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Aramco partners with Chinese giant for projects in Saudi

Sinopec Limited's parent, Sinopec Group, is the world's largest oil refining, gas and petrochemical conglomerate Unsplash
Sinopec Limited's parent, Sinopec Group, is the world's largest oil refining, gas and petrochemical conglomerate

Saudi Arabian Oil Company (Aramco) on Wednesday signed an agreement with China Petroleum and Chemical Corporation (Sinopec) to develop projects in the kingdom, underscoring the strong investment links between the two countries.

The Memorandum of Understanding (MoU) covered a number of areas including potential collaborations across upstream and downstream businesses, engineering and construction, oilfield services, carbon capture and hydrogen, Aramco said.

It also outlined the possibility of Sinopec establishing a local manufacturing hub in King Salman Energy Park.

“We are delighted to be able to extend our relationship with Sinopec and leverage our mutual strength and reach while creating a path to bring our long-standing cooperation in China to our facilities in Saudi Arabia,” Mohammed Y. Al-Qahtani, Aramco senior vice president of downstream, said.

Yu Baocai, president of Sinopec Corp, said the “two companies will join hands in renewing the vitality and scoring new progress of the Belt and Road Initiative and Vision 2030”.

The announcement further cements the fact that the Middle East has become a key target for Chinese investment through the Belt and Road Initiative (BRI).

The BRI was launched by Chinese president Xi Jinping in October 2013. Over the last nine years a total of $932 billion has been spent developing projects throughout Asia, Africa and Latin America.

While overall BRI spending between January and June this year declined four percent year-on-year to $28.4 billion, the Middle East was the destination for 57 percent of all funding over the period.

Saudi Arabia topped the global rankings with $5.5 billion, according to research by the Shanghai-based Green Finance and Development Center (GFDC).

One of the biggest deals saw China’s state-owned Silk Road Fund become part of an international consortium that bought a 49 percent in Saudi Aramco’s gas pipelines subsidiary for $15.5 billion.

The GCC accounts for around two thirds of China’s imports of crude oil. 

Dr Christoph Nedopil Wang, director of the GFDC and author of the report, said China’s stronger engagement in the Middle East, especially in the hydrocarbons sectors, “might also be driven by some of the Western companies’ interest in reducing some of the oil and gas investments in the region, which can be seen as an opportunity for Chinese partners.”

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