Monday January 23, 2006

Energy deal expected on Saudi king's China visit

channelnewsasia.com :

China and Saudi Arabia are expected to sign an agreement on energy cooperation during a milestone visit by Saudi King Abdullah that both sides hope will usher in a new chapter of closer relations. The visit is the first by a Saudi king since the two nations established diplomatic relations in 1990.

The visit by the Saudi king comes at a time when China, the world's second biggest oil consumer, is scouring the globe for more oil to fuel its unprecedented economic transformation. It also comes as Saudi Arabia, the world's biggest oil supplier with the largest known reserves, seeks to diversify its economy and move away from too much dependence on the United States, the biggest oil consumer, analysts said.

"I think this cooperation makes a lot of sense," said a Hong Kong-based oil analyst who requested anonymity. "China has the fastest growing market and Saudi Arabia has the right product to sell ... the US is the biggest market but the US is not the booming market. The US market is saturated, so the growth is slower."

news.moneycentral.msn.com :

Saudi Arabia's King Abdullah arrived in Beijing on Sunday for his first ever state visit. From Beijing, the king will fly to India - which has vied with China for several energy deals - then Malaysia and finally Pakistan. The monarch is traveling with a large business delegation, including Oil Minister Ali al-Naimi.

Saudi Arabia was China's top supplier of oil in the first 11 months of last year, providing 17% of its imports, nearly 440,000 barrels per day (bpd). This was under a third of shipments to the United States over the same period, at 1.43 million bpd.

Gulf states, which produce a heavier type of oil that Chinese refineries are ill-equipped to process, may find it easier to sell to China if they also invest in refineries. Saudi Aramco last year signed a $3.5 billion deal together with Exxon Mobil Corp. and Sinopec , China's top refiner, to expand a refinery in south Fujian province. It is also in talks with Sinopec about investing in a plant in the northern city of Qingdao.

(2006-01-23 21:45:20 SGT) [Energy] Permalink

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