating new pathways for growth in a country that is driving the increased integration of refining and petrochemical processes. I am delighted that this spirit of cooperation is being extended across hydrogen, renewables and carbon capture and excited by the potential for further cooperation in these key areas which will shape our collective future.

—Mohammed Y. Al Qahtani, Aramco Senior Vice President of Downstream

The announcement strengthens Aramco’s efforts to support demand for energy, petrochemicals and non-metallics in China as the company seeks to expand its liquids-to-chemicals capacity to up to 4 million barrels per day by 2030.

The MoU comes in the context of efforts to strengthen ties between Saudi Arabia and China; Saudi Arabia and China signed a strategic partnership agreement last week during a visit to the kingdom by President Xi Jinping.

During a summit of Gulf Arab leaders held in Riyadh, President Xi said that China would work to buy oil and gas in yuan—a move that would weaken the US dollar’s grip on world trade. President Xi said that China and Gulf nations should make full use of the Shanghai Petroleum and National Gas Exchange as a platform to carry out yuan settlement of oil and gas trade.

Xi noted that over the past decade, trade between China and Arab states has grown by US$100 billion, with the total volume exceeding US$300 billion. China’s direct investment in Arab states was up by 2.6 times, with the stock of investment reaching US$23 billion; more than 200 Belt and Road projects have been carried out.