Saudi Aramco and its Chinese joint venture (JV) partners NORINCO Group and Panjin Xincheng Industrial Group have signed an agreement to build an oil refinery and petrochemical plant in northeast China.

The project is estimated to cost $12.2bn, reported Reuters citing Panjin Xincheng Industrial Group’s statement on WeChat.

Joint venture Huajin Aramco Petrochemical Company (HAPCO), will be responsible for the construction and operation of the oil refinery and petrochemical plant to be located in Liaoning province’s city of Panjin.

The refinery will comprise a 300,000 barrels per day (bpd) oil refinery and a petrochemical plant with an annual production capacity of 1.65 million tonnes (mt) of ethylene and 2mt of paraxylene. Construction of the refinery is planned to commence in the second quarter of 2023.

Aramco will supply up to 210,00bpd of crude oil feedstock to the integrated refining and petrochemical complex, which is expected to be operational by 2026.

Aramco downstream executive vice-president Mohammed Y Al Qahtani said: “This important project will support China’s growing demand across fuel and chemical products.

“It also represents a major milestone in our ongoing downstream expansion strategy in China and the wider region, which is an increasingly significant driver of global petrochemical demand.”

Norinco Group deputy general manager Zou Wenchao said: “This large-scale refinery and petrochemical complex is a key project of Norinco Group to implement and realise the joint development of the high-quality Belt and Road initiative, promote industrial restructuring, and enhance the oil and petrochemical sector to become stronger, better and larger.

“It will play an important role in deepening economic and trade cooperation between China and Saudi Arabia, and achieving common development and prosperity.”

Aramco holds a 30% stake in HAPCO while NORINCO Group and Panjin Xincheng Industrial Group own 51% and 19% stakes, respectively.