Saudi Aramco has signed definitive agreements to acquire a 10 percent stake in Shenzhen-listed Rongsheng Petrochemical Co. (Rongsheng) for $3.6 billion (24.6 billion Chinese Renminbi), fortifying its presence in China’s downstream sector.

The Saudi oil major will supply 480,000 barrels per day (bpd) of Arabian crude oil to Rongsheng affiliate Zhejiang Petroleum and Chemical Co. (ZPC) as part of a long-term sales agreement.

Aramco Overseas Company, a wholly-owned subsidiary of Aramco, will acquire the interest in Rongsheng.

Rongsheng owns a 51 percent equity interest in ZPC, which in turn owns and operates the largest integrated refining and chemicals complex in China with a capacity to process 800,000 bpd of crude oil and to produce 4.2 million metric tonnes of ethylene per year.

The transaction involves an off-market secondary sale of Rongsheng shares by majority shareholder Zhejiang Rongsheng Holding Group, with potential for future collaboration between the parties in trading, refining, chemicals production and technology licensing.

The transaction is expected to close by the end of 2023 and is subject to regulatory approvals.

Earlier, Aramco joint venture, Huajin Aramco Petrochemical Company (HAPCO), announced plans to start constructing a major integrated refinery and petrochemical complex in northeast China in the second quarter of 2023.

Combined, the partnership with Rongsheng and the HAPCO joint venture will see Aramco supply 690,000 bpd of crude to high chemical conversion assets, the statement said.