DOHA: Saudi Aramco has backed out of a deal to build a $10-billion refining and petrochemicals complex in China. The energy giant has been slashing spending due to low oil prices and moreover, the market outlook is uncertain.
Saudi Aramco, decided to stop investing in the facility in China’s northeastern province of Liaoning after negotiations with its Chinese partners. The company has so far declined comment. Saudi Aramco plans to slash capital spending as it tries to maintain a $75 billion dividend amid low crude prices and rising debt.
The joint venture deal was signed when Crown Prince Mohammed bin Salman was in Beijing in February last year. Saudi Arabia wanted to increase market share in Asia and also has encouraged Chinese investment in the kingdom.
The Saudis were set to team up with China North Industries Group Corp. (Norinco) and Panjin Sincen to form Huajin Aramco Petrochemical Co. Saudi Arabia was expected to supply 70 per cent of the crude for the 300,000-barrel-a-day refinery. The Chinese side will proceed with the project, which also includes an ethylene cracker and a paraxylene unit while the joint venture remains a future option.
Saudi Aramco had also been in talks with Pertamina of Indonesia earlier this year over a refinery expansion project, but negotiations ended without an agreement.