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SAUDI ARABIA - Aramco in China.

Saudi Aramco has equity in the refining business in China, which is to become a major market for the company. Chinese oil imports are expected to exceed 50m t/y from 22m in 1996. Talks on raising Chinese purchases of Saudi crude oil and on Saudi Aramco investing in China's downstream were held in September 2001 during a visit to Shanghai by Saudi Oil Minister Ali Al Naimi. He met with the Chinese Minister of the State Development and Planning Commission, Zeng Peiyan, and the CEOs of state oil firms including Li Yizhong of Sinopec. The talks were held in the margin of an oil conference held in Shanghai.

In 1995 Saudi Aramco bought 45% in a small refinery at Thalin in north-east China. In early 1998, Saudi Aramco, Exxon and Fujian Petrochemical Co. signed an agreement to do a feasibility study for repair and expansion of a 80,000 b/d refinery at Fujian in south-east China. The latest round of talks was held in mid-2001 between Saudi Aramco, ExxonMobil and Sinopec, with discussion centring on a 200,000 b/d oil refinery in Quingdao in Shandong province as part of a $3.5 bn programme of JVs. The plan is also to raise the Fujian plant's capacity to 160,000 b/d by 2005 and have a related 600,000 t/y naphtha-based ethylene cracker built there.

During a visit to the kingdom by Chinese President Jiang Zemin on Nov. 1, 1999, the two governments signed several co-operation agreements including a contract raising Saudi Aramco's crude oil sales to China. Saudi Arabia is China's biggest trading partner in the Middle East and North Africa, and two-way trade amounts to almost $2 bn.

Beijing considers Saudi Arabia an ideal source for oil imports, in view of supply security considerations, among other things. China needs more refineries or it will have to continue importing oil products.
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Publication:APS Review Oil Market Trends
Date:Nov 5, 2001
Words:316
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