Rongsheng Petrochemical unveiled that the Chinese private petrochemical giant and its second-largest shareholder Saudi Arabian Oil Company are in talks to buy stakes in each other’s subsidiaries. Moreover, the pair plans to partner on a new CNY67.5 billion (USD9.5 billion) facility in the planning at Rongsheng.

Rongsheng or its affiliates will buy a 50 percent stake in Saudi Aramco’s unit Saudi Aramco Jubail Refinery, also known as SASREF, while Saudi Aramco or its affiliates will buy up to 50 percent stake in Rongsheng’s unit Ningbo Zhongjin Petrochemical, the Hangzhou-based company announced late yesterday, citing the MOU the two sides signed yesterday.

Moreover, Rongsheng and Saudi Aramco are in talks to expand the production capacity of SASREF’s plants and make their products more flexible, complex, and higher quality, as well as hike the output capacity of Zhongjin’s factories, the firm added.

In the announcement, Rongsheng also noted that the two companies plan to partner on Rongsheng’s new plant, which details were unveiled in a separate statement released on the same day. However, none of the two statements mentioned the type of partnership the pair plans to adopt for this project.

To be built in Zhoushan, China’s eastern Zhejiang province, the new plant will produce new materials, such as fine chemicals, high-end resins, engineering plastics, degradable plastics, special polyesters, and high-end fibers, Rongsheng added, noting that the construction period of the plant is expected to be three years.

Once completed, the new plant will generate an average of CNY86.9 billion in operating revenue and CNY15.5 billion in net profit every year, with an after-tax payback period including construction of 6.1 years, Rongsheng noted.

In July, Saudi Aramco completed its CNY24.6 billion investment plan announced in March to acquire 10 percent of Rongsheng, becoming its second-largest shareholder. The pair also inked a series of long-term deals, including some for the supply, storage, and technological development of crude oil and for the purchase and sale of refined chemicals.

Rongsheng’s shares [SHE: 002493] were trading up 0.1 percent at CNY10.27 (USD1.45) as of lunch break in Shenzhen today.