Helping China build a prosperous future

Editor's note: With energy supply and the Belt and Road Initiative high on the agenda for President Xi Jinping's state visit to Saudi Arabia, China Daily spoke with Saudi Aramco, a leading supplier of crude oil to China, about its current cooperation with Chinese companies and plans for the future.

Saudi Aramco President and CEO Amin Nasser said that the relationship between Saudi Arabia and China is historical, deep and growing, and China's Belt and Road Initiative will offer tremendous opportunities in the coming years.

"We are proud to be the leading source of crucial energy supplies for China's progress and rapid development, and we are increasingly looking to China as a major source for our engineering and procurement. The Chinese market also offers attractive and mutually beneficial downstream energy growth opportunities. We are especially pleased that what started as a producer-consumer relationship continues to grow from strength to strength, with greater strategic cooperation toward shared goals and joint collaboration in R&D and innovation, and human resource development in leading Chinese universities. A prime example of our collaborative partnership is Yanbu Aramco Sinopec Refining Co, our award-winning joint venture with Sinopec, which is a world-class refinery that can meet the most stringent global fuel specifications."

More than 3 billion barrels of oil, equivalent to 42 million metric tons, have been delivered since the first shipload of Arabian crude reached Sinochem in 1991 via the Maritime Silk Road. In 2015, Saudi Aramco was China's largest source of crude oil, with the trade volume standing at 1 million barrels per day, an increase of 2 percent on the previous year, and accounting for more than 15 percent of total Chinese imports.

To integrate regional operations and better fit into the dynamic Asian market, in 2012 Saudi Aramco moved the headquarters of its fully-owned Asian subsidiary to Beijing. Over the years, Saudi Aramco has strengthened its relationships with China's top energy companies, including Sinopec, CNPC, CNOOC and Sinochem. In April 2015, Wanhua Chemical Group, China's largest propane dehydrogenation plant, was added to the liquefied petroleum gas customer list; and Aramco is now pursuing Southwest China cooperation with CNPC, which is an integrated refinery and marketing project.

The trade between Saudi Arabia and China is two-way and mutually beneficial. For some 2,000 years, trade and commerce have linked the Arabian Peninsula and China. Trade has flowed both ways, and involved not only silk, spices, ceramics and textiles, but also ideas and innovations, elements of culture and learning, and religious and philosophic teachings. The trade and cultural exchanges in olden days were conducted overland along the great Silk Roads as well as through important maritime links.

Today, Chinese companies have a significant presence in Saudi Arabia, and enjoy unprecedented investment opportunities. So far there are 160 Chinese companies operating in Saudi Arabia in sectors such as construction, infrastructure, telecommunications and petrochemicals, among others. In energy, for example, Sinopec International Petroleum Services is active in the areas of upstream drilling and seismology.

Many more Chinese companies are welcome to explore Saudi Arabia's huge potential opportunities, including the three newly developed industrial cities of Jazan, Al-Hasa and Ras Al-Khair.

Expanding cooperation

Extending right across the hydrocarbon value chain, Saudi Aramco has pursued significant downstream joint venture development opportunities with Sinopec, Asia's largest refiner.

Fujian Refining and Petrochemical Co is a Saudi Aramco joint venture with Sinopec, ExxonMobil and the Fujian provincial government. Fully operational since 2009, FREP is a refining and petrochemical complex that expanded capacity to 280,000 barrels per day in 2015. The expansion provides most of the petrochemical feedstock needed for the increase of FREP's steam cracker from 800 to 1,100 kilo tons per annum, which was completed early in 2015. FREP is a key element in Saudi Aramco's chemicals strategy and has long been recognized for its outstanding environmental performance by the local community and government.

Another Saudi Aramco-Chinese joint venture is with Sinopec SenMei (Fujian) Petroleum Co, with annual sales of about 6 million tons (47.4 million barrels). SSPC markets gasoline, diesel and illuminating kerosene - produced by its sister joint venture FREP - through 1,000 retail sites in nine cities, via a distribution network of 17 terminals across the province. SSPC was awarded three of the highest safety awards recognized by both Chinese government and industry.

Yanbu Aramco Sinopec Refining Co is a world-class, full-conversion refinery that has been fully operational since the end of 2014. YASREF uses 400,000 barrels per day of Arabian Heavy Crude Oil to produce premium transportation fuels, as well as high-value refined products for both international and domestic markets.

More widely, Aramco Trading Co, a fully owned subsidiary of Saudi Aramco, took its first step into the chemical business by selling Saudi-produced chemical products to Asia. Saudi Aramco witnessed its first direct polymer sales to Chinese customers in 2013. Its chemical sales business in China started realizing profits in 2014. Annual sales of polyethylene and polypropylene in 2015 totaled 375.35 kilo tons per annum.

Today, Saudi Aramco is negotiating further partnerships in China's refining and marketing segments to build on existing ties.

A front runner

Saudi Aramco believes that technology and innovation are the driving forces for continued and future success in the energy sector, and are essential to solving global energy challenges and stimulating the local knowledge economy.

Its Beijing research center was inaugurated in 2015 to expand global reach and facilitate effective partnerships with local research entities, academia and industry, while enhancing research in Saudi Arabia.

The 4,400-square-meter center in Beijing is working on creating cutting-edge solutions to existing exploration and production challenges through innovative thinking and technology. It aims to be a pioneer exploration and production research center that leads the industry in excellence. It is the first global research center in the Asia Pacific region, and employs over 20 researchers, with the goal of expanding to 62 by 2017.

In December 2015, the center organized its first technical forum under the theme of Innovative Geophysical Concepts: New Solutions, which attracted more than 180 professionals from all over China, creating a great platform for technical connection and knowledge sharing.

Complementing its in-house research and amplifying the potential benefits generated by a global research network, Aramco established a corporate venture team in China in 2015. The goal is to support Aramco's corporate venture unit, Saudi Aramco Energy Ventures, to invest in China's startup and high-growth companies with strategically important technologies. It provides support to promising companies in the form of strategic guidance, access to a global network and capital for accelerating the development and deployment of technologies. There is a strong pipeline of candidate companies so far, and the company expects to identify more champions from China.

CSR core to strategy

Aramco Asia's corporate social responsibility endeavors not only reflect its values and commitment to local communities, but also help address environmental and sustainability challenges. Globally, proactive corporate citizenship is an essential part of everything the company does.

In China, Aramco is pursuing a Clean Air Asia effort, with Tsinghua University's Environmental Science and Engineering School, to support air quality and climate change, low emissions and urban development. In terms of achieving the goal of creating a knowledge society, the company has formed a partnership with the prestigious Academy of Mathematics and Systems Science to demonstrate appreciation for the organization's efforts to nurture academic leaders and talents in the fields of mathematical and systems science. The company has also offered scholarships to students - who are potential company recruits - from Sun Yat-Sen University.

Building relationships with key opinion leaders in China, from academicians to industry regulators and policymakers, from government and non-government agencies to media, plays a crucial role in shaping the energy industry's future. For example, in November, a delegation of 19 Chinese representatives visited Saudi Aramco's headquarters in Dhahran and various facilities in the country to deepen their understanding of the company's energy supply role.

A new chapter

There are many reasons to highlight the achievements of people-to-people exchanges between China and Saudi Arabia.

Thanks to the efforts of the two governments, some 2,000 Saudi and Chinese students have been able to study and research in one another's countries since their exchange program was launched in the late 1990s.

Recently the program has been expanded in the Asia-Pacific region so that more students can benefit.

In 2015, more than 120 students sponsored by Saudi Aramco enrolled in A-level Asian universities: 57 in China, 32 in South Korea, 32 in Japan, and, for the first time, four in Singapore.

By the end of 2015, 67 Saudi students had successfully completed their degree programs and graduated from schools in Asia - 34 in China, 17 in Japan and 16 in South Korea. These graduates are now serving in positions that optimally draw on their education, language and cultural backgrounds.

China's partnership with Saudi Aramco is mutually beneficial, multi-layered and continually evolving. With such firm foundations already established, it is a positive win-win partnership that can only go from strength to strength.

(China Daily 01/20/2016 page12)