SINGAPORE – China’s state-owned Zhenhua Oil has booked the loading of 2 million barrels of Saudi crude oil in August, two sources familiar with the matter said on Wednesday, suggesting a new joint venture refinery between China and Saudi Arabia is poised to begin operations.
The crude oil will be supplied to the newly built 300,000 barrels per day Huajin Aramco Petrochemical (HAPCO) refinery in China’s northeastern Liaoning province, sources said.
HAPCO is a joint venture between Saudi Aramco and Chinese state-owned defense conglomerates Norinco Group and Panjin New City Industrial Group.
Reuters reported in June that HAPCO’s start of operations had been postponed to September or October due to disruptions to Middle East oil supplies through the Strait of Hormuz.
Aramco declined to comment, and Zhenhua Oil did not immediately respond to a Reuters request for comment.
According to people familiar with the matter, Norinco’s subsidiary, Zhenhua Co., Ltd., is procuring crude oil for the refinery.
Aramco announced that it will supply up to 210,000 barrels per day of crude oil to HAPCO in 2023.
Trade sources said Aramco sold a total of about 24 million barrels (774,194 barrels per day) of crude to Zhenhua and other Chinese refiners in August, double the record low of about 12 million barrels in July.
The world’s biggest oil exporter cut its official selling price for crude to Asia in August by $11 a barrel from the previous month, the biggest drop in more than 20 years.
The sharp price cuts come after a tentative deal between the United States and Iran eased concerns about Middle East supplies and caused oil prices to plummet. But fresh attacks in the region since last week have reignited supply concerns and slowed shipping through the Strait of Hormuz again.
Zhenhua last loaded Saudi term crude in August 2024, according to Reuters records.
(Reporting by Siyi Liu in Singapore; Editing by Sonali Paul)
