Saudi Arabia will host a China-Arab summit on Dec. 9 attended by Chinese President Xi Jinping, with the leaders of the two countries expected to discuss trade ties and regional security.
Xi’s visit comes at a time when US-Saudi ties are at a nadir, uncertainty weighs on global energy markets with the West imposing a price cap on Russian oil and as Washington warily eyes China’s growing influence in the Middle East.
The Chinese delegation is expected to sign dozens of agreements with Saudi Arabia and other Arab states covering energy, security and investments, diplomats have told Reuters.
Below are some details about oil, trade and security relations between China and Saudi Arabia.
OIL TRADE
China is Saudi Arabia’s largest trading partner, with bilateral trade worth $87.3 billion in 2021. Chinese exports to Saudi Arabia reached $30.3 billion, while China’s imports from the kingdom totalled $57 billion.
Saudi Arabia is China’s top oil supplier, making up 18 percent of China’s total crude oil purchases, with imports totalling 73.54 million tons (1.77 million barrels a day) in the first 10 months of 2022, worth $55.5 billion, Chinese customs data shows.
Oil imports last year amounted to 87.56 million tons, worth $43.9 billion, making up 77 percent of China’s total merchandise imports from Saudi Arabia.
State-run Saudi Aramco has annual supply deals with half a dozen Chinese refiners including Sinopec, CNPC, CNOOC, Sinochem, Norinco as well as private refiner Zhejiang Petrochemical Corp.
REFINERIES
Aramco in early 2022 made a final investment decision to build a $10 billion refinery, petrochemical complex in northeast China, marking its single largest investment in China.
Named Huajin Aramco Petrochemical Company, the joint venture groups Aramco, Huajin Chemical Industries Group Corporation (000059.SZ) — a unit of defense conglomerate Norinco-- and Panjin Xincheng Industrial Group.
The project, expected to be operational in 2024, combines a 300,000-bpd refinery and 1.5 million tons per year ethylene plant, with Aramco set to supply up to 210,000 bpd crude oil.
Aramco’s only other similar investment in China is a 25 percent stake in Refining and Petrochemical Company Ltd. in Fujian province controlled by state refining giant Sinopec Corp. , which began in 2008 operating a 280,000 bpd refinery and a 1.1 million ton per year (tpy) ethylene complex.
Aramco in October of 2018 signed a memorandum of understanding with Zhejiang provincial government to invest 9 percent in Zhejiang Petrochemical Corp. that operates China’s single-largest refinery of 800,000 bpd. No further progress has been announced since.
Similarly, Sinopec owns 37.5 percent in Yanbu Aramco Sinopec Refining Co. (YASREF), a JV with Aramco that operates a 400,000-bpd refinery in Yanbu on the Red Sea coast.
FINANCIAL
China’s state-owned Silk Road Fund is part of a consortium led by US-based EIG Global Energy Partners that in mid-2021 closed a deal to buy 49 percent of Saudi Aramco’s oil pipelines business for $12.4 billion.
Silk Road is also part of a consortium led by BlackRock Real Assets and Hassana Investment Company that announced in February completion of a 49 percent stake acquisition in Aramco Gas Pipelines Company for $15.5 billion.
POWER
Saudi utility developer ACWA Power, partly owned by the Saudi sovereign wealth fund, said in September that it agreed with Silk Road Fund to jointly invest in a 1.5 gigawatt (GW) gas-fueled power plant in Uzbekistan for $1 billion, part of Beijing’s One Belt One Road initiative.
State-run China Energy Engineering Corp. (CEEC) is building a 2.6-GW solar power station in Al Shuaiba in Saudi Arabia, also owned by ACWA Power, the Middle East’s largest solar project.
MILITARY, SECURITY
Saudi Advanced Communications and Electronics Systems Co. (ACES) signed a deal with China Electronics Technology Group to manufacture unmanned aerial vehicle payload systems in the kingdom, Saudi English-language newspapers Arab News and Saudi Gazette reported in March.
The UAE in February said it plans to order 12 L-15 light attack planes from China with the option of purchasing 36 more.
