Nearly 70 billion dollars to create a super giant! The petroleum industry appears the century big merger and acquisition!

Recently, Saudi Aramco, an oil giant, announced an agreement to acquire 70% of the shares of SABIC, a Saudi petrochemical giant, with a transaction scale of US $69.1 billion The stake is currently held by the sovereign wealth fund, the Saudi public investment fund (PIF) All of this is not groundless As early as November 18, local media reported that Saudi Aramco planned to buy 70% of SABIC for us $70 billion By 2030, they plan to increase the average daily refining capacity from 4.9 million barrels to 8-10 million barrels Once the century merger and acquisition of "oligarchs" and "giants" is exposed, a huge wave is set off in the oil field At the same time, the $69.1 billion deal will be one of the largest acquisitions in the history of oil since the 21st century Affected by this, the international crude oil futures prices fell significantly, Beijing time at zero on the 28th refresh day low Data showed that Brent crude oil market fell below $67 / barrel, down more than 1% in the day; WTI fell below $59, down 1.6% at one time Saudi Arabian oil company (Saudi Aramco) is a company that exploits Saudi Arabia's oil resources It is also called Aramco for short Its headquarters is located in the city of Zahran in the east of Saudi Arabia The company can be traced back to 1933 American California Mobil Oil Company signed an agreement with the kingdom of Saudi Arabia, and obtained the 66 year privilege of oil exploration, exploitation, processing, transportation and sales in the east of Saudi Arabia In the same year, the company started California Arab mobil oil company In 1980, the Saudi government paid off all compensation and completed the redemption of the company's assets At present, Aramco is actually owned by the Saudi government According to the ranking of an American oil analysis agency, in 2003, Saudi Aramco ranked first among the top 10 oil and gas production companies in the world Founded in 1976 and headquartered in Riyadh, SABIC is the largest and most profitable non oil company in the Middle East The Saudi government owns 70% of SABIC and the remaining 30% is owned by private investors in Saudi Arabia and other GCC countries SABIC is the world's leading manufacturer of petrochemical products in terms of sales volume and product diversity SABIC is a global market leader in the production of polyethylene, polypropylene and other advanced thermoplastic products, glycol, methanol and fertilizer At present, SABIC's business is divided into four strategic business divisions: petrochemical, specialty materials, agricultural nutrients and steel SABIC's business covers 50 countries around the world, has more than 64 world-class factories, and has advanced research resources and innovation centers in five key regions: the Middle East, the United States, Europe, Southeast Asia and Northeast Asia Saudi Aramco, the power behind the royal family, has contributed most of Saudi Arabia's financial revenue, and the two enterprises involved in this time are also Saudi government, so the influence of the Saudi Crown Prince is indispensable behind this large-scale operation Previously, Saudi Arabia's crown prince Salman had made ambitious plans for the kingdom in the post oil era, among which Saudi Aramco's IPO was an important part He has said the company is worth $2 trillion As part of the equity in the transaction is currently held by the sovereign wealth fund Saudi public investment fund (PIF), the acquisition is equivalent to a change of phase injection into PIF, bringing a lot of money to Saudi Crown Prince Salman's reform agenda, and PIF can use a lot of money to achieve domestic economic diversification If Saudi Aramco sold 5% of its shares, it would raise a record $100 billion That would be far higher than Alibaba's record $25 billion in 2014 Although the intention of Saudi Aramco's IPO has been reversed several times, according to the latest statement of the crown prince in October 2018, Saudi Aramco's IPO plan will continue to advance and will be launched no later than 2021 The IPO is the core of the vision 2030 plan, which is a measure taken by the crown prince to diversify Saudi Arabia's economy and reduce its dependence on the oil industry Giant's trip to China Returning to the industry itself from the capital level, at present, the two giants have invested in various joint ventures in China, including 1 million T / a ethylene plant, 650000 T / a cracked gasoline hydrogenation plant, 4 / 360000 T / a ethylene oxide / glycol plant, 300000 t / a linear low-density polyethylene plant, 300000 t / a high-density polyethylene plant, 20 / 12 / 50000 T / a butadiene extraction / MTBE / butene-1 plant 450000t / a polypropylene plant, 350000t / a phenol acetone plant and 35000t / a styrene plant Whether the acquisition will affect the future development of domestic projects remains to be seen At present, SABIC has factories in Guangzhou, Shanghai, Tianjin and other places Among them, Sinopec (Tianjin) Petrochemical Co., Ltd is a large-scale petrochemical enterprise jointly invested and established by Sinopec and SABIC with a 50:50 share ratio, which was formally put into commercial operation in 2010 In addition to Sinopec, SABIC said in 2016 that it signed an agreement with Shenhua Ningxia coal group, a branch of Shenhua Group, to build a petrochemical industrial zone in China At the same time, we will invest in building a new coal chemical complex After two years, "Shenhua Ningmei Saudi Basic Industry Co., Ltd joint venture 700000t / a coal to olefin new material demonstration project" was publicized again for the second environmental impact assessment The main construction devices did not change from the previous project, marking the acceleration of the project According to the public information, Shenhua Ningxia coal and Saudi Basic Industry Company jointly invested 700000 T / a coal-based olefin and new material demonstration project, which plans to use dry coal gasification technology to produce low-density polyethylene, ultra-high molecular weight polyethylene and other products The annual coal consumption of the project is 5.35 million tons, including 3.4 million tons of raw coal and 1.95 million tons of fuel coal, with an estimated investment of 22.9 billion yuan SABIC still has in-depth investment plans in the future, including three new projects with Sinopec, including two projects in China: the investment amount of Sinopec Tianjin Petrochemical expansion project is about 220 million US dollars, and its capacity will increase from 1 million tons to 1.3 million tons after completion; the investment amount of Tianjin polycarbonate project is about 1.7 billion US dollars, and the design capacity is 260000 tons In 2018, SABIC said it had signed a memorandum of understanding with the Fujian provincial government and planned to build a new petrochemical integrated unit in Fujian Province, China, but there is no "exact timetable" at present Saudi Aramco has also stepped up investment cooperation with China in recent years At present, Fujian United Petrochemical Co., Ltd is a large Sino foreign joint venture petrochemical enterprise jointly established by Fujian Refining and Chemical Co., Ltd., ExxonMobil and Saudi Aramco On February 21-22, Saudi Crown Prince Mohammed bin Salman visited China During his visit, a number of Chinese enterprises signed 35 memorandums of cooperation with Saudi government departments and enterprises with tens of billions of dollars The total amount is over $28 billion Among them, the amount of investment in the petrochemical industry is over 17 billion US dollars, accounting for 60% of the total amount, including 01 Saudi Aramco's acquisition of 9% of the equity of Zhejiang Petrochemical Co., Ltd., Saudi Aramco's first signing in Zhejiang Province with Zhoushan Municipal government, intends to acquire 9% of the equity of Zhejiang Petrochemical Co., Ltd., but the specific amount is not disclosed 02 The second contract of service supply Zhejiang Petrochemical refining and chemical integration project was signed with Rongsheng petrochemical, Zhejiang Juhua Investment Co., Ltd and Zhejiang Tongkun Investment Co., Ltd Saudi Aramco will provide long-term crude oil supply for the refining and chemical integration project of Zhejiang Petrochemical, and make full use of the large crude oil storage facilities of Zhejiang Petrochemical to provide services for customers in Asia 03 The third contract for cooperation with Zhejiang energy to invest in refined oil retail is the investment in refined oil retail network signed by Saudi Aramco and Zhejiang energy group The two sides plan to establish a large-scale retail network of refined oil products in Zhejiang Province in the next five years The retail business will be integrated with Zhejiang Petrochemical as a distribution channel for refined products On March 22, 2019, China ordnance industry group, Saudi Arabia Petroleum Company (Saudi Aramco) and Liaoning Panjin Xincheng Group Co., Ltd jointly funded the establishment of a new company, Huajin Aramco Petrochemical Co., Ltd., with its registered address in Panjin City, Liaoning Province China ordnance industry group, Saudi Aramco and Panjin Xincheng group hold 36%, 35% and 29% respectively The total investment of the project will exceed US $10 billion, including 15 million tons / year of oil refining, 1.5 million tons / year of ethylene and 1.3 million tons / year of p-xylene plant It is planned to become the largest Sino foreign joint venture after the trial operation in the second half of 2023 Behind the super takeover is Saudi Aramco's "refining dream" It can be seen from the above measures that Saudi Arabia is the largest oil producing country in the world, while China is the largest oil and chemical consumption market Both sides are constantly seeking the possibility and ways to deepen strategic cooperation With the lifting of restrictions on foreign investment in the upstream and downstream industries of oil and gas in China, they have also cleared the way for foreign businesses to build heavy chemical projects in China However, the Middle East petrochemical giants represented by Saudi Aramco and other enterprises are not satisfied with the simple import and export trade of petrochemical products They began to increase their efforts to seek cooperation with domestic petrochemical enterprises, invest in joint ventures and build factories, and the two sides have complementary advantages They have even gradually infiltrated the layout from the upstream field to the downstream refined oil retail business Behind the acquisition of SABIC by Saudi Aramco, Saudi Arabia's large-scale operation of internal funds will give birth to an upgraded petrochemical industry giant running through the entire industrial chain Preliminary information at present: by 2030, they plan to increase the average daily refining capacity from 4.9 million barrels to 8-10 million barrels From the perspective of the industry itself, because it still takes time for capital integration and industrial chain integration, it remains to be seen whether the upstream and downstream resources and sales channels can be well integrated in the future and whether the whole industrial chain can be opened There may be a big move behind Saudi Aramco's IPO or the restart of Saudi government's request for Saudi Aramco to buy SABIC CNBC believes that the deal will allow Saudi Aramco to expand its business in smelting and petrochemicals, and is equivalent to injecting capital into PIF in a different way According to the Wall Street Journal, PIF is almost equal to the financing that Saudi Aramco IPO can obtain The transaction will bring a lot of money to Saudi Crown Prince Salman's reform agenda The crown prince hopes to use PIF to realize domestic economic diversification There are also signs to follow Last year, after the news that Saudi Arabia called for the suspension of Saudi Aramco's IPO plan, the crown prince of Saudi Arabia put forward a new fundraising "idea", intending to urge Saudi Aramco to carry out one of the largest corporate bond issuance cases in the world, and inject US $50-70 billion into the PIF with the purchase of part or all of SABIC's equity Saudi official comments also revealed the huge gains the deal could bring Yasir Othman al rumayyan, managing director of PIF, said in a statement: This is a win-win deal and a transformative deal for the three most important economic entities in Saudi Arabia It will release most of PIF's funds, allowing PIF to continue its long-term investment strategy and support the diversification of Saudi industry and revenue The Saudi energy minister and chairman of Saudi Aramco, Fatih, tweeted that the Saudi economy was the biggest winner of the deal The acquisition of equity will create a great enterprise in the energy and petrochemical industry, a world leading giant and a comprehensive national energy and petrochemical enterprise The Wall Street Journal quoted Saudi officials as saying that the two companies had been negotiating for more than a year, and they were reluctant at first to reach an agreement at the urging of the crown prince Commodity and energy market consulting service trademark global proctor's Europe, Middle East and