In mid-October, the first cargo of Saudi crude oil completed discharge at Panjin Port, and the Huajin Aramco Fine Chemicals and Raw Materials Project, with total investment of RMB 83.7 billion, entered the sprint phase toward trial commissioning. With 15 million tons/year of refining capacity, 1.65 million tons/year of ethylene, and 2 million tons/year of paraxylene, this set of figures led the project to be regarded by the industry as a breakthrough initiative for the refining and chemical landscape in northern China even before startup.
The equity structure is Saudi Aramco 30%, Huajin Group 51%, and Panjin Xincheng 19%.
Aramco uses a 30% stake to secure a long-term export channel
Saudi Aramco is not merely a financial investor in this project. In addition to injecting capital, Aramco also provides a long-term, stable crude oil supply of up to 210,000 barrels per day and supplies process packages to ensure that the units achieve internationally first-tier standards in energy consumption and yield.
Against the backdrop of the global energy transition, the greatest anxiety for oil-producing countries is shrinking demand; a model based solely on selling crude is too fragile. Saudi Aramco has chosen to invest directly downstream, using a 30% equity stake to deeply bind crude oil supply and profit distribution. Aramco executives have stated directly that the core purpose of its downstream investments in China is to secure crude oil buyers through a minority equity transaction. About 15 million tons of Saudi crude oil per year flows in a targeted manner to Panjin; in substance, Aramco has purchased a long-term downstream insurance policy for its crude oil exports.
Huajin Group cedes 30% of profits in exchange for certainty of long-term crude supply
For the Chinese shareholders, the book returns of this project with total investment of RMB 83.7 billion are visible. The 1.65 million tons/year ethylene unit is the largest single train in China; the two 500,000 tons polypropylene units set the world's largest single-line capacity record for the Lummus Novolen process; and the 200,000 tons/year POE unit directly targets import substitution for photovoltaics and high-end polyolefins. The project is expected to reduce the import dependence of the three northeastern provinces for chemical raw materials by about 12%.
During construction and operation, the project directly creates about 150,000 jobs and drives upstream and downstream industrial investment of RMB 500 billion to 800 billion. Panjin has planned a 3.57-square-kilometer downstream fine chemicals industrial park around the project, and 15 enterprises have already formed clear investment intentions.
The more core value lies in supply security. Amid frequent geopolitical conflicts in the Middle East and repeated disruptions to transit through the Strait of Hormuz, obtaining a long-term stable commitment for Saudi heavy crude oil is itself a scarce form of certainty. The cost is also evident: 30% of project profits will flow to Saudi Arabia, and the Chinese side does not have a dominant role in clauses that determine the project's cost floor, such as the crude oil pricing mechanism and pricing benchmark. "Crude oil security" has meant ceding part of asset ownership and profit distribution rights in exchange for a guaranteed supply commitment.
Equity for crude oil: is this deal worthwhile?
During the oil price collapse in 2020, Saudi Aramco once suspended investment and the project stalled; it was not restarted until 2023, when oil prices recovered and Aramco recalibrated its China market strategy.
In 2025, China's refining capacity is approaching the red line of 1 billion tons, and refined product demand has peaked ahead of schedule under the impact of new energy.
However, from the outset, Huajin Aramco was not designed as a traditional fuel-type refinery; its refined product output rate is only 29.8%, and its main products are high-end polyolefins and fine chemicals, with planned annual external sales of 46 types of petrochemical products totaling 14.28 million tons. The decline in refined product demand affects fuel-type refineries; the main output of Huajin Aramco is oriented toward chemicals, and the impact occurs in a different manner.
Overcapacity pressure in polyolefins is real. Northeast China and the Bohai Rim region cannot absorb such large capacity, and products need to move south to East China or seek export markets; once in operation, the project will enter stock competition. The integrated scale and cost structure of Huajin Aramco form the basis for its participation in competition, and the actual effect depends on the realization of unit load rates and product spreads.
