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March 17, 2017

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China-Saudi deals worth billions

Source: Agencies | March 17, 2017, Friday | Print Edition

CHINA and Saudi Arabia yesterday signed agreements worth a potential US$65 billion on the first day of King Salman’s visit to Beijing. The 81-year-old monarch, who has overseen the launch of an ambitious economic reform plan since his accession two years ago, is on a monthlong Asian tour.

Saudi Arabia is seeking to boost oil sales to China, the world’s second-largest oil market, after losing market share to Russia.

The deals included a memorandum of understanding between giant state oil firm Saudi Aramco and China North Industries Group Corp (Norinco), to look into building refining and chemical plants in China.

Saudi Basic Industries Corp (SABIC) and Sinopec, which jointly run a chemical complex in Tianjin, also agreed to develop petrochemical projects in both countries.

President Xi Jinping told Salman that China was a reliable and stable oil export market and the two countries should deepen their cooperation.

“For a long time, China and Islamic countries have respected each other and had win-win cooperation, and have created a model of the peaceful coexistence of different cultures,” Xi said, according to China’s foreign ministry. Salman said he hoped China could play an even greater role in Middle East affairs, the ministry added.

Deputy Foreign Minister Zhang Ming said the MOUs and letters of intent were potentially worth about US$65 billion and involved everything from energy to space.

“President Xi Jinping and King Salman are old friends,” Zhang said. “Practical cooperation between China and Saudi Arabia has already made major achievements, and has huge potential.”

A statement on Saudi state news agency SPA said the documents included an MOU for the kingdom to participate in China’s Chang E-4 moon mission and a partnership agreement for drone manufacture.

Saudi and Chinese companies also signed 21 deals ranging from investments in oil and petrochemical plants to e-commerce and renewable energy markets.

For Saudi Aramco, the potential investments fit with its strategy to expand refining and chemicals in a bid to diversify assets and secure long-term agreements for its oil. China recently loosened its control on a sector long dominated by the country’s top three energy giants in a bid to boost private investment.

The Norinco deal could involve a greenfield refinery and chemical plant in Panjin, Liaoning Province, while also upgrading a refinery and petrochemical facility there, a source said.

“This MOU shows Aramco is determined to expand its market share in the Far East by looking beyond oil majors and working closely with new independent clients with its biggest market,” said Sadad al-Husseini, an energy consultant.

Aramco said the MOU was for the development of refinery and chemical facilities. The state oil giant also signed an MOU with Aerosun Corp for the manufacture of thermoplastic pipes and components.

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