In a strategic move to boost capacity to meet the escalating global demand for high-quality petrochemicals, China Petroleum and Chemical Corp (Sinopec) and Saudi Aramco have signed a Venture Framework Agreement to develop a fully integrated petrochemical complex at their joint venture in Saudi Arabia, Sinopec said on Wednesday.

The agreement seeks to advance engineering studies for the development of a fully-integrated petrochemical complex at Yasref, a joint venture owned by Aramco (62.5 percent) and Sinopec (37.5 percent), enhancing its ability to meet the growing demand for high-quality petrochemical products.

The project aims to maximize operational synergies and create additional value through introducing a petrochemical unit, a large-scale mixed feed steam cracker with 1.8 million metric tons per year capacity, and 1.5 million tons per year aromatics complex with associated downstream derivatives integrated into the existing Yasref complex, it said.

"The agreement further deepens and elevates our strategic partnership with Sinopec, while the planned expansion project solidifies our commitment to product innovation and diversification," said Amin H. Nasser, Aramco president & CEO. "As we look forward to strengthening our collaboration with Sinopec in making Yasref a leading refining and petrochemical company, we aim to contribute to strengthening Saudi Arabia's position as a global leader in energy and chemicals."

Industry experts believe the chemical industry faces worldwide structural shortages in high-end products represented by new chemical materials and high-end fine chemicals.

Chinese petrochemical companies are boosting innovation to focus on specialized and high-end products, which is setting them apart in the global market and increasing their profits. This strategic move is positioning them to compete in more valuable parts of the international petrochemical industry, they say.

According to Pang Guanglian, deputy secretary of China Petroleum and Chemical Industry Federation, China's petrochemical industry already accounts for 45 percent of global sales and market share, and is rapidly approaching over half, highlighting its dominant position.

Driven by technological progress and strong supply chains, major Chinese oil and petrochemical firms, including State-owned oil giant China National Petroleum Corp, Sinopec, as well as China National Offshore Oil Corp, are expanding their global presence and aiming for a larger market share, capitalizing on the rising demand for energy transition technologies.

The federation believes that although the trade situation is still challenging, with numerous obstacles, trade frictions and uncertainties, demand potential for China's petrochemical products in international markets remains significant.

To address challenges in the petrochemical industry, Pang said it is necessary to prioritize energy saving and carbon reduction through process optimization, increase the adoption of renewable energy sources like green electricity and shift toward sustainable raw materials such as biomass instead of traditional fossil fuels.

These approaches represent a multi-faceted strategy for the petrochemical sector to enhance sustainability and reduce its environmental impact, he said.