Saudi Arabia’s state oil company Aramco announced on Sunday that it has signed a deal with Chinese analog China Petroleum and Chemical Corporation (Sinopec) to build an oil refinery in southeast Fujian province, helping secure a stable and affordable supply of gasoline and other fuels in China.
The deal appears to have been the product of negotiations fueled by Chinese Communist Party dictator Xi Jinping’s visit to Saudi Arabia this month. The Saudi royal family received Xi with a lavish welcome featuring air force flyovers, a marching band, and the hosting of two major economic conferences with Gulf and Arab states. Prior to Xi’s arrival in Riyadh, multiple reports from both countries indicated that Riyadh and Beijing would sign about $29 billion in trade deals. On December 11, the Saudi news agency al-Arabiya reported that China signed about $50 billion worth of investment deals while in Saudi Arabia, including deals with the Saudi kingdom and other participants in the regional conferences held that week.
Xi’s visit to Saudi Arabia prompted comparisons to left-wing American President Joe Biden’s trip to the country this summer, which resulted in no significant agreements between America and Saudi Arabia and triggered widespread condemnation from human rights groups who lamented that Biden met with Crown Prince Mohammed bin Salman, whom he had previously blamed for the gruesome killing of Washington Post contributor Jamal Khashoggi. Biden greeted Mohammed bin Salman with a now-famous fist bump, apparently indicating an end to pressure on the kingdom in the wake of Khashoggi’s killing, and his administration supported granting bin Salman immunity in a lawsuit regarding the killing in November.
Following Biden’s visit to Saudi Arabia, the country supported a move by OPEC+ to cut oil production by two million barrels a day, greatly increasing gas prices around the world. OPEC+, a global oil cartel including OPEC member nations and Russia, made its decision in October, shortly before the American midterm elections. The announcement was made more embarrassing for Biden as reports claimed that the Saudis had told him during his visit that they supported increasing, not cutting, production. The far-left New York Times reported that the Saudis had “duped” Biden’s team.
“As President Biden was planning a politically risky trip to Saudi Arabia this summer, his top aides thought they had struck a secret deal to boost oil production through the end of the year,” the Times reported in October, “an arrangement that could have helped justify breaking a campaign pledge to shun the kingdom and its crown prince.”
Al-Arabiya reported on Sunday that the deal between Aramco and Sinopec included the construction of a refinery capable of processing 320,000 barrels of oil a day. The agreement also reportedly included the construction of a “1.5 million tons-per-year petrochemical cracker complex,” used to produce the chemicals necessary to refine the oil.
“These projects represent an opportunity to contribute to a modern, efficient, and integrated downstream sector in both China and Saudi Arabia,” Mohammed Y. Al Qahtani, Aramco senior vice president of Downstream, was quoted as saying in the official press release regarding the project. “They also underpin our long-term commitment to remain a reliable supplier of energy and chemicals to Asia’s largest economy.”
The refinery, the press release reportedly said, would begin operating in 2025.
The Emirati newspaper, the National, noted on Sunday that the new announcement followed an agreement already in place between Aramco and another Chinese company, Shandong Energy Group, for the latter to provide the necessary chemicals to handle crude oil. Shandong is largely a coal production operation, but China has used it to expand its energy capabilities generally. The companies announced the Shandong agreement on December 9 as Xi arrived in Saudi Arabia.
“Both Shandong Energy and Aramco are important players in the international energy arena,” the chairman of Shandong, Li Wei, said at the time. “We share a lot of common interests, complementary strategies with expansive scope for co-operation, especially in oil and gas resources development, and integrated refining and petrochemicals development along the whole industrial chain.”
This week, Aramco also announced a deal with another Chinese company, Saudi Basic Industries Corporation (Sabic), to build a petrochemical complex.
Expanding local refinery capacity in China allows Saudi Arabia to import crude oil for refining and guarantees greater supply in the country, potentially lowering prices for China without increasing oil production and thus, leading to a global decline in price. China is the world’s largest importer of crude oil and a key Saudi customer. Saudi Arabia is also one of the few nations in the world to enjoy a trade surplus with China. As the National noted, “In September alone, China’s exports to Saudi Arabia reached $3.43 billion, while imports stood at $6.81bn.”
Agreements signed following Xi’s visit to Riyadh to help China secure its petroleum supplies occurred alongside China agreeing to help Saudi companies expand their business through the Belt and Road Initiative (BRI), a global infrastructure program China uses to bankrupt and colonize poor countries. China offers predatory loans to impoverished countries in Latin America, Africa, and Southeast Asia to be used to pay Chinese companies to build expensive roads, ports, and railways and seizes the projects when the countries cannot pay their loans back.
During Xi’s visit, China and Saudi Arabia issued a joint statement in which they revealed that China would invite Saudi Arabia to cooperate in the BRI, meaning that Saudi companies would help build BRI projects. The Chinese Foreign Ministry said the agreement would assist both sides to “earnestly synergize China’s Belt and Road Initiative and Saudi Arabia’s Vision 2030.”
Vision 2030 is a Saudi long-term plan, organized by Crown Prince Mohammed bin Salman, to diversify the Saudi economy away from oil to protect it from attempts to “transition” the world into a “green” economy.
COMMENTS
Please let us know if you're having issues with commenting.