Saudi Arabia's King Salman oversaw the signing of deals worth as much as $65 billion on the first day of a visit to Beijing on Thursday, as the world's largest oil exporter looks to cement ties with the world's second-largest economy.
The deals included a memorandum of understanding (MoU) 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 already jointly run a chemical complex in Tinajin, also agreed to develop petrochemical projects in both China and Saudi Arabia.
Saudi Arabia's octogenarian monarch, who has overseen the launch of an ambitious economic reform plan since his accession two years ago, is on a month-long Asian tour. The visits to countries that are some of world's fastest growing importers of Saudi oil aim to promote investment opportunities in the kingdom, including the sale of a stake in Aramco.
Saudi Arabia has sought to boost oil sales to China, the world's second-largest oil market, after losing market share to Russia last year, by working mostly with China's top three state oil firms.
In Beijing's cavernous Great Hall of the People, President Xi Jinping told Salman that China was a reliable and stable oil export market and the two countries should deepen 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 told Xi he hoped China could play an even greater role in Middle East affairs, the ministry added.
"Saudi Arabia is willing to work hard with China to promote global and regional peace, security and prosperity," Salman said. Deputy Chinese Foreign Minister Zhang Ming said the memorandums of understanding and letters of intent were potentially worth about $65 billion, involving everything from energy to space.
Besides the MoUs agreed between the two governments, Saudi and Chinese companies signed 21 deals, ranging from exploring investments in oil and petrochemical plants to ecommerce and co-operating in renewable energy markets.
For Saudi Aramco, the potential investments fit with its strategy to expand its refining and chemicals portfolio in its bid to diversify assets and secure long-term agreements for its oil.
Beijing, for its part, has recently loosened its grip on a sector long dominated by the country's top three energy giants in an effort to boost private investment as the economy cools.
The Norinco deal could involve exploring the possibility of a greenfield refinery and chemical plant in Panjin, Liaoning province, while also upgrading an existing refinery and petrochemical facility in the same location, an industry 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 and former senior Aramco executive.
Aramco said in written statements 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 reinforced thermoplastic pipes and components.
About the author
Research Associate at Center for Islam and Global Affairs (CIGA) at Istanbul Sabahattin Zaim University