As Asia is driving almost all of the global oil demand growth today and is set to continue to do so in the coming decades, some of the world’s biggest oil producers, those in the Middle East, are looking to expand their presence in the key demand growth market.

Saudi oil giant Aramco and Abu Dhabi’s ADNOC plan to expand their downstream businesses, especially in Asia, to lock in future demand for their crude in the petrochemicals sector.

Over the past two years, Saudi Arabia has announced a flurry of downstream deals in Asia, including in China and South and Southeast Asia, as it seeks to capture more markets for its crude oil.

China may soon see a peak in its demand for road transportation fuels, such as gasoline and diesel, due to booming electric vehicle (EV) sales and LNG-powered trucks, respectively.

While OPEC, whose de facto leader is Saudi Arabia, recognizes a structural shift in road fuel demand in China, it hasn’t backed down from its estimate that global oil demand will continue to grow, and peak oil demand is not on the horizon.

Both OPEC and the International Energy Agency (IEA) – far apart as they are about long-term global oil demand trends – expect India to overtake China soon to become the biggest oil driver of demand growth.

OPEC’s World Oil Outlook 2050 says that India, Asia outside China, Africa, and the Middle East will be the key sources of incremental demand in the coming years. Combined demand in these four regions is set to increase by 22 million barrels per day (bpd) between 2023 and 2050. India alone will add 8 million bpd to its oil demand by 2050. China, for its part, will see its oil demand increase by 2.5 million bpd, according to OPEC.

Petrochemicals in China and refining and petrochemicals in India, South Asia, and Southeast Asia will be driving global growth.

And the Middle East’s top oil producers want to be in pole position to capture this demand growth.

From Abu Dhabi, ADNOC – in a consortium with Borouge and Borealis – announced in July a project collaboration agreement with China’s Wanhua Chemical Group to launch a feasibility study to develop a 1.6 million tons per year specialty state-of-the-art polyolefin complex in Fuzhou, China.

The world’s single largest crude oil exporter, Saudi Aramco, signed additional agreements with China’s Rongsheng Petrochemical and Hengli Group in September to advance talks on cooperation in the refining and petrochemical sectors in China and Saudi Arabia.

Aramco’s agreement with Hengli Group advances talks about Aramco’s potential acquisition of a 10% stake in Hengli Petrochemical Co., Ltd., subject to due diligence and required regulatory clearances.

Earlier this year, Aramco entered into discussions with Hengli Group about the potential acquisition of 10% in Hengli Petrochemical.

“China is an important country in our global downstream growth strategy, and we look forward to building on a relationship that spans more than three decades to unlock new opportunities in this crucial market,” Mohammed Al Qahtani, Aramco Downstream President, said in September.

Saudi Aramco continues to be on the lookout for acquisition opportunities in the downstream segment and LNG, Yasser Mufti, Aramco’s Executive Vice President for Products and Customers, told Reuters in an interview earlier that month.

In recent years, the Saudi oil giant has been pursuing deals to expand its international downstream presence, especially in demand centers such as Asia.

Last year, Aramco entered Pakistan’s downstream market by acquiring a 40% stake in Gas & Oil Pakistan Ltd, one of the country’s largest retail and storage companies.

In 2023, Aramco also announced two major refinery and petrochemical deals in China, which not only give the world’s largest oil firm a share of the Chinese downstream market but also an additional export outlet for 690,000 bpd of Saudi crude in China.

Just last week, Aramco signed a collaboration agreement with Vietnam’s oil firm Petrovietnam for potential cooperation spanning the storage, supply, and trading of energy and petrochemical products.

During the signing of one of the deals with China, Aramco Downstream President Al Qahtani, said in April, “We continue to explore new opportunities in important markets, as we seek to progress in our liquids-to-chemicals strategy.”