Singapore — Chinese greenfield independent refiner Zhejiang Petrochemical has secured term crude oil supplies from state-owned Saudi Aramco, sources from both companies said on Monday.
The deal was inked in Singapore during APPEC in last week, sources said.
This is the second term deal that Saudi Aramco signed with Chinese independent refiners. The first one was with the 400,000 b/d Hengli Petrochemical in Northeast China, which has taken more than two VLCC caroges from the Saudis under the term contract.
For the contract between Saudi Aramco and Zhejiang Petrochemcial, both the companies declined to disclose the volume and the loading period.
The 400,000 b/d Zhejiang Petrochemical plans to take one VLCC cargo for delivery each month since August.
Its first crude oil cargo was 2 million barrels of Oman in late August, according to a company source.
The refinery remains under construction despite being scheduled to start up in later this year, a second company source said.
Located in Zhoushan city in eastern Zhejiang province, Zhejiang Petrochemical will have two crude distillation units, each 200,000 b/d in capacity. One is designed to crack 50% Arab Medium and 50% Iranian Light, while the other will process Brazilian Frade Blend and Iranian Heavy at a 1:1 ratio, according to its environmental report.
The refinery has received a crude import quota of 5 million mt (36.65 million barrels) from the Ministry of Commerce for 2018, and was expected to win up to 20 million mt in 2019 as it targets starting commercial operation in about June.
China's Ministry of Commerce said over the weekend that independent oil companies would be able to apply for up to 202 million mt (4.06 million b/d) of crude oil import quotas in 2019, 41.8% higher than the target of 142.42 million mt the government had initially set for 2018.
The volume was more than enough to cover demands from these greenfield refineries.
--Oceana Zhou with staff, oceana.zhou@spglobal.com
--Edited by Maurice Geller, maurice.geller@spglobal.com