Chinese Leader, Saudis Talk Oil, Trade - Yahoo! News

RIYADH (AFP) - China and Saudi Arabia signed energy, defense and security deals on the first day of a visit by Chinese President
Hu Jintao to the oil-rich kingdom focusing on economic and energy cooperation.
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The Chinese leader also discussed a proposed 5.2-billion-dollar energy venture in China with officials of Saudi petrochemical giant SABIC.

Hu's visit, which will take him to the headquarters of state oil conglomerate Saudi Aramco, comes just three months after Saudi King Abdullah went to China.

The trip underlines the fast growing ties between the two countries as Beijing looks for oil to fuel its growth and Riyadh forges partnerships with Asian powers.

Hu and Abdullah presided over the signing of a series of cooperation agreements following the Chinese president's arrival Saturday from the United States.

"They included a framework cooperation agreement in the energy field between Sinopec and Saudi Aramco," a Chinese official said.

The deal provides for strengthened cooperation in gas exploration and possible cooperation in oil exploration between China's Sinopec and Aramco, the official said.

Sinopec is already drilling for gas in the Saudi desert and building a refinery with Aramco in the Chinese province of Fujian. Another joint refinery venture is planned in Qingdao city.

The two sides also signed a security agreement and accords on cooperation in health and youth affairs, the official said.

The Saudi state SPA news agency reported that the two sides also inked a "contract on defense systems."

No details on the contract were immediately available. Saudi Arabia, which has traditionally used Western defense systems, purchased Chinese Eastwind missiles in the 1980s.

Hu discussed a proposed Saudi-Chinese venture to build a refinery and petrochemical complex in China with officials of the Saudi Basic Industries Corporation, SABIC chairman Prince Saud bin Abdullah bin Thunayan al-Saud told reporters.

Under the proposed venture, valued at 5.2 billion dollars, SABIC would build the petrochemical complex while its Chinese partner, Dalian Shide, would build the refinery, Saud said.

The project requires Beijing's green light, and Hu's visit to the headquarters of SABIC, which exports two billion dollars worth of petrochemical products to China annually, was seen as a sign of his interest in the venture.

The Chinese leader was also due to meet Saudi businessmen and confer separately with billionaire entrepreneur Prince Alwaleed bin Talal before flying to the oil-rich Eastern Province on Sunday to meet Aramco officials in Dhahran.

China's commerce ministry said the trade volume between the two countries hit 2.7 billion dollars during the first two months of 2006, a 43 percent rise on the same period last year.

Saudi exports to Beijing were worth 2.21 billion dollars, according to the Chinese Xinhua news agency.

The kingdom exported some 22.18 million tons of oil to China last year, becoming its biggest crude supplier.

King Abdullah reached five economic deals, including an energy agreement, during his January trip to China, which was part of an Asian tour underlining Riyadh's quest to expand links with Asia.

While Beijing needs energy to feed its growing economy, Riyadh, which has traditionally had strong Western ties, is seeking to secure more markets for its oil and broaden its sources of technology imports as it opens up its economy following accession to the
World Trade Organization, analysts say.

Hu's visit comes at a time when oil prices have shot up to record prices of more than 75 dollars a barrel.

Hu also met Abdulrahman al-Attiyah, secretary general of the six-nation Gulf Cooperation Council with which China is negotiating a free trade agreement.

"We hope to sign the FTA by year's end," Attiyah said after the talks.

On Sunday, Hu is to give a speech at the Shura Council, becoming only the second foreign leader to do so after French
President Jacques Chirac, who addressed the appointed advisory body in March.

Hu is due to leave for Morocco on Monday and continue his tour in Africa with stops in Nigeria and Kenya.

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