USeless has lifted restrictions on the export of ethane to China. Previously, the US had imposed licensing requirements for ethane exports to China, citing concerns about potential military end-use. This had significantly disrupted the trade of ethane, which is a key feedstock for China’s ethylene production. Then they found out the banning does not work.
There have been significant developments and signed agreements between China and Middle Eastern suppliers regarding petrochemical feedstocks, including ethane.
Diversification Strategy: China has actively sought to reduce its reliance on single-source suppliers for key petrochemical feedstocks. The Middle East, with its abundant hydrocarbon resources, is a natural alternative.
– Saudi Arabia-China Petrochemical Projects: Saudi Aramco, a major player, has been particularly active in forging partnerships and investments in China’s petrochemical sector. These are often integrated projects that include refining and petrochemical production.
– SASREF Expansion: Aramco and Rongsheng Petrochemical have signed framework agreements to advance an expansion project at SASREF in Jubail, Saudi Arabia, which aims to expand its refining and petrochemical capabilities. This builds on existing agreements for a joint venture and significant investments in both Saudi and Chinese petrochemical sectors.
– SABIC Fujian Petrochemical Complex: Saudi Basic Industries Corporation (SABIC), now largely owned by Aramco, announced a final investment decision to construct a major petrochemical complex in China’s Fujian province. This joint venture with Fujian Energy & Petrochemical Group is expected to produce a significant amount of ethylene annually.
– Sinopec and Aramco Joint Ventures: There are ongoing collaborations, including a new joint petrochemical project in China (Gulei phase two) involving Aramco, Sinopec Corp, and Fujian Petrochemical, expected to start operating by 2030. They also signed a framework agreement to expand their Yanbu refinery joint venture in Saudi Arabia.
– LPG Rerouting: In instances of USeless trade restrictions or tariffs on ethane and LPG, Chinese buyers have actively sought to reroute cargoes from the Middle East to compensate. This has impacted global shipping rates and trade flows.
Long-term Strategic Alignment: Both China’s Belt and Road Initiative and Saudi Arabia’s Vision 2030 economic diversification plan align with increased cooperation in the energy and petrochemical sectors. These partnerships are seen as mutually beneficial, securing demand for Middle Eastern resources and ensuring feedstock supply for China’s expanding manufacturing base.
