Saudi Arabia, China Forge Giant Partnerships in Energy, Chemicals and Construction

With the conclusion of Chinese President Xi Jinping’s official visit to Saudi Arabia, major Saudi companies working in the field of energy, chemicals and construction announced giant partnerships with China.

- Refining and petrochemicals

Saudi Aramco, one of the world’s largest integrated companies in the field of energy and chemicals, and the Shandong Energy Group revealed that they were exploring opportunities for cooperation in the field of integrated refining and petrochemicals in China.

The two companies have signed a Memorandum of Understanding (MoU), which includes a potential crude oil supply agreement and chemicals products offtake agreement, supporting Aramco’s role in building a thriving downstream sector in Shandong Province, it said.

The signing ceremony, which was conducted with the participation of Shandong Provincial People’s Government, underlined the importance of Aramco’s collaboration with Chinese companies. The scope of the MoU extends to cooperation across technologies related to hydrogen, renewables and carbon capture and storage, it added.

Mohammed Al Qahtani, Aramco senior vice president of downstream, said: “Through collaborations such as this in China’s energy heartland, we are creating new pathways for growth in a country that is driving the increased integration of refining and petrochemical processes.”

- Signing of 9 Agreements

Saudi ACWA Power has also signed a set of MoUs with nine Chinese entities. These agreements aim to launch joint cooperation to invest in ACWA Power’s global clean and renewable energy projects in Saudi Arabia and countries committed to the Chinese Belt and Road Initiative.

Mohammad Abdullah Abunayyan, Chairman of ACWA Power, said: “As a leading developer of power, water and green hydrogen assets worldwide, and being headquartered in a Belt and Road Initiative country, we are in a unique position to support both the energy transition and economic transformation envisioned by Saudi Arabia’s forward-looking and iconic Vision 2030, as well as China’s Belt and Road initiative.”

The strategic partners from China include Industrial and Commercial Bank of China (ICBC), Bank of China, SPIC Huanghe Hydropower Development Company, China Southern Power Grid International, Power China International Group, China Energy International Group, Jinko Solar Company, Sungrow Power Supply Company and Jolywood Solar Technology Company, ACWA Power said in a statement on Friday.

Cooperation between ACWA Power and China dates back to 2009, when the Saudi company opened its first offices in the Chinese capital, Beijing.

Today, ACWA Power enjoys strategic relations with Chinese companies in the field of engineering, procurement and construction contracting, equipment supply, financing institutions and investment partners. These companies contribute to the implementation of 47 projects within the ACWA Power investment portfolio in 12 countries around the world.

- Construction projects

The Saudi Ministry of Municipal, Rural Affairs and Housing represented by the Ministry’s Agency for Stimulating Housing Supply and Real Estate Development, and the National Housing Company, signed an MoU for cooperation with 3 Chinese companies to contribute to the provision of more than 100,000 housing units.

This agreement comes as an extension of the strategic partnership that the ministry holds with a number of regional and international bodies, with the aim to exchange experiences and raise the real estate supply, develop business and improve performance efficiency.

- Digital economy

Saudi Arabia signed a strategic partnership for cooperation in the fields of digital economy with China. The agreement was signed by Engineer Abdullah Al-Sawaha, Minister of Communications and Information Technology, and on the Chinese side, Minister of Industry and Information Technology Wang Zhigang, in the presence of a number of officials from both sides.

The partnership establishes a framework for cooperation, covering the areas of digital economy, communications and information technology, promoting research and innovation in the field of emerging technologies, in addition to improving aspects of communications infrastructure, and enabling the growth of digital entrepreneurship through emerging business models such as financial technology and e-commerce.

Within the framework of the partnership, the two sides will cooperate in the field of digital technology applications and radio frequency spectrum management, in addition to developing and building local capacities in contact and data centers, developing digital platforms and cloud computing services, and expanding submarine cable projects.

Business activity in Saudi Arabia's non-oil sector accelerated to a four-month high in September, driven by strong demand, which led to faster growth in new orders. The Riyad Bank Saudi Arabia Purchasing Managers' Index (PMI), adjusted for seasonal factors, rose to 56.3 points from 54.8 in August, marking the highest reading since May and further distancing itself from the 50.0 level that indicates growth.

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders, alongside challenges in supply. The improvement in business conditions contributed to a significant rise in employment opportunities, although difficulties in finding skilled workers led to a shortage in production capacity.

At the same time, concerns over increasing competition caused a decline in future output expectations. According to the PMI statement, inventories of production inputs remained in good condition, which encouraged some companies to reduce their purchasing efforts.

Growth was strong overall and widespread across all non-oil sectors under study. Dr. Naif Al-Ghaith, Senior Economist at Riyad Bank, said that the rise in Saudi Arabia's PMI points to a notable acceleration in the growth of the non-oil private sector, primarily driven by increased production and new orders, reflecting the sector’s expansionary activity.

Al-Ghaith added that companies responded to the rise in domestic demand, which plays a crucial role in reducing the Kingdom's reliance on oil revenues. The upward trend also indicates improved business confidence, pointing to a healthy environment for increased investment, job creation, and overall economic stability.

He emphasized that this growth in the non-oil sector is particularly important given the current context of reduced oil production and falling global oil prices. With oil revenues under pressure, the strong performance of the non-oil private sector acts as a buffer, helping mitigate the potential impact on the country's economic conditions.

Al-Ghaith continued, noting that diversifying income sources is essential to maintaining growth amid the volatility of oil markets. He explained that increased production levels not only enhance the competitiveness of Saudi companies but also encourage developments aimed at expanding the private sector's participation in the economy.

This shift, he said, provides a more stable foundation for long-term growth, making the economy less susceptible to oil price fluctuations.

Saudi Arabia, China Forge Giant Partnerships in Energy, Chemicals and Construction