China is a land of opportunities

Mutib A. Al-Harbi, Aramco Asia President

Exclusive interview of Aramco Asia President Mutib A. Al-Harbi

"Our cooperation with China has long gone beyond the scope of crude oil trade, and has extended in a broader, more diversified, and more strategic direction." During the Third Belt and Road Forum, Mutib A. Al-Harbi, Aramco Asia President, emphasized in an exclusive interview with a reporter from China Energy News. What impact has the Belt and Road Initiative brought to Saudi Aramco? How will Aramco expand its business landscape in China? Mr. Harbi answered these questions in our exclusive interview.

  • In the strategic alignment between the Belt and Road Initiative and Saudi Vision 2030, what cooperation opportunities has Saudi Aramco gained? What impact will this have on Aramco’s business development in China?

Aramco has obtained many investment opportunities thanks to the strategic alignment between BRI and Saudi Vision 2030. Aramco’s relationship with China has gone far beyond crude oil sales and developed into a more extensive, diversified, and strategic bilateral partnership.

In terms of size, scale and strength, China’s economy is exceptional. The country is a land of opportunities for leading companies and strategic partners that share China’s vision. Aramco is proud to have been a key partner of China for decades, and our views on the future of energy are closely aligned. We are doubling down on meeting China’s energy demands, including new lower carbon products; chemicals; and advanced materials, all supported by emissions reduction technologies.

Aramco is committed to helping China achieve its carbon reduction goals. As the lowest-cost producer globally, we are uniquely positioned to leverage the emerging technologies needed to support a stable and orderly transition.

Last year, Aramco signed a Memorandum of Understanding (MOU) with Shandong Energy Group to explore collaboration on integrated refining and petrochemical opportunities. In addition, the MOU extends to cooperation across technologies related to hydrogen, renewables and carbon capture and storage, which will eventually contribute to the accomplishment of China’s carbon neutrality target.

  • Since delivering the first barrel to China in 1991, Aramco has been supplying oil to Chinese market for 32 years. Aramco is not only a witness and beneficiary of China’s rapid economic and social development, but also a participant and contributor. The modern energy system part of China's 14th Five-Year Plan emphasizes accelerating energy transformation towards green and low-carbon energy while ensuring stable and secure supply. Against this background, what are Aramco’s latest strategic plans and goals? What will be the direction and focus of Aramco in China?

Today, we have five offices in China and three joint ventures in China, namely Huajin Aramco Petrochemical Co., Ltd. (HAPCO), a new integrated refining and petrochemical company which is still under construction, and Fujian Refining & Petrochemical Co., Ltd., a 280MBD integrated refining and petrochemical company, and Sinopec Senmei (Fujian) Petroleum Co., Ltd, a retail joint venture between Aramco, ExxonMobil and Sinopec, with approximately 1,000 retail gas stations and convenience stores and 12 fuel distribution terminals. We also have 10% interest of Rongsheng Petrochemical Co., Ltd.

In the energy sector, we have recently made two landmark accomplishments, signaling further development of Aramco business in China: Aramco's acquisition of 10% of Rongsheng Petrochemicals, and the Huajin Aramco Petrochemical Co., Ltd. joint venture established by Aramco, Norinco and Panjin Xincheng Industrial Group.

Aramco is already working on three major strategies and development priorities to support China’s long-term energy security and its emissions reduction goals. First, we are expanding our oil production capacity by 1 million barrels per day to 13 million barrels per day by 2027 and increasing our gas production by more than 50% by 2030.

Second, we are determined to further reduce the already low carbon intensity of our oil production, as well as our methane intensity, through solutions like advanced carbon capture and storage, and circular carbon economy technologies. To advance technologies that will help all of us move closer to a net-zero emissions future, we recently launched a US$1.5 billion venture capital sustainability fund and are developing more efficient and lower emission engines and hybrid systems.

Aramco has been partnering with Tsinghua University, FAWDE and Shandong Chamboard Petrochemicals Company to develop a state-of-the-art ultra-low emission heavy-duty truck. Aramco also provided subject matter expertise in a joint study for the preparation of the “China Automobile Low Carbon Action Plan (CALCAP) – 2020 Research Report,” led by Automotive Data of China Co., Ltd. (ADC) of China Automotive Technology and Research Center Co., Ltd. (CATARC). The report is an initiative to support China in peaking GHG emissions by 2030 and achieving carbon neutrality by 2060.

In March, we signed a letter of intent with China's Geely Automobile and France's Renault to become a potential minority shareholder in a new powertrain technology company that aims to support the development of synthetic fuel solutions and next-generation hydrogen technology with the production of more than 5 million internal combustion, hybrid and plug-in hybrid engines and transmissions per year.

Third, we are steadily adding lower carbon energy to our portfolio, especially blue hydrogen and blue ammonia, e-fuels, and renewables.

In May, we announced our full cooperation with Baosteel and the Saudi sovereign wealth fund PIF to establish the first full-process thick plate factory in Saudi Arabia. The facility is designed to advance the steel industry ecosystem, not just within the Kingdom, but across the Gulf region, and is committed to manufacturing low-carbon steel production by cutting carbon dioxide emissions from steel plate production by 90% in the future.

In particular, we see a major win-win opportunity to build a world-leading, integrated downstream sector in China, with special emphasis on the high conversion of liquids directly into chemicals as part of our broader liquid-to-chemicals business expansion plans.

  • In the past two years, COVID-19 pandemic, combined with the conflict between Russia and Ukraine, has had a serious impact on the international energy market. Oil and gas prices have risen sharply, and the market has experienced inadequate oil supply more often. Under the new international situation, what kind of cooperation should be carried out between China and Saudi Arabia? What are the challenges and opportunities? How do you view the development of the commodity market in the next few years?

The situation in Ukraine has exposed the limitations of global energy policies and underscored the critical role energy companies play in providing reliable, affordable and increasingly sustainable energy.

However, it is important to recognize that the conflict is not the root cause of the crisis. The oil market was already stretched following years of underinvestment. To ensure an orderly transition, the world needs conventional and new energy to run in parallel for as long as required. Prematurely discontinuing investments in conventional energy will likely lead to serious supply shortfalls and slow the pace of the global transition toward lower emissions.

At Aramco, we believe that continued investment in conventional energy alongside ongoing efforts to advance renewable technologies is the most effective way to deliver an orderly transition that does not come at the expense of economic prosperity or energy security. Ensuring this security is why we aim to increase our capacity through multiple increments. At the same time, we also intend to increase our natural gas production by more than half by 2030 to help the Kingdom achieve a lower carbon energy mix.

Source: China Energy News   Reporter: Wang Lin