From the moment that China offered Saudi Crown Prince Mohammed bin Salman (MbS) a face-saving way out of the Saudi Aramco initial public offering disaster that he had created, as analysed in depth in my new book on the new global oil market order, the relationship between the two countries has grown ever stronger. Toward the end of last year, Saudi Arabia reiterated its commitment to China as its “most reliable partner and supplier of crude oil,” along with broader assurances of its ongoing support in several other areas. This followed the comment in March 2021 at the annual China Development Forum hosted in Beijing, from Aramco chief executive officer, Amin Nasser that: “Ensuring the continuing security of China’s energy needs remains our highest priority - not just for the next five years but for the next 50 and beyond.” Such statements appeared to confirm that MbS now sees the U.S. as a partner just for its security considerations in the new global oil market order, with no meaningful quid pro quo on Saudi Arabia’s part, whilst regarding China as its key partner economically and Russia as its key partner in energy matters. A slew of new commitments last week from Saudi Arabia to China appear to confirm these views.
To begin with, Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said that the Kingdom is keen to cooperate further with China in developing gas ties, as well as those relating to crude oil. These gas ties will span the entire sector, from the development of reserves to new petrochemicals projects, and follow on from the signing last August of a multi-pronged memorandum of understanding (MoU) between Saudi Aramco and the China Petroleum & Chemical Corporation (Sinopec). As the president of Sinopec, Yu Baocai, put it at the time: “The signing of the MoU introduces a new chapter of our partnership in the Kingdom [of Saudi Aabia] …The two companies will join hands in renewing the vitality and scoring new progress of the Belt and Road Initiative [BRI] and [Saudi Arabia’s] Vision 2030.” Crucially for China’s long-term plans in Saudi Arabia, it also covers opportunities for the construction of a huge manufacturing hub in King Salman Energy Park that will involve the ongoing, on-the-ground presence on Saudi Arabian soil of significant numbers of Chinese personnel. These will not just be directly related to the oil, gas, petrochemicals, and other hydrocarbons activities, but will also include a small army of security personnel to ensure the safety of China’s investments. At that point last year, Aramco already had a 25 percent stake in the 280,000 barrels per day (bpd) Fujian refinery in south China through a joint venture with Sinopec (and the U.S.’s ExxonMobil) and had also earlier agreed (in 2018) to buy a 9 percent stake in China’s 800,000 bpd ZPC refinery from Rongsheng.