BEIJING: Saudi Basic Industries Corp (SABIC) will go ahead with building a petrochemical complex in southeastern China’s Fujian province, the company said in an exchange filing on Sunday, shoring up Saudi ties with China, the world’s top oil importer.

The project, expected to cost around $6.4 billion, will be developed in a joint venture with state-owned Fujian Fuhua Gulei Petrochemical.

First proposed in 2018, the joint venture marks the latest in a series of tie-ups between Saudi firms and Chinese refiners.

The complex is expected to be able to produce 1.8 million metric tons of ethylene per year, and is designed to expand SABIC’s manufacturing presence in Asia and diversify its feedstock supply chain, SABIC said. Construction is expected to begin in the first quarter of 2024, with completion expected in the first quarter of 2027.

The announcement follows a number of similar investments by the kingdom’s oil giant Saudi Aramco in China’s downstream sector. Early in January, Chinese privately-controlled refiner Rongsheng Petrochemical and Aramco announced they were in talks to take a 50% stake in each other’s refineries in China and Saudi Arabia.

Aramco previously announced it had agreed to acquire a 10% stake in Rongsheng, an investment attached to a 20-year crude oil supply deal with Rongsheng-controlled Zhejiang Petrochemical Corp.

The deal closed in July at a valuation of $3.4 billion.

SABIC’s quarterly profit drops 85% on lower sales prices

In September last year, Aramco announced plans to become a strategic investor in another private Chinese refiner Jiangsu Shenghong Petrochemical, which operates a 320,000 bpd refinery and petrochemical complex in the eastern province of Jiangsu.

Aramco is also in talks to acquire a 10% stake in Shandong Yulong Petrochemical Co, which is building a refinery complex that can process 400,000 barrels of crude a day in eastern China’s Shandong province.