State oil giant Saudi Aramco has signed a contract with Chinese oil refiner North Huajin Chemical Industries Group Corp to supply crude in 2017, two sources with knowledge of the matter said on Monday.
The contract, the first between Aramco and Huajin, comes as Saudi Arabia attempts to regain its status as the top crude supplier to China, the world’s second-largest oil consumer, this year after losing the top spot to Russia in 2016.
Saudi Aramco will supply Arab Extra Light crude to Huajin to enable the Chinese state-controlled refiner to produce more naphtha for its petrochemical production, one of the sources said. Saudi Aramco did not respond to an e-mail seeking comment. Huajin, a unit of China’s military group NORINCO, could not be immediately reached for comment.
Top global oil exporter Saudi Arabia has been exploring new ways to sell more crude to China by offering spot cargoes and providing better credit terms.
Saudi Aramco could also start supplying crude to the Huizhou refinery owned by China National Offshore Oil Corp (CNOOC) after an expansion that is expected to finish in the second quarter.
Huajin operates a crude oil refinery in Panjin in Liaoning province with a processing capacity of 6 million tonnes per year and a petrochemical plant in Panjin that produces 700,000 tonnes per year of ethylene, according to an announcement from its listed unit North Huajin Chemical Industries.