Gas from Mongolia and oil from Saudi Arabia: China’s double deal
China is full of energy. Petroleum from Saudi Arabia and gas from Russia via Mongolia. While the world is busy with other matters, Beijing demonstrates once again that it knows how to take advantage of any opportunity. After bringing anti-Covid protests under control with a sudden easing of anti-pandemic restrictions, Xi Jinping embarked for Riyadh where he signed dozens of agreements with Prince Mohammad bin Salman. But he also meets regional leaders at the first summit between China and the Arab countries, another sign of declining American influence. All this not before having closed other agreements, this time on gas, with Mongolia.
Let’s go in order. Chinese President Xi Jinping was received by Prince Mohammed bin Salman at the al-Yamamah Palace on Thursday. The reception came after China and Saudi Arabia signed 34 energy and investment deals, while Xi promised to strengthen the comprehensive strategic partnership with Riyadh. The Saudi news agency reported that Chinese and Saudi companies signed dozens of deals – covering green energy, information technology, infrastructure and health – on Wednesday, as Xi began his state visit in Saudi Arabia.
The total value of the 34 deals has not been disclosed. But the agency previously reported that the two countries were aiming to sign 20 preliminary agreements worth $29.26 billion. Saudi Energy Minister Abdulaziz bin Salman also announced a plan to establish a regional hub for Chinese factories to further boost energy supply chains. “The Kingdom of Saudi Arabia has strong and close strategic relations with China in many fields, the most important of which is energy,” the Saudi news agency said. “The Kingdom of Saudi Arabia will remain China’s credible and reliable partner in this field.”
The increasingly close bond between Xi Jinping and bin Salman
Oil is always at the heart of everything. China is Saudi Arabia’s largest trading partner, with bilateral trade worth $87.3 billion in 2021. In addition, Saudi Arabia is China’s top oil supplier, accounting for 18% of China’s total crude purchaseswith imports totaling 73.76 million tons in the first 10 months of 2022, worth $55.52 billion, according to data from China’s customs.
Last year, oil imports amounted to 87.56 million tons, worth $43.9 billion, accounting for 77% of China’s total imports of goods from Saudi Arabia. State-owned Saudi Aramco has entered into annual supply agreements with half a dozen Chinese refineries, including Sinopec, CNPC, CNOOC, Sinochem, Norinco and the privately owned Zhejiang Petrochemical Corp.
In early 2022, Aramco made the final decision to invest in the construction of a $10 billion refinery and petrochemical complex in northeast China, marking its largest investment in China. Named Huajin Aramco Petrochemical Company, the joint venture brings together Aramco, Huajin Chemical Industries Group Corporation – a unit of the defense conglomerate Norinco – and Panjin Xincheng Industrial Group.
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