State-owned oil giant Saudi Arabian Oil Co. is in talks to invest billions of dollars in a Chinese state-owned oil refinery, according to people familiar with the matter.
The deal--which could be valued at up to $2 billion--would give Saudi Aramco, as it is known, a more-than 30% stake in a 260,000-barrels-a-day plant owned by PetroChina Co. in China's Yunnan province, the people said. PetroChina is a unit of state-owned China National Petroleum Corp.
Continue Reading Below
Saudi Arabia could supply some of the refinery's crude needs, one of the people said. Aramco might also buy some of PetroChina's retail assets, the person said.
If the talks succeed, they would finally bring to fruition plans that Aramco and PetroChina have been discussing for several years, the people said.
Aramco and PetroChina originally signed a memorandum of understanding to supply oil to the Yunnan refinery in exchange for an equity stake in 2011, but the deal never got off the ground.
Saudi Arabia has been trying for years to strengthen its ties with China on energy and, more recently, investments. The kingdom, which is a top oil supplier to China, has sought to build refineries in tandem with Chinese companies.
Aramco and China Petroleum & Chemical Corp., better known as Sinopec, last year inaugurated a joint-venture refinery with a capacity of 400,000 barrels a day on the Red Sea coast of Saudi Arabia.
Recently, bridge-building between the two countries has accelerated as Saudi Arabia seeks to boost its supply of oil to China, as well as gather investors for a proposed listing of part of Aramco. That IPO, which has been billed as the biggest ever, could take place in 2018 and raise as much as $100 billion. The Saudis are hoping that Chinese companies and funds can take major stakes in the IPO, according to people familiar with discussions.
Chinese President Xi Jinping visited Saudi Arabia early last year, and Saudi King Salman traveled to China in March, trips that generated a host of agreements and memorandums of understanding for business deals--although it is possible that many won't materialize.
Write to Julie Steinberg at firstname.lastname@example.org and Summer Said at email@example.com
(END) Dow Jones Newswires
August 04, 2017 06:31 ET (10:31 GMT)