China's robust economic recovery has assured oil supplies and investment from Saudi Aramco's Chief Executive Officer Khalid Al-Falih said Friday. “There are signs of recovery in oil demand in developing and emerging economies led by the Chinese economy,” Al-Falih, also company president, told Xinhua in an interview in Beijing. The global economic crisis pushed the world's largest oil producer and exporter to cut oil output and supply in line with shrinking demand, but the overall demand was still much lower than last year, he said. “We are bound by the Saudi Arabian government that decides based on OPEC agreement on how much Aramco can produce,” he said. Aramco's present oil output stands at 8 million barrels a day, and will rise to 9.5 million to 10 million barrels a day late this year or next. “But I can tell you that China has always been given the highest consideration to make sure they (Chinese customers) receive as much of their requirements as possible,” he said. He said the company was supplying almost 1 million barrels a day to China, and that was expected to keep growing. In 2006, the company signed a memorandum of understanding with China Petroleum and Chemical Corp., (Sinopec), under which, China would increase its imports from the Saudi producer up to 1 million barrels a day (50 million tons a year) by 2010. Aramco's first refinery investment in China, which went into operation Wednesday in southeast China's Fujian Province, is owned and operated by Sinopec and Saudi Aramco and Exxon Mobil. Aramco has a 25-percent stake. The $4.9 billion plant will triple Fujian's annual oil refining capacity to 12 million tons from 4 million tons. The project is expected to see 60 billion yuan ($8.8 billion) in its annual sales revenue. The cooperation with Chinese partners was “so far so good”, he said. “We want to operate the joint venture for a little bit longer to see it will be profitable and make money before we move further to new investment,” he said. “For any project we build, there is a period to create enough profit. Then we can consider further expansions and investment,” he said, when asked about progress in talks on a refinery project in Qingdao, Shandong Province. He said China had prospects for growth and investment because of the excellent complementary relationship between Aramco and Chinese counterparts and the large and growing market in China. But they are not imminent and we are not making a decision today,” he said. Al-Falih said he was also reassured about the company's commitment to the Chinese market by the government's new fuel pricing system. “We are very satisfied with the new pricing system, and we think it is fair and transparent,” he said. China has adjusted fuel prices eight times this year after the government adopted a new pricing mechanism from Jan. 1. It allows changes in the benchmark retail prices of oil products when the international crude price changes more than 4 percent over 22 straight working days. Al-Falih said Aramco was working with Sinopec on a gas exploration project, in which Sinopec took an 80-percent stake and Aramco the rest. He expected the two companies would make plans to commercialize exploration in years to come, “but so far we are still exploring.” Aramco has recently resumed negotiations with Sinopec over investing in one of the latter's refineries located in the coastal city of Qingdao, according to the China Ministry of Commerce on Thursday. The Sinopec Qingdao refinery has a refining capacity of 200,000 barrels per day (bpd).
