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China, Saudi Arabia Sign $65 Billion in Deals

Reuters, March 16, 2017
Reuters

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 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.

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 within 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.

(Reporting by Ben Blanchard and additional reporting by Reem Shamseddine in KHOBAR, Katie Paul in RIYADH and Meng Meng and Chen Aizhu in BEIJING; Editing by Clarence Fernandez, Greg Mahlich)

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Copyright 2017 Thomson Reuters. Click for restrictions.

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