January 19th, 2012
11:08 AM GMT
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Dhahran, Saudi Arabia (CNN) – China is thirsty for oil to fuel its economic boom – and it’s increasingly looking to Saudi Arabia to help quench that thirst.

Saudi Arabia produces nearly 10 million barrels of oil a day – about the same as China consumes. That’s why the Kingdom is at the heart of China's energy strategy to secure more resources from the Gulf region.

Chinese energy giant Sinopec recently signed a joint venture with Saudi’s Aramco, the world’s biggest oil company, that will lock-in an additional 400,000 barrels of oil per day by 2014.

It’s a sign of China’s eagerness to boost economic and political ties to Saudi Arabia.

Aramco CEO Khalid Al Falih told CNN’s John Defterios: “China … is the engine of the global economy; they are growing, their population is urbanizing and there is a thirst for energy.”

He added: “We need China as much as China needs us."

Aramco is the number-one oil supplier to China, ahead of Angola and Iran, fostering a symbiotic relationship that has produced three joint ventures.

With Iran's threat to close the Strait of Hormuz after their recent military exercises, China continues to hedge its bets by spreading its orders and investments all around the world.

"We have been doing that all the time and we are buying everywhere around the world,” says Sinopec CEO Fu Chengyu. “We will do the same in the future."

The Saudi-China bilateral trade relationship was cemented when King Abdullah made his first overseas visit to Beijng after taking the throne in 2005 – a relationship that is poised to expand.

“We are a major investor in China – we supply them with about 800,000 barrels per day, which shows a great deal of trust and interdependence,” says Al Falih. “Then, of course, for the first Chinese investment to take place in Saudi Arabia by Sinopec shows that they are also seeing a lot of faith in the Saudi market and in Saudi Aramco.”

Al Falih says this two-way investment is creating an energy corridor between China, Saudi Arabia and other Gulf States, and diversifying the Saudi economy.

“We have a lot of resources in energy – oil for Saudi Arabia, gas for Qatar and so forth,” he says.

“Hopefully what we want to do is build around this energy corridor exchange of goods and services and trade and other areas that adds value to the Chinese economy and to the Saudi economy that goes beyond simple trade in crude oil.”

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soundoff (33 Responses)
  1. Beerbarrel

    What the Saudis are saying is that they do not want to be too dependent on the USA.

    January 19, 2012 at 11:58 am |
  2. wys

    What the Saudis are saying is that oil is not a priviledge of the rich nations to be used for the purposes of war and greed?

    January 19, 2012 at 12:18 pm |
  3. Floyd Burgoz

    What they are saying is they want China to be a leading buyer of Saudi Oil to wipe out Iran. They are a sworn enemy of Iran and will do just about anything within it's power/oil to bring China into its fold.

    January 19, 2012 at 12:44 pm |
  4. Steve Thompson

    As shown in this article, as a result of growing oil demand from India and China in the next 25 years, non-OECD nations will account for 90 percent of the increase in energy demand with China and India responsible for 50 percent of the increase:

    http://viableopposition.blogspot.com/2011/12/future-of-oil-2010-to-2035.html

    To compensate for production declines over the next 25 years, 47 million BOPD of gross production additions are needed; to put this into context, this is twice the volume of oil currently produced by all Middle East OPEC nations! This will require an investment of $10 trillion over the next 25 years.

    January 19, 2012 at 12:59 pm |
  5. Marco Hsiao

    According to "Jiu Tangshu" (Old Tang History 舊唐書): in 651 the first ambassador of the Arab Empire was sent to China. He said his country has had 34 years, and went through 3 monarchs. Jiu Tangshu has good record on the rise of Islam, and indicates that the Arab Empire defeated Persia and the East Roman Empire.

    (Jiu Tangshu also records: Persia had sent tributes to the Tang Empire several times for asking China's assistance; under the invasion of the Arab Empire, Persia was close to collapse. At last Persia's prince (and followers) fled to the Tang Empire; the Tang government let them to live in the Tang Empire's territory – today's Afghanistan. The Tang Empire had considered sending troops to assist Persia, but it did not happen, because 1. It was too distant, 2. The Arab Empire also sent tributes to China.)

    Now the world is moving to peace. China should build friendly relation with India, Pakistan, Iran, Turkey, Iraq and Saudi Arabia for prompting trade and world peace.

    All Asian countries should cooperate together. Possibly in the future a huge "Asian Union" might be built; and it could have a big contribution to prosperous economy and world peace.

    January 19, 2012 at 2:54 pm |
  6. Organic Food

    Obama cancels keystone pipeline.

    So the Chinese are slurping up more oil, guess what? That means there will be less of it.

    If there is less of it, it will cost more. Yes, cancel that pipeline for some farmers in the middle of nowhere, now we can all pay a lot more to put gas in our cars. This summer is going to be really bad. Thanks again.

    January 19, 2012 at 4:36 pm |
  7. FromBelow

    China's not going to protect you Iran. They can get their oil elsewhere.

    January 19, 2012 at 5:21 pm |
  8. TonyK

    What will happen if China will not be able to get the oil it needs? The answer is, It will attack the oil countries.As simple as that. From what we see, China has been armed to it's teeth, and is perhaps the strongest nation today.

    January 19, 2012 at 6:00 pm |
  9. RP2012

    Arabian gulf my ass.

    January 19, 2012 at 6:04 pm |
  10. OSKAR

    China is the country to fear by definition. It has nice and polite people, but the politicians are not that friendly. If you don't belong to the party, you are their enemy, and that's dangerous. Somehow, they are the next colonials around the globe.
    It makes sense, since they have to feed 1,2 billion people.

    January 19, 2012 at 6:08 pm |
  11. That'snotTrue:[

    @TonyK

    Uhhhhh.......I think your talking about the US, its the only country in the middle east fighting for "freedom"...which really means oil. Please don't group the leaders of China in the same group, yes there are weapons, but then again the US wants to occupy the pacific, so you can see who's way more agressive....

    January 19, 2012 at 8:16 pm |
  12. opAZ

    That'snotTrue:[
    @TonyK

    You mean to say – just calling spade a spade?

    but the spade is actually freedom for them oppressed for centuries until the arabian springs. Oil is just the a corollary.

    .

    January 20, 2012 at 2:17 am |
  13. Choco monster

    Ahh, the evil Chinese think these meaningless gestures are sacred for other cultures. When the ish hits the fan, these American allies will cut China's oil supply off in a flash. The thin veneer of peace is the only thing that makes this charade possible. But don't cross the US, or you'll see who's the unpopular one.

    January 20, 2012 at 2:40 am |
  14. wovoka

    Wow.
    And I bet the Chinese won't even force them to buy expensive jets with pricey service agreements.

    January 20, 2012 at 3:27 am |
  15. Jameson

    Man the Saudis are sharp businessmen. Hu Jintao is out of his league, especially if he thinks standing next to someone means something. These guys are using him to get back at Iran and will cut him off dry as a bone the second the US tells them to.

    January 20, 2012 at 3:56 am |
  16. Susan

    @wovoka, that's because the Chinese have no jets to sell. Who would want to fly on copied Russian designs anyway?

    January 20, 2012 at 3:58 am |
  17. Susan

    @tonyk, China is a all show and no go.

    January 20, 2012 at 4:00 am |
  18. whatzthefuzz

    The Far East will never engage in colonialisation. Firstly, historically thay have never shown any such proclivity. Secondly, they tend to be pacifists and religious. Thirdly, they are fiercely nationalistic and are prepared to make sacrificesfor it. Fourthly, they understand the evils of colonialism, having suffered from it and having fought for their own liberation. Fifthly, the world has progressed into an enlighthened global village and no act of aggression and invasion is tolerated and accepted by the international community.

    To cast aspersion on Asian countries as evil, oppressive, corrupt is a reflection of the very evils of colonialisation visited on them by the hitherto more advanced and evangelistic westerners. What was good for the goose is now not good enough for the gander.The hard hitting maxim of not casting stones when living in glass houses and letting he who has not sinned cast the first stone is carved in more stones?

    January 20, 2012 at 4:35 am |
  19. Marco Hsiao

    A warning to Choco monster!

    Apologize immediately!

    You are so uneducated and foolish.

    January 20, 2012 at 12:14 pm |
  20. fuzzball

    Saudia is probably looking for a strong and stable buyer with a veto power in the security council who does not want to start a war every couple of years.

    January 20, 2012 at 4:54 pm |
  21. Hsing Tao

    The seemingly rapid advance of China is just a mirage. In essence the fragility of China's full dependence on outside energy and material is it Achilles heel. When the giant comes crashing down, it will mist likely take a few of it's closest dependents down, but over all this will result in an internal struggle and massive bloodshed. This is the CCP's doom.

    January 20, 2012 at 9:08 pm |
  22. gerald

    china needs to sell their manufactured goods knowing full well that the US consumer is running out of money,hence buying oil from oil rich nations around the world which in turn uses that money to pay workers who buy chinese goods

    January 20, 2012 at 11:33 pm |
  23. Marco Hsiao

    Some immoral comments are making enemies. Are the US citizens so low quality? Are they for prompting US military budget? Or just immoral blabbers? They are provoking.

    Facts must be known. The immoral and ineffective US military has killed 100,000 innocent Muslims, and destroyed 2 million Muslims' homes and furniture in Iraq, then make lies to insult Iraq. Saudi Arabia and other western Asian countries needs a new justice power to as friend.

    The half prisoners of the world are US citizens in the US jails. (Does the US government bully her own citizens? Or the US is most immoral country?) The US also consume half drug of world.

    January 21, 2012 at 4:17 am |
  24. Marco Hsiao

    China should become largest trade partner for India, Pakistan, Iran, Turkey, Iraq, Syria, Israel and Saudi Arabia; it is a historical destiny. And they all will be China's friends.

    However in 2050, a dominant justice power will emerge on the world center.

    January 21, 2012 at 4:18 am |
  25. Choco monster

    Marco Hsiao, get off our media you CCP goon. No one cares what you think in China. If you want to war you will get nuked. End of story.

    January 21, 2012 at 6:17 pm |
  26. xpresvue

    @ Monster, your name fit you and your country!

    January 21, 2012 at 7:57 pm |
  27. Dirtyy

    US your downfall is close, do not try and force others in to saving you.

    January 21, 2012 at 9:05 pm |
  28. War

    Everything wrong the US did China is doing, so why are the Americans complaining???, the US financed wars in Africa, Charles Taylor was an FBI agent (check BBC for more), and their roles in other nations as well.

    China is doing the same thing in a different way, so why are people complaining???

    January 21, 2012 at 9:47 pm |
  29. arid

    http://www.muslimvoicetv.com

    January 21, 2012 at 11:46 pm |
  30. Aisha W

    Why does everything have to have a "secret agenda" =S why can't it just be , a country in need of oil and another country supplying it for them !

    January 23, 2012 at 5:44 am |
  31. sameh

    very sad situation See the elephant is dying and die

    http://www.bestofthebestofall.com/forums/viewtopic.php?f=38&t=1163

    January 26, 2012 at 3:49 pm |
  32. Pedram

    Thank you for srnaihg this piece, it's definitely an eye-opener. Living in cities and a populated suburbia doesn't truly show the impact of the recession, but now I know what it is doing, or can do, to small towns. It certainly is a question of ethics this story reminds me a bit of the Dr. Suess story The Lorax, in which a get-rich-quick idea led to the destruction of a beautiful forest of trees. I do believe the local government should be looking for ways to improve their low economy status, but also needs to protect their home and store owners in the process. The oil companies are simply doing their job, and money is obviously scarce for these people. But the duties of non-injury seem to be neglected here, and I feel that is unacceptable. Especially unethical is to lie about the housing situation, completely throwing away any duties of fidelity to the people that come to find jobs. If the locals wanted to boost their economy, that's one thing. But not being able to support the townies that have been there from the start, is bad use of power and disheartening. They may not be able to prevent the litter of people that choose to live and sleep in their cars, but they can prevent them from harming the safe, inviting, positive atmosphere that people used to feel when they entered the small North Dakota town.

    February 29, 2012 at 4:29 am |
  33. Jamel Bellemare

    I drop a comment each individual time I like a guide on a web page or if I've something to valuable to contribute towards the conversation. It's a result with the fire communicated in the post I browsed. And after reading this report I had been essentially moved enough to drop a comment here

    http://www.uCMrNaEQzsuCMrNaEQzs.com/uCMrNaEQzsuCMrNaEQzs

    January 12, 2014 at 2:48 am |

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