Saudis study $65 billion in China investments during King's trip
16 Mar 2017 - 23:30
Saudi Arabian Oil Co. may deepen investment in China’s oil industry as part of $65 billion worth of potential deals signed between the two countries in everything from energy to manufacturing and a theme park.
Amin Nasser, chief executive officer of the Saudi state crude producer, signed a memorandum of understanding with China North Industries Group Corp. on Thursday to explore downstream oil opportunities. Saudi Aramco, as the company is known, is already a partner in refineries and petrochemical plants in the country. The Chinese company, known as Norinco, manufactures weapons and machinery and also has a refining unit.
Companies from both countries signed 22 agreements to study joint investment opportunities at a ceremony in Beijing. Chinese firms will look at a $2 billion petrochemical plant in Jazan, in the southwest of Saudi Arabia, supplying solar energy material, building e-commerce businesses and investing in a cultural theme park in the Middle East.
King Salman bin Abdulaziz is in the midst of an Asia-wide trip that’s already seen Saudi Arabia pledge investments including $13 billion in Malaysian and Indonesian energy projects. The Middle East nation is also courting foreign investors as it seeks to diversify its economy and gears up for what may be the largest-ever initial public offering. The country plans to float a 5 percent stake in Aramco, which Deputy Crown Prince Mohammed bin Salman has said is worth $2 trillion.
“The visit is part of Saudi’s ’Look East’ policy that intends to broaden trade with Asia and particularly China," said Yao Kuangyi, China’s former ambassador to Turkey. “Saudi Arabia also needs new markets and economic partners to help the country with its economic transformation from its dependence on oil, and China is a perfect target as a major economy with huge demands.”
Officials from the two countries have discussed the possibility of China Investment Corp., the country’s sovereign wealth fund, investing in the Aramco initial public offering, according to people with knowledge of the matter, who asked not to be identified because the talks are private. China National Petroleum Corp. may also be involved, they said Thursday. No formal agreement has been reached, according to the people.
Hong Kong, Tokyo and Singapore are among Asian locations that have been identified as possible venues for the listing of Aramco’s shares. The company’s primary listing will be on Saudi Arabia’s domestic exchange and it’s also evaluating other markets including as New York or London.
After concluding a signing ceremony Thursday at the Great Hall of the People in Beijing, Chinese President Xi Jinping addressed King Salman, saying that the visit had “solidified our cooperation in developing the two countries’ relations.” Commenting on the agreements reached, Xi said “the results have surpassed our expectations.”
Total trade between China and Saudi Arabia more than doubled to $54 billion dollars between 2006 and 2015, according to IMF data.