January 19th, 2012
11:08 AM GMT
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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