Hengli Petrochemical Co. Ltd. has signed a long-term agreement for Saudi Arabian state-owned oil giant Aramco to supply it with around 20 million tons of crude oil a year, starting in October. It is thought to be the first such supply deal between Aramco and a private Chinese oil company. The crude will be sent to Hengli’s refinery in the special economic zone on Dalian’s Changxing Island in China’s northeast. Some 270,000 tons of Saudi Arabian medium crude reached the refinery on June 28, with state-owned Sinochem Oil Co. Ltd. assisting with customs clearances, as per a trading agreement signed in January. Hengli’s Aramco deal is a milestone for China’s independent “teapot refiners” — producers that have managed to develop on the fringes of a domestic industry dominated by state-owned giants such as China National Petroleum Corp. and PetroChina Company Ltd. While mostly sidelined by a lack of government support, teapots grew rapidly in the last few years and now account for around a fifth of China’s crude oil imports, leading to an increasing interest on international markets. In June ExxonMobile Corp.’s global oil marketing team stormed into China hoping to woo teapot refiners and peddle deals at an exhibition in Dongying, Shandong province, showing the growing interest from major players in the expanding sector. While many teapots refine fewer than 100,000 barrels per day, Hengli gained approval in April from the state economic planner, the National Development and Reform Commission, to import 400,000 barrels per day, the largest quota ever for a private refinery, according to Reuters. Contact reporter Ke Dawei (daweike@caixin.com)
Saudi Arabia's state-owned oil company Hengli Petrochemical has signed a deal to supply crude oil to a "teapot" refinery operated by private Chinese firm Aramco. Under the arrangement, 20 million tons of crude per year will be supplied to the facility, situated in the special economic zone of Changxing Island. Such teapot refineries have developed rapidly in China in the last few years, and now account for a fifth of the country's crude oil imports. This is believed to be the first supply deal between Hengli Petrochemical and a private Chinese oil company.