CONTEMPORARY EURASIA VIII (2) ContEurVIII2 | Page 71

ARAM ABAJYAN
to China in order to sign an agreement on economic cooperation. During
this visit, Riyadh promised to help Beijing construct a strategic oil
stockpile of about 100 million tons on China’s Hainan Island, as well as a
new refinery in Guangzhou, which involved the direct investment of
approximately $8 billion. 21
During the first period of bilateral cooperation, China’s former
President Jiang Zemin’s visit to Saudi Arabia in 1999 can be viewed as
an illustrative point of Beijing’s efforts to develop ties in a true sense,
while maintaining strategic partnership with Riyadh. Sino-Saudi relations
entered a new promising phase since that time. During that trip, the
leaders of China and Saudi Arabia signed an oil cooperation agreement,
and, in the words of the Chinese President, that event inaugurated a
‘strategic oil partnership’ between the sides. By this agreement, apart
from upstream oil exploration and production, the Kingdom opened its
domestic oil and gas market to China. Subsequently, Beijing agreed to
open its downstream sector (refining products from crude oil) to the
Saudi national oil company, Saudi Aramco. Saudi oil helped China
quickly expand its imports. Even though China’s refining capability was
not very suitable for Saudi heavy crudes, the Kingdom shifted some
lighter crudes to the Chinese market with more advanced refining
infrastructures from other customers. In 2002, Saudi Arabia became
China’s leading crude oil supplier. At the same time, much needed Saudi
investments in joint ventures were taking place in China intent on
expanding and developing the refining capacity of the country. Sino-
Saudi cooperation was not only profitable for China- its effects were
mutually beneficial. Especially after the 2000s, the Saudis found
themselves in a very profitable position by supplying China’s textile
industry with petrochemical products. In 2004, China’s Sinopec won one
of the three opportunities for foreign energy firms to develop Saudi
Arabia’s non-associated gas resources. Natural gas was found in geologic
formations, which did not contain crude oil. 22
Nevertheless, this deal had some possibly political motivations,
because the economic benefits of this action for Sinopec remain unclear.
The agreement could be characterized as apolitical deal between China
and Saudi Arabia, forming good relations with the Kingdom in order to
ensure Beijing’s long-term energy needs, while China continued its

21 Lai,
“China’s Oil Diplomacy,” 523.
and Bader, “Managing China-U.S.,” 191.
22 Leverett
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