Saudi vows to ensure China’s energy security for the next 50 years and beyond

Saudi Arabia’s state-backed oil giant Aramco has promised to ensure China’s energy security remains its highest priority for the next 50 years and beyond, CEO Amin Nasser told the China Development Forum on Sunday.

Saudi Arabia, the world’s biggest oil exporter, retained its position as China’s top supplier in the first two months of this year, with volumes up over 2% percent to 1.86 million barrels per day (bpd), China customs data showed on Saturday.

The kingdom beat Russia to keep its ranking as China’s top crude supplier in 2020 despite unprecedented production cuts in a pact between the Organization of the Petroleum Exporting Countries (Opec) and its allies to balance global markets after demand plunged during the pandemic.

“Ensuring the continuing security of China’s energy needs remains our highest priority,” Nasser said in a video speech. “We appreciate that sustainable energy solutions are crucial to a faster and smoother global energy transition, but, realistically, this will take some time since there are few alternatives to oil in many areas.”

Nasser said earlier on Sunday that Chinese demand was very close to pre-pandemic levels while Asia, East Asia in particular, has seen a strong pickup.

Besides being a top supplier of China’s energy needs, Nasser said Aramco is also well-placed to help China achieve its second centennial goal in energy transition.

Chinese President Xi Jinping announced in September that China will bring its carbon emissions to a peak before 2030 and reach carbon neutrality by 2060, a pledge that is expected to create a tectonic shift in its energy and manufacturing sectors.

Nasser added that Aramco is working with Chinese universities and companies in researching cleaner engine fuel systems and technologies to convert crude to chemicals and to reduce greenhouse gas emissions from existing energy sources.

“In fact, we have even bolder ambitions to expand and intensify our research collaboration with China,” Nasser said.

Experts from China National Petroleum Corp’s (CNPC) research institute have forecast that China’s oil demand will be capped at 730 million tonnes by around 2025 under Xi’s climate pledge.

This comes as Aramco paid the Saudi government 30% less in taxes in 2020, the company said in a financial report on Monday, as the region’s largest economy reels from the fallout of the coronavirus pandemic and low oil prices, ABC News reported on Tuesday

Saudi Arabian Oil Co, the kingdom’s largest taxpayer, transferred US$110 billion to the government in 2020 in dividends, royalties and income taxes, down from nearly US$159 billion the year before.

The kingdom plans to spend US$263 billion in 2021, according to its budget, showing the significance of Aramco’s payments to state coffers.

Even as Saudi Crown Prince Mohammed bin Salman aggressively pushes to diversify the economy away from oil, Saudi Arabia relies on the energy sector for 80% of its exports and two-thirds of its financial revenues.