9 months ago • 2 mins
Saudi Aramco, the oil behemoth, is carving more inroads into the world's second-biggest economy.
What does this mean?
Aramco has a $161 billion profit from last year burning a hole in its pocket, and it looks like the firm has got its heart set on a Chinese spending spree. The oil titan inked a deal over the weekend that’ll see it co-invest in a new $12 billion refining and petrochemical plant in Liaoning province. And the very next day, Aramco upped its multi-billion dollar investment in the country – coughing up $3.6 billion for a 10% stake in one of China's biggest oil-refining firms. That kind of spending might look overeager, but these are pretty savvy moves: they let Aramco wade further into China's refining sector while bolstering its crude oil sales to the country. As a matter of fact, these two recent deals will see the firm shipping nearly 700,000 barrels of oil each day to some of the very refineries it’s investing in.
Why should I care?
Zooming in: Fuel to the fire.
Aramco's ambitions are a clear sign that the firm’s got faith in China’s energy demand growing over the coming years. But the oil titan’s moves are a kind of counter-attack too. See, Western sanctions have pushed Russia to offer its slippery elixir elsewhere at discount prices – and just last month Russia nabbed first place as China's top supplier. That’s put Saudi Arabia – normally China’s go-to oil producer – on red alert, suggesting that this rivalry might be about to start heating up.
The bigger picture: Get the smelling salts.
China’s bounceback has been somewhat muted so far, with data showing that industrial groups’ profits slumped by 23% in the first two months of the year. The world’s second-biggest shipping group, Maersk, reckons that weakness is down to the fact consumers are still “stunned” by pandemic disruptions. When they recover, then the economy should come back roaring too.
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