Sinopec reportedly secures $1.1bn contract to construct gas pipelines for Aramco

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Sinopec Oilfield Service, a unit of Sinopec Group, has reportedly signed a $1.1bn (RMB7.96bn) deal to build natural gas pipelines for Saudi state-owned energy firm Aramco.

The petroleum engineering services firm said the contract is for the procurement and construction of the third phase of the master gas system in Saudi Arabia.

Sinopec plans to construct parts of a pipeline grid, including trunk lines totalling 2,630 km and 1,340 km of branch lines. This is part of Aramco’s effort to expand gas distribution throughout the kingdom.

The company is expected to complete construction by the end of May 2027.

Aramco and Sinopec gas pipeline deal is the latest in the collaboration between Chinese-Saudi companies as the two countries have stepped up their bilateral relations across different sectors of the economy including energy, tourism and banking.

Aramco and the Public Investment Fund signed an agreement with Chinese steelmaker Baoshan Iron and Steel Company (Baosteel) in May 2023 to build a steel plate manufacturing complex in Saudi Arabia.

The steel manufacturing base has a designed annual capacity of 2.5 million tonnes of direct reduced iron and 1.5 million tonnes of steel plate.

Earlier this year, SABIC said it would go ahead with plans to build a petrochemical complex in southeastern China’s Fujian province, shoring up Saudi ties with China, the world’s top oil importer.

Aramco is in talks to acquire a 10 per cent stake in Hengli Petrochemical. The deal will significantly expand the state-owned energy giant’s refining presence in China. Hengli Petrochemical, owned by Hengli Group, operates a 400,000 barrel per day (bpd) refinery and integrated chemicals complex in China’s Liaoning Province.

The state oil behemoth is also in talks with China’s oil refining giant Rongsheng Petrochemical (Rongsheng) to buy a 50 per cent stake in each other’s refineries in China and Saudi Arabia.

Last July, the Dhahran-based firm closed the $3.6bn (SAR784bn) acquisition of a 10 per cent stake in China’s oil refining giant Rongsheng Petrochemical through its subsidiary, Aramco Overseas Company.

Aramco’s chief executive Amin Nasser said earlier in 2024 that oil demand is healthy and growing in the world’s second-biggest economy.

Read: Saudi Arabia set to raise over $11.2bn from Aramco stock offering