Aramco Agrees to Supply Oil to Chinese Refinery

RIYADH, Saudi Arabian Oil Co. State said yesterday that its unit of Aramco Overseas Co., signed a memorandum of understanding with PetroChina Co. Ltd., a subsidiary of China National Petroleum Corp. to supply crude to a refinery base planned in southwestern China.
Aramco, the world's largest oil company, will provide the greatest amount of 200,000 bpd of Saudi crude oil through long-term contract to the refinery of 10 million metric tons per year of PetroChina in China's Yunnan province, under the agreement, Aramco said in a statement posted on its website.
Saudi Arabia already exports about 1.1 million barrels of oil to China, while the Middle East as a whole provides about 2.9 million barrels of oil to the country.
The portfolio of refinery products include ultra low sulfur gasoline and diesel specifications that meet current and future Chinese.
"This agreement is an important step forward in our relationship with the CNPC and the expansion of our global downstream strategy," said the chief executive of Aramco, Khalid Al-Falih in the statement. "We consider ourselves not simply sellers of oil to China, but strategic partners."
China, the second largest economy in the world, beat the U.S. as the largest importer of oil from Saudi Arabia in 2009, and the kingdom's oil is increasingly important factor in the growing power of the nation. Energy demand is growing rapidly in China, driven by rapid industrialization and a growing middle class.
Despite China's efforts to diversify its oil imports, the bulk of imported crude oil it needs to spur growth comes from Saudi Arabia, according to the U.S. Energy Information Administration.
Last week, Aramco signed a memorandum of understanding with China Petrochemical Corp., or Sinopec Group, to develop the Yanbu refinery to 400,000 barrels per day in Saudi Arabia Red sea coast.
Sinopec Group initially will own 37.5% and Aramco will own 62.5% in the project should proceed to formally participate in a joint venture to begin operation in 2014, Aramco said.