Aramco & Sinopec Signed MOU for Refining PartnershipSource: www.gulfoilandgas.com 3/16/2011, Location: Middle East
Saudi Aramco and China Petrochemical Corporation (Sinopec) signed a Memorandum of Understanding (MOU) related to the ongoing development of the Red Sea Refining Company (RSRC), a world-class, full-conversion refinery in Yanbu’, on the west coast of Saudi Arabia. The MOU was signed by Khalid A. Al-Falih, President and CEO, Saudi Aramco, and Su Shulin, President, Sinopec.
Saudi Aramco and Sinopec have agreed to initially subscribe to equity interests of 62.5% (Saudi Aramco) and 37.5% (Sinopec) in RSRC should they proceed to formally participate in a joint venture. Both companies bring commercial and technical knowledge and expertise to the joint venture while creating a strategic partnership to enhance trade of transportation fuels between a significant energy producer and a significant consumer.
In-Kingdom refinery projects such as the RSRC joint venture in Yanbu’ have the location advantage to effectively and efficiently supply both international and domestic markets. Development of this particular relationship with Sinopec in RSRC is a continuation of Saudi Aramco’s long-term strategy of making world-scale downstream investments following a massive upstream program that increased the Company’s crude oil production capacity to 12 million barrels per day.
RSRC is one of a number of downstream projects where Saudi Aramco is demonstrating its commitment to meet future worldwide energy demand.
The joint venture will also continue a partnership tradition between Saudi Aramco and Sinopec across the hydrocarbon value chain in Saudi Arabia and in China. Sinopec is Saudi Aramco’s partner (with ExxonMobil) in the Fujian Refining and Petrochemical Company Limited in Fujian Province, as well as in Sino Saudi Gas Ltd., one of the in-Kingdom gas exploration companies. Sinopec is also among Saudi Aramco’s largest crude oil lifters.
“This agreement further strengthens our mutually beneficial partnership with Sinopec, and in addition it demonstrates our commitment and capability to add value to our expanding downstream business through a world-class partner, with a solid network of marketing and distribution capability needed to support the Red Sea Refining Company,” said Khalid A. Al-Falih, President and CEO, Saudi Aramco.
“Sinopec and Saudi Aramco have developed a strong and long-term relationship, and have built concrete cooperation in refining, petroleum trading, and engineering services. The Red Sea Refining Company will open a new chapter in which Sinopec consolidates the complementary strategic partnership with Saudi Aramco through the downstream investment in Saudi Arabia. The project is a further step by Sinopec to expand its international operation by developing its overseas refining and petrochemical business, and to sharpen its competitive edge. It will also help Sinopec gain access to more energy sources and secure China’s energy supply” said Su Shulin, President, Sinopec.
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