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Thu 16 Mar 2017 11:16 AM

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China and Saudi sign agreements worth $65bln

KSA seeking to boost oil sales after losing market share to Russia last year

China and Saudi sign agreements worth $65bln
Saudi Arabias King Salman bin Abdulaziz al-Saud. (TOMOHIRO OHSUMI/AFP/Getty Images)

Saudi Arabia's King Salman
oversaw the signing of deals worth potentially $65 billion as he began a visit
to Beijing on Thursday, as the world's largest oil producer looks to cement
ties with the world's second-largest economy.

The
octogenarian monarch, who has overseen the launch of an ambitious economic
reform plan since his accession two years ago, is on a month-long Asian tour.

The
visits to countries that are some of world's fastest growing importers of Saudi
oil aim to promote investment opportunities in the kingdom, including the sale
of a stake in its giant state firm Saudi Aramco.

Saudi
Arabia has sought to boost oil sales to China, the world's second-largest oil
market, after losing market share to Russia last year, by working mostly with
China's top three state oil firms.

Chinese
President Xi Jinping told Salman in Beijing's cavernous Great Hall of the
People that his visit showed the importance he attached to relations with
China.

"This
visit will push forward and continue to improve the quality of our relations
and bear new fruit," Xi said in comments in front of reporters.

Deputy
Chinese Foreign Minister Zhang Ming said the memorandums of understanding and
letters of intent were potentially worth about $65 billion, involving everything
from energy to space, but he did not give details.

"President
Xi Jinping and King Salman are old friends," Zhang said. "Practical
cooperation between China and Saudi Arabia has already made major achievements,
and has huge potential."

For
Saudi Aramco, the potential investments fit with its strategy to expand its
refining and chemicals portfolio in its bid to diversify assets and secure
long-term agreements for its oil. An MoU with state-run Norinco will look into
building refining and chemical projects in China, while Saudi Basic Industries
Corp (SABIC) and Sinopec have agreed to develop petrochemical projects in China
and Saudi Arabia. The Norinco deal could involve exploring the possibility of a
greenfield refinery and chemical plant in Panjin, Liaoning province, while also
upgrading an existing refinery and petrochemical facility in the same location,
an industry source said. Sinopec and SABIC, one of the world's largest
petrochemical companies, jointly run a refinery in Tinajin.

China
has traditionally played little role in Middle East conflicts or diplomacy,
despite its reliance on the region for oil. But it has been trying to get more
involved in efforts to end Syria's six-year-old civil war, where Riyadh
supports rebels battling President Bashar al-Assad.

Last
year China also offered support for Yemen's government, which is backed by a
Saudi-led Gulf Arab coalition in a war against the Iranian-aligned Houthi
movement that controls much of the country.

Zhang
said both the Yemen and Syria crises were discussed by Salman and Xi, and both
leaders agreed that these issues must be resolved politically via talks.

China
has had to tread a careful line, though, as it also has close relations with
Iran. Xi visited both Saudi Arabia and Iran in January last year.

Next
week Israeli Prime Minister Benjamin Netanyahu visits China.

One
Beijing-based diplomat from a Muslim-majority country told Reuters that China
was trying to play the role of "honest broker" in the Middle East, as
it lacks the historical baggage of the Americans or the Europeans.

"China
does not take sides and that is appreciated," said the diplomat, speaking
on condition of anonymity.