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Saudis set to supply reserves in China


By Caroline Muspratt (Filed: 24/04/2006)


Saudi Arabia is considering setting up a strategic oil reserve in China which could be used by Beijing in case of emergency. The Chinese President Hu Jintao is visiting Saudi Arabia, China's main oil supplier, and raised the plan during talks with his host King Abdullah.


The proposal could see a strategic oil reserve set up in China supplied by the Saudis, in addition to the oil Saudi Arabia exports to the country for its daily needs. The reserve would be in a coastal city in south-east China, a Chinese official said. He said Riyadh and Beijing were discussing the plan's feasibility and how to carry it out. President Hu flew to Saudi Arabia from Washington, where he was meeting President Bush.


His visit has emphasised the importance of Saudi oil to China, where surging demand has helped push world crude prices to record highs of over $72 a barrel. Saudi Arabia was China's top oil supplier in 2005, providing 17.5pc of its imports. Since joining the World Trade Organisation in December, Saudi Arabia's growing economy has been opening up and the Kingdom is eyeing new export opportunities in Asia. King Abdullah led a large delegation to China in January in a drive to help develop its trade links with rising Asian economies and diversify from traditional US ties.


Saudi Aramco, the state oil giant, last year signed a $3.5bn deal with Exxon Mobil and Sinopec, China's top refiner, to expand a refinery in the South Fujian province of China. President Hu also told his Saudi hosts yesterday that China was ready to help bring stability to the Middle East. His visit is seen as a step toward boosting both political and economic links between the two countries.


http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/04/24/cnsaudi24.xml&menuId=242&sSheet=/money/2006/04/24/ixcity.html