Oil giant plans production expansion to fuel China's efforts toward carbon goals

Saudi Aramco will support China's domestic energy security by expanding its oil and gas production capacity while reducing its oil production carbon intensity to facilitate the country's green transition, said a top company official.

"Saudi Aramco aims to play a key role at the heart of China's long-term energy security and high-quality development," said Amin H.Nasser, president and CEO of the company, during the China Development Forum in Beijing.

The climate change mitigation goals cannot be achieved at the expense of energy security. Saudi Aramco will expand its oil production capacity to 13 million barrels per day by 2027 while increasing gas production by more than 50 percent by 2030 to fuel China's efforts to this end, Nasser said.

The CEO said the company — the world's largest oil exporter — is also working on green solutions, such as advanced carbon capture and storage and circular carbon economy technologies, as "China's venture capital space offers important investment opportunities to stimulate the technology development and innovation required".

Aramco said on Monday that its wholly-owned unit Aramco Overseas Co will acquire a 10 percent stake in Shenzhen-listed Rongsheng Petrochemical Co Ltd for 24.6 billion yuan, which is expected to expand its downstream presence in China.

Aramco will supply 480,000 b/d of Arabian crude to a Rongsheng subsidiary — Zhejiang Petroleum and Chemical Co Ltd — under a long-term sales agreement.

The company also said on Sunday that it will kick off construction this year of a major integrated refinery and petrochemical complex in Panjin, Liaoning province, which will receive 210,000 b/d of crude after completion from Aramco. The facility will be fully operational by 2026.

Aramco has a 30 percent stake in the complex through its joint venture Huajin Aramco Petrochemical Co with China North Industries Group Corp, or Norinco, which holds a majority share of 51 percent. Panjin Xincheng Industrial Group owns the remaining stake of 19 percent.

The project represents "a major milestone in our ongoing downstream expansion strategy in China and the wider region, which is an increasingly significant driver of global petrochemical demand", said Mohammed Yahya Al-Qahtani, Aramco executive vice-president of downstream.

Multinational corporations have been continuing to prioritize downstream assets in China, as demand in the country is expected to continue growing along with economic recovery, said Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University.

Saudi Arabia is China's top crude supplier, while China is also central to Aramco's strategy to diversify into more specialized high-value chemical products and less carbon-intensive hydrocarbon usage at the same time, Lin said.

Market fluctuations will lead to more cooperation between countries rich in resources and big energy consumers, and are mutually beneficial in refining, as well as science and technology research and development, he added.

The company also signed a memorandum of cooperation with the Guangdong provincial government on Sunday to jointly explore investment opportunities in energy cooperation, research and innovation and industrial projects.

Saudi Aramco is willing to strengthen cooperation with Guangdong in petrochemicals, hydrogen energy and ammonia energy, to support Guangdong in developing more sustainable petrochemical industries, he said.

The CEO said: "We want to be an all-inclusive source of energy and chemicals for China's long-term energy security and China's high-quality development. That is why we are doubling down on China's energy supply, including new lower carbon products, chemicals and advanced materials, all supported by emissions reduction technologies."

Looking forward to the Chinese market, Nasser said he sees a major win-win opportunity to build a world-leading, integrated downstream sector in China, with special emphasis on the high conversion of liquids directly into chemicals as part of the company's broader liquid-to-chemicals business expansion plans.