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RIYADH, Jan 20: Saudi Arabia, the world’s top oil exporter, aims to raise its economic and political profile in booming Asian countries when senior officials start a tour of the region next week that will include China and India.
After joining the World Trade Organization in December, Saudi Arabia’s protected but growing economy is opening to the outside world and the kingdom is also eyeing new export opportunities in Asian giants.
King Abdullah and a large business delegation, including Oil Minister Ali al-Naimi, will arrive in China on Sunday, then move to India, Malaysia and finally Pakistan from Feb 1-3.
“Our commercial interests are increasing, especially with China and India, and the Muslim countries of Asia. The Saudi market, which is mostly oriented to America and Europe, is finding new opportunities of investment,” a Saudi official said.
“We’ve had an ongoing relationship but they are becoming a lot more important because the quality of their production in goods and services is improving, they are very competitive and our market is consuming a great deal of their production.”
India and China, the world’s No 2 oil consumer, will be key stops for Saudi oil officials seeking to lock in these markets through joint ventures. Riyadh, which aims to boost its oil output capacity to 12.5 million barrels per day by late 2009, is seeking a better picture of future demand for crude.
In recent years, economic expansion in China and India boosted fuel consumption at a surprising rate, leaving the energy industry ill-equipped to meet the extra demand.
“Our policy is to increase our crude exports to the market and meet their demands. We are the premium suppliers to China and India and will continue to be so,” a Saudi source said.
“This is where the growth is...At the same time we want to build relations through investment,” he said, adding that India and China were active in engineering, equipment, consulting and other services.
The Saudi cabinet earlier this month authorized Mr Naimi to sign cooperation protocols with China but gave no details.
State oil firm Saudi Aramco is already in talks over joint refinery projects in China and South Korea. Opec producers have said there is a need for more sophisticated refineries that are able to deal with heavier oil that is more difficult to refine.
BUILDING ON TIES: Saudi Arabia’s WTO entry is expected to boost foreign investment, providing funds for diversification of the country’s booming oil-based economy, and bring new export opportunities for Saudi firms, especially in the petrochemical industry.
“Other states in the region already started initiatives. Good links with China and India make sense because they are good markets,” said Albert Momdijian of Credit Suisse First Boston.
Chinese ambassador Wu Chunhua said Saudi crude accounted for 13.8 per cent of Chinese oil imports in 2004. “Sino-Saudi bilateral trade volume reached $14.5 billion in the past 11 months of 2005,” he added.
The visits to Pakistan and Malaysia would focus on boosting commercial and cultural links with Saudi Arabia, diplomats and analysts said.
Pakistan is interested in Saudi investment in plans to develop its Gwadar port, Pakistani ambassador Abdulaziz Mirza said. The port is expected to be the end-point of a natural gas pipeline from Turkmenistan through Afghanistan, where instability has kept the project on the drawing board.
Saudi Arabia’s population of 24 million includes six million expatriate workers — 2.8 million from India and Pakistan.
Industry experts said Malaysia, leveraging on its ties with Riyadh, was expected to lobby for a slice of the kingdom’s huge energy sector.—Reuters
