News Letter

THE NEW SILK ROAD: CHINA’ ENERGY POLICYAND STRATEGY IN THE MENA REGION

SBE, Vol.20, No.1, 2017

ISSN 1818-1228

Qatar University

poured in while Saudi Arabia invested in

China’s downstream refining business. In

fact, Saudi Arabia planned to develop supply

contracts through mutually beneficial joint-

venture investments in exploration, refining,

petrochemicals, and infrastructure projects

As energy sits at the core of Saudi-Chinese

cooperation, it covers a wide umbrella of oil

processes, whether oil imports, upstream,

downstream, oil reserve tank building, and

refining petrochemical industries. In sum,

Saudi Arabia provides oil while China offers

consumer goods, services, markets, and oil

imports. While China is increasing its oil

imports from Saudi Arabia, the latter is “more

than delighted” to increase its oil exports

and production capacity as it announced its

“willingness, ability, and desire to increase

production capacity to meet any demand

caused by the decline in Iranian oil export.”

The New Rivalry between China and the United

States

The U.S. and Saudi Arabia have long had a

privileged relationship mainly based on trade

partnership, and especially oil. However, the

9/11 attacks and the proven involvement of

Saudi citizens in international terrorism caused

tension in the Saudi-U.S. relationship. At the

same time, Sino-Saudi relations intensified

and Saudi leaders began to view China as a

convenient alternative, especially with regards

to the Beijing Consensus and its policy of strict

non-interference in Saudi Arabia’s internal

affairs, which contrasted with Washington’s

drive for constant political reform. Politically,

both China and Saudi Arabia felt threatened by

U.S. insistence on global political norms, as

72 Sager, Abdulaziz. 2010. ‘GCC-China Relations:

Looking beyond Oil-risks and Rewards’, in Abdulaziz,

Sager, Geoffrey, Kemp (eds), China’s Growing Role in the

Middle East. Washington, DC: Nixon Center, 2010, Pp. 18.

73 Olimat Muhammad S., China and the Middle East:

From Silk Road to Arab Spring,

Reprint Edition, NewYork,

Rougtledge, 2015. Pp.159.

both countries maintain state control over the

media and civil society on grounds of political

and social stability

. However, Saudi Arabia

still maintains a special relationship with the

United States and both governments continue

to cooperate on several security issues.

Nonetheless, the economic reality is that

United States’ demand for oil is constant and

the Washington Consensus constantly raises

tensions. These factors increasingly push Saudi

Arabia to rely more on China.

VI. Sino-Iranian Oil Policy

Due to decade-long economic sanctions under

United States’ watch, Sino-Iranian relations

have received particular attention. As one of

four countries that imported Iranian oil in 2014,

China has been receiving the largest share of the

pie. On Iran’s side, the collapse of the Soviet

Union combined with international sanctions,

slow economic growth, and under-developed

oil and gas industries, have all encouraged Iran

to look east for new partners

China’s oil imports from Iran started in the

1960’s. After the Iranian revolution, China

assisted Iran in rehabilitating its oil and gas

fields especially by importing some of its oil

technology. China helped Iran maintaining and

upgrading three of its oil refineries in 2000,

tapping into oil reserves in the Caspian Sea

Basin and the gas fields of the Persian Gulf

Since then, China has been following two

major projects in Iran: the North Pars gas field

and the Yadavaran oil field. In 1997, China

entered the Iranian energy sector by bidding

74 Alterman & Garver, The Vital Triangle, China, The

United States and the Middle East, CSIS,Centre for

Strategic and International Studies, Washington DC. 2008,

Pg 64

75 Chubin . 2010. Pp 24

76 Olimat Muhammad S., China and the Middle East:

From Silk Road to Arab Spring,

Reprint Edition, NewYork,

Rougtledge, 2015. Pp. 42