LOS ANGELES, Jan. 24 -- Saudi Arabia's King Abdullah bin Abdulaziz al-Saud and Chinese President Hu Jintao, following a recent summit meeting in Beijing, have agreed to a landmark accord on oil, natural gas, and minerals as part of five main areas of cooperation between their two countries.
"China is willing to improve the dialogue and the method of cooperation on energy with Saudi Arabia to raise the level of energy cooperation," Hu said, adding that closer cooperation in the fields of infrastructure construction and telecommunication is also under way.
The new agreement on hydrocarbons, signed by Saudi Arabia's Petroleum and Mineral Resources Minister Ali Al-Naimi and Ma Kai, the head of China's State Development and Reform Commission, is the first between the two governments on overall cooperation in the field of energy.
Neither side provided any details of the agreement, but Saudi Foreign Minister Prince Saud al-Faisal underlined Hu's remarks on hydrocarbons as a main theme of the summit, saying "China is one of the most important markets for oil and Saudi oil is one of the most important sources of energy for China."
Prince Saud said the energy deal would set the framework for specific energy investments between the two sides, and that specific agreements would soon be signed by the two countries' respective national oil companies.
Chinese Foreign Minister Li Zhaoxing said the agreements would be implemented shortly, a point apparently underscored by a report in the Beijing Morning Post, which said Jan. 24 that China and Saudi Arabia planned to build a large crude oil storage facility in China's Hainan province.
The storage capacity of the oil facility is expected to reach 25-30 million tonnes, the paper reported. It said the facility is part of a comprehensive joint project that also includes a refinery and a natural gas storage facility.
The storage site is expected to supply oil to the refinery and house part of China's oil reserves, the newspaper said.
It added that Saudi Arabia would carry out the project with a Chinese petroleum firm, but it did not identify the firm.
Chinese imports up
The new government-to-government agreement comes with China's growing demand for oil, which is increasing by some 15%/year. In 2005, China imported 130 million tonnes of crude oil, up 3.3% over 2004.
China's imports of crude oil from Saudi Arabia have already more than doubled from 8.8 million tonnes in 2001 to more than 20 million tonnes in 2005.
The agreement also caps large-scale energy cooperation between China and Saudi Arabia since 2003, which includes a number of projects already under way.
Among them, China's Sinopec is drilling for gas in the Saudi desert and building a refinery with Saudi Aramco in China's Fujian province, while Saudi Aramco has begun engineering work with Sinopec on a second refinery in China's Qingdao city.
Contact Eric Watkins at [email protected].