The ground-breaking ceremony for new plants in Tianjin and Chongqing, a venture between SABIC and China's Sinopec. (File photo/Xinhua)
Saudi Arabia has boldly increased its investment projects in China in a bid to gain greater benefits from the Chinese economic boom with a stronger commitment to meet China's energy needs. The trend is seen as resulting from the geopolitical changes in the Middle East and the recent visit to the nation by China's premier, Wen Jiabao.
The political developments following the escalation of the nuclear controversy involving Iran is prompting Saudi leaders to make more active investments in China and use Saudi energy resources for greater benefit in the Chinese market, according to the online news reports from the 21st Century Business Herald in Guangzhou.
Saudi Basic Industry Corporation (SABIC) announced on April 6 a new investment plan of US$100 million to set up a new technology center in the Kangqiao area of Shanghai.
Just three days earlier, SABIC had launched the second phase of construction projects for petrochemical plants in the cities of Tianjin and Chongqing. These were part of the US$11 billion project with the state-run Sinopec Group to continue boosting output at polycarbonate production complexes.
SAIBIC is one of the largest international suppliers of petrochemicals and the second-biggest conglomerate in Saudi Arabia after the Aramco Group, with the Saudi government holding a majority 70% stake.
Sinopec is also working with Aramco to jointly inject US$10 billion in Saudi Arabia to build a new oil refinery with an annual capacity of 20 million metric tons. Sinopec holds a 37.5% stake in the venture, according to industry sources.
In addition, the two sides are also working on a new project to expanding the integrated petrochemical complex in Longquan in the southeast Chinese province of Fujian to double its capacity to 12 million tons of crude oil plus one million tons of ethylene per year.
Quoting sources, the 21st Century Business Herald also reported that Aramco is working with a giant oil group owned by the Chinese government to build a new large-scale crude oil refining complex at an unnamed coastal city in northern China.
Industry analysts and researchers said that the closer oil and petrochemical cooperation between Saudi Arabia and China has resulted from increased contact between the two sides and a shrewd move by Saudi leaders with Iran set to be hit with increased sanctions.
The expanded investment cooperation enables Saudi Arabia to use its oil to leverage huge benefits from the Chinese while China can secure the steady supplies of oil it needs to maintain its economic growth, they said.