Saudi Aramco-Sinopec joint venture unveils new oil refinery project

Published January 21st, 2016 - 10:00 GMT

Custodian of the Two Holy Mosques King Salman and President Xi Jinping of China launched a major oil refinery project on Wednesday, reflecting the growing partnership between the two countries.

The deal would see the further expansion of the $10 billion Yanbu Aramco Sinopec Refining Company (YASREF), a joint venture between Saudi Aramco and China Petroleum and Chemical Corporation (Sinopec), which has already created 6,000 direct and indirect jobs, said Khalid Al-Falih, Aramco’s chairman, who addressed the launch ceremony.

Al-Falih said the Kingdom’s relationship with China has been strengthened in the last two decades. “China is the Kingdom’s largest trading partner and Saudi Aramco is proud to be China’s number one supplier of energy,” he said in an Aramco press release on Wednesday.

“YASREF, which is a partnership between Sinopec and Saudi Aramco, is part of Saudi Aramco’s strategy to expand and diversify its national and international investment portfolio.”

“Three strategic factors will help to further strengthen the relationship and transform it from transactional supply to a deeper, long-term partnership. First, is the doubling of Saudi Arabia’s energy supply to China, coupled with continued downstream investment to support economic growth, both in China and the Kingdom.”

Xi also attended the opening of King Abdullah Petroleum Studies and Research Center at its headquarters in the capital. It is as an independent, non-profit institution that focuses on research in energy economics, policy, technology and the environment.

King Salman also took Xi on a tour of the historical Al-Muraba’a palace on Wednesday. When they arrived, a traditional Al-Ardah dance was performed, in which both leaders participated.

In a separate interview, Gao Hucheng, the Chinese minister of commerce, said Xi’s visit has created momentum for plans to set up the Chinese-Gulf Cooperation Council (GCC) Free Trade Agreement (FTA).

Al-Falih said the second part is implementing Xi’s “One Belt-One Road” initiative that will enable the Kingdom to become a stronger partner to China, and also increase China’s investment in the Kingdom’s economic and industrial cities.

This is to enable the Kingdom to become a hub for China to access its Middle East and Africa markets. “Thirdly, is the need to continually improve the mutual cooperation between the Kingdom and China in the areas of research, innovation, knowledge transfer and culture.”

The wider “Framework Agreement for Strategic Cooperation” will actively explore more cooperation opportunities in the oil and gas industry. The YASREF refinery has the capacity to refine 400,000 barrels per day of Arabian heavy crude and produces over 13.5 million gallons per day of ultra-clean transportation fuels and other high-value refined products.

During the palace tour, the king and Xi enjoyed Arabic coffee and some local cuisine and toured the palace, which was built by the late King Abdulaziz as the headquarters of the Royal Court in 1936 and completed in 1939. It has become one of the most prominent landmarks in Riyadh.

The tour covered the palace’s rooms including the late King Abdulaziz’s court, coffee room and guard, and an exhibition of clothing and photographs of the nation’s founder with leaders from several countries, and his sons.

King Salman gave Xi a replica of Al-Muraba’a palace as a gift before saying farewell. The audience was attended by Riyadh Gov. Prince Faisal bin Bandar bin Abdulaziz; Prince Sultan bin Salman, president of the Saudi Commission for Tourism and National Heritage, princes, ministers and officials, according to the Saudi Press Agency.

China and the GCC resumed negotiations on the FTA on Jan. 17 and concluded in principle the negotiations on trade in goods on Jan. 19 this year. Gao said the next round of talks would take place in mid-February this year.

Talks with Beijing on a free trade agreement have been underway for more than a decade, but in a joint statement issued during Xi’s visit the six-state bloc said negotiations would be accelerated with an agreement by the year-end.

On foreign policy, the foreign ministers of the two countries, Adel Al-Jubeir and Wang Yi discussed on Tuesday political issues in the region. Wang said the visit would boost relations. There would be a high-level committee set up to coordinate cooperation between the two sides in all fields, he said.

The two-day landmark visit saw China and Saudi Arabia ink 14 agreements in the areas of energy, culture and industrial cooperation.

The Saudi state news agency also said Saudi Arabia and China signed a memorandum of understanding to build a high-energy nuclear reactor that would use gas for cooling.

On Jan. 15, 2015, YASREF completed its first shipment, sending 300,000 barrels of clean diesel fuel from the YASREF Marine Terminal.

In December 2015, YASREF won the Construction Project of the Year prize at the highly prestigious Platts Global Energy Awards in New York City.

Established on Jan. 14, 2012, YASREF is a joint venture between Saudi Aramco, which holds a 62.5 percent share, and Sinopec, which holds a 37.5 percent share. YASREF represents both companies’ focus on driving downstream growth across the entire hydrocarbon chain.

By Abdul Hannan Tago


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