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Energy ties fuel friendly relations

By Xiao Wan (China Daily)
Updated: 2009-02-23 07:59

Ali Al-Naimi, Saudi Arabian oil minister, speaks to journalists as he arrives for a meeting of the Organization of Petroleum Exporting Countries in Cairo on Nov 29, 2008.    Bloomberg News

During President Hu Jintao's state visit to Saudi Arabia and four African nations, the Chinese leader reiterated that the nation should deepen friendly relations with those countries, with energy cooperation playing an important part in this.

Mohammed Al-Madi, regional vice-president and chief representative of Saudi Petroleum Ltd Beijing Representative Office, has no doubts that cooperation with China is valuable to his firm and country.

"The volume of our crude trade with China has been steadily growing in recent years," said Al-Madi, whose company is an affiliate of Saudi Aramco, the national oil company of Saudi Arabia.

In 2007, Saudi Aramco exported nearly 23 million tons of crude oil to China's largest refiner Sinopec, at an average rate of 460,000 barrels per day (bpd). Last year the figure was around 32.4 million tons, at an average of 650,000 bpd.

It is expected that by 2010, the average rate will increase to 1 million bpd, and by 2015, the rate will grow to 1.5 million bpd, said Al-Madi.

Saudi Aramco established a sales and marketing subsidiary office in Beijing in 1998, at a time when China's crude oil imports were small. "Since then, we have established close supply relationships with China's leading refiners - bonds that will continue to strengthen over time," said Al-Madi.

Along with Sinopec, Fujian province and ExxonMobil held an inauguration ceremony in 2007 to mark the formal government approval of joint venture contracts and the granting of business licenses for two joint ventures - Fujian Refining & Petrochemical Co Ltd and Sinopec SenMei (Fujian) Petroleum Co Ltd.

The two ventures, with a total investment of around $5 billion, are among China's first fully integrated refining, petrochemical and fuel marketing projects with foreign participation.

"Synergies from these two world-scale, integrated businesses, closely coupled with the strengths of the four partners and a long-term crude supply agreement with Saudi Aramco, significantly enhance the competitiveness of this project, and help ensure its world-class performance," said Al-Madi.

"It will also boost the development of China's petrochemical industry and contribute to the economic development of Fujian province," he pointed out.

Saudi Aramco is the world's largest oil corporation in terms of proven crude oil reserves and production. Its business covers a wide range, including oil and gas exploration, oil refining and distribution, and international shipping.

As the world's largest oil producer, Saudi Arabia is also the largest source of China's oil imports. Customs figures showed that China imported around 36 million tons of crude from the country in 2008, an increase of 38 percent year-on-year.

China imported 179 million tons of crude oil in 2008, an increase of 9.6 percent from a year earlier. Imports accounted for 48 percent of the nation's total crude oil demand, 1.8 percentage points higher than the previous year.

According to a recent report from the State Information Center, 55 percent of the country's oil consumption will be met by imports in 2010, with the figure rising to 66 percent in 2020.

Cooperation with Africa

China National Petroleum Corp (CNPC) has formed five overseas oil and gas cooperative regions, in Africa, Central Asia & Russia, South America, the Middle East and the Asia-Pacific.

Although it has operations in many parts of the globe, Africa is where the firm has had its longest and biggest overseas presence.

Last October, the company inaugurated the construction of two refineries in N'Djamena, capital of Chad, and in Chad's neighbor Niger.

The Chadian joint venture refinery is scheduled to start operations by 2011 with an annual capacity of 700,000 tons of gasoline and diesel, 20,000 tons of kerosene and 60,000 tons of LPG.

On Sept 20, 2007 CNPC and the Chadian petroleum minister signed an agreement on the establishment of the joint venture.

The refinery in Niger is 950 km east of Niamey, the country's capital, and will be able to refine 20,000 barrels of crude oil per day. It is expected to become operational within three years.

CNPC struck a $5 billion deal with Niger's government in June 2008 to pump oil from the Agadem block within three years and build a 2,000-km pipeline to export it.

CNPC had expanded its oil and gas businesses to 29 countries by the end of 2008. A total of 75 projects are currently underway in those countries.

By the end of last year, CNPC had provided engineering and technological services to 44 countries and regions, and exported materials and equipment to 69 countries and regions.

(China Daily 02/23/2009 page3)