China’s Sinopec Signs $1.3 Billion Deal with Saudi Aramco for Gas Pipeline Construction

A subsidiary of China’s energy giant Sinopec has inked a $1.3 billion agreement with Saudi Aramco to acquire and construct pipelines for an expansion of the Kingdom’s natural gas distribution network. The deal, announced by Sinopec International Petroleum Services Corporation, a subsidiary of Sinopec Oilfield Service Corporation, involves the procurement and construction of Packages 6 and 7 of the Phase 3 Pipeline Project Clusters of the Master Gas System.

The project is expected to be completed by May 31, 2027, as per the contract details disclosed by Sinopec in a filing with the Hong Kong Stock Exchange. This initiative, known as the Phase 3 Pipeline Project Clusters of Saudi Aramco MGS, marks a significant step in Aramco’s efforts to enhance natural gas production and sales in Saudi Arabia, aiming to supply gas to more customers and reduce the reliance on burning crude for power generation.

Saudi Aramco has shifted its focus towards expanding natural gas output by 60% by 2030, following the cancellation of oil capacity expansion plans earlier this year. The Kingdom has made notable natural gas discoveries in the Empty Quarter, along with additional reservoirs in existing fields, signaling a growing demand for gas amidst the global energy transition.

As part of its strategic vision, Aramco has ventured into the international LNG market, engaging in discussions with U.S. LNG developers for potential investments and long-term supply agreements. The surge in global LNG demand, projected to rise by 50% by 2030, has spurred Saudi Arabia to accelerate the development of unconventional natural gas fields.

This collaboration between Sinopec and Saudi Aramco not only signifies a landmark deal in the energy sector but also highlights the growing importance of natural gas in the Kingdom’s energy landscape. With a shared commitment to sustainable energy solutions, both companies are poised to make significant contributions to the evolving global energy market.

By Tsvetana Paraskova for