Chinese privately-controlled refiner Rongsheng Petrochemical (002493.SZ) and Saudi Aramco (2222.SE) are in talks for the Chinese company to buy a 50% stake in the Saudi company’s refining unit SASREF, a filing showed on Tuesday.

Rongsheng is also negotiating to sell Aramco an up to a 50% stake in its unit Ningbo Zhongjin Petrochemical Co, the Chinese company said in a statement to the Shenzhen stock exchange, citing a memorandum of understanding signed on Tuesday.

Saudi Aramco Jubail Refinery Company (SASREF), located in Jubail Industrial city, processes crude oil into petroleum products and has a production capacity of 305,000 barrels per day (bpd), its website shows.

If the SASREF stake acquisition happens, it would be the first investment by a private Chinese firm in a significant Saudi refining asset. State refining giant Sinopec Corp is so far the only Chinese company that owns a refinery stake in Saudi Arabia.

The companies also discussed expanding the Saudi refinery and upgrading its products.

The final investment decision is pending due diligence on Ningbo Zhongjin and SASREF by the two buyers respectively, Rongsheng Petrochemical said.

Aramco said in March it had agreed to acquire a 10% stake in Rongsheng, an investment attached to a 20-year crude oil supply deal with Rongsheng-controlled Zhejiang Petrochemical Corp. The deal closed in July at a valuation of $3.4 billion.

It has also been in talks to buy a 10% stake in Shandong Yulong Petrochemical Co, which is building a refinery complex that can process 400,000 barrels of crude a day in eastern China’s Shandong province.

In September, Aramco announced plans to become a strategic investor in another private Chinese refiner Jiangsu Shenghong Petrochemical, which operates a 320,000 bpd refinery and petrochemical complex in the eastern province of Jiangsu.

In a separate filing to the stock exchange, Rongsheng said it plans to invest 67.5 billion yuan ($9.46 billion) in new materials at its base Zhoushan in east China that makes products such as high-performing plastic material ethylene vinyl acetate (EVA)and polyolefin elastomers used in solar panels.

Reuters, Aizhu Chen, Andrew Hayley and Roxanne Liu, January 2, 2024