China's oil demand offsets drop in OECD, Aramco says

State oil giant Saudi Aramco said rising oil demand from its largest crude buyer, China, will offset declining consumption elsewhere.

"I believe increased Chinese demand offsets declining consumption in the OECD nations," Khalid Al Falih, chief executive officer of Aramco said in a speech posted on the firm's website.

"[It] is essential to encouraging necessary investment in exploration as well as oil production, refining and transportation capacity, which ultimately benefits all petroleum consumers," Falih said.

China, the world's No. 2 oil user, is surpassing the US as Riyadh's largest crude oil buyer with volumes poised to touch an average of 1 million barrels per day this year, or roughly one-fifth of China's total crude imports.

"Our relationship is founded on the provision of steadily growing volumes of crude oil currently about a million barrels per day, making Saudi Aramco China's largest and most reliable supplier," Falih said.

Sino-Saudi trade ties have grown as Chinese economic growth has boosted its fuel consumption and increased its reliance on the kingdom's crude.

"The oil industry itself looks to China as the largest source of incremental demand growth."

Aramco has already partnered Sinopec in the joint venture Fujian plant in southeast China.

It signed last week an initial deal with China's Sinopec Group to jointly build a $10-billion Yanbu refinery on the Red Sea coast, a pact that further cements ties between the two energy giants.

Aramco said on Sunday its subsidiary, Aramco Overseas Co had signed a memorandum of understanding with PetroChina Company Ltd, a subsidiary of China's state-owned oil giant CNPC to develop a 200,000 bpd crude refinery in in Yunnan, the Chinese province that borders on Myanmar.