DUBAI : Saudi Aramco is in talks to buy a 10 per cent stake in Shandong Yulong Petrochemical Co, it said on Wednesday.

Shandon Yulong is building a refinery complex that can process 400,000 barrels of crude a day in eastern China’s Shandong province.

Aramco and the firm have signed a memorandum of understanding to “facilitate discussions relating to the possible acquisition by Aramco of a 10 per cent strategic equity interest”, the Saudi group said in a statement.

Under the terms of the preliminary agreement, Aramco may supply Shandong Yulong with crude oil and other feedstock. A deal is subject to due diligence, transaction documents being negotiated, and regulatory approvals.

“We believe this collaboration has potential to enable all parties to contribute to China’s energy security and development, and aid in navigating the energy transition,” said Mohammed Al Qahtani, Aramco’s downstream president.

Last month Aramco said it was looking at acquiring a 10 per cent stake in Jiangsu Shenghong Petrochemical.

In March, the company raised its multi-billion dollar investment in China by finalising and upgrading a planned joint venture in northeast China and acquiring an expanded stake in a privately controlled petrochemical group.