Shenghong Holding Group chairman Miao Hangen and Aramco executive vice-president of products and customers Yasser M Mufti sign the agreement. Credit: Aramco.

Saudi Aramco and Jiangsu Eastern Shenghong (Eastern Shenghong) have signed a cooperation framework agreement to hold talks on Aramco’s investment in Eastern Shenghong’s petrochemical subsidiary.

The Middle East energy and chemicals giant will potentially acquire a 10% equity stake in Jiangsu Shenghong Petrochemical Industry Group (Shenghong Petrochemical).

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Aramco did not disclose the financial details of the potential deal, which will be subject to due diligence and regulatory approvals.

Through its wholly owned subsidiaries, Shenghong Petrochemical owns and runs a 320 million-barrels-per-day (mbd) integrated refinery and petrochemicals complex.

It also operates a methanol-to-olefins and derivatives facility, as well as a plant for producing pure terephthalic acid.

These facilities are at the Xuwei Petrochemical Industrial Park in Jiangsu province.

Under the agreement, it is expected that Aramco will supply crude oil and potentially other feedstocks to Shenghong Petrochemical.

Subject to future negotiations and the implementation of binding agreements, Aramco and Shenghong Petrochemical also hope to work together on the development of a sizeable expansion project.

Aramco downstream president Mohammed Y Al Qahtani said: “Aramco looks forward to partnering with Eastern Shenghong to supply the reliable energy required for China’s long-term growth, development and energy security.

“The signing of this cooperation framework agreement is another significant milestone in Aramco’s downstream strategy to increase conversion of Arabian crude oil to chemicals and to expand into the critically important Chinese market. We see China as an important partner not only for today but for decades to come.”

In July this year, Aramco acquired a 10% stake in China’s Rongsheng Petrochemical (Rongsheng).

The 24.6bn yuan ($3.4bn) Rongsheng deal also forms part of Aramco’s plans to expand operations in China.