(Yicai) April 23 -- Saudi Arabian Oil Company, the world’s biggest oil company, is planning to purchase a 10 percent stake in Hengli Petrochemical, in what would be the world’s biggest oil company’s fourth investment in large private Chinese petrochemicals firms in the past 12 months.

Aramco is preparing to buy a 10 percent stake in Hengli Petrochemical, pending regulatory approvals and due diligence checks, Dhahran-based Aramco said yesterday, citing the memorandum of understanding penned by its parent firm Hengli Group and Aramco.

The price of the purchase was not mentioned, but the transaction may be worth CNY11 billion (USD1.5 billion) based on Hengli Petrochemical’s closing price yesterday.Hengli Petrochemical has the world's single biggest ethene producing facility with an annual capacity of 1.5 million tons. The Suzhou-based firm is able to process 20 million tons of crude oil and five million tons of coal per year.

The investment would not result in a change in Hengli Petrochemical’s ownership, as Hengli Group and its persons acting in concert own 75.4 percent of the company, the company said yesterday.

Since March last year, Aramco has bought 10 percent stakes in Rongsheng Petrochemical, Shandong Yulong Petrochemical and Jiangsu Shenghong Petrochemical Group. And in January, the firm said it plans to buy an up-to 50 percent stake in Rongsheng’s unit Ningbo Zhongjin Petrochemical and to partner with it on a new petrochemicals plant.

Hengli Petrochemical and other affiliates under the Hengli Group will also link arms with Aramco over the supply of crude oil and other raw materials, procurement of products, licensing of technology and other areas, Hengli Petrochemical said.

Hengli Petrochemical’s profit doubled in the first quarter from a year earlier to CNY2.1 billion (USD290 million), while revenue climbed 4 percent to CNY58.4 billion (USD8 billion), according to its latest financial report.

In 2023, sales of petroleum refining products made up half of its earnings at 51.1 percent, according to Hengli Petrochemical's financial report for that year. And 30.9 percent of its income came from the sale of Purified Terephthalic Acid, the raw material used to make polyester, and 14.5 percent from various polyester products.

Hengli’s stock price [SHA:600346] closed down 2 percent at CNY15.24 (USD2.10) today. The stock has gained 37 percent since early February when it sank to a low point.

Editor: Kim Taylor