Saudi Oil for Chinese Ballistic Missiles

Chinese President Hu Jintao and President George W. Bush may not have had much to say to each other when they met at the White House last week, but Hu knew down to the last gallon the size of America’s Strategic Petroleum Reserve and would settle for nothing less.

Therefore, when he flew from America to Riyadh, he had his figures pat.

DEBKA-Net-Weekly reports that, before Hu left Saudi Arabia on April 24, he and King Abdullah had agreed in principle that the Saudis would undertake to fill up the strategic petroleum reserve that China proposed to build on its southern coast, with no less than 100 million tons of crude, equivalent to 700 million barrels – exactly the capacity of the American SPR.

At present, China uses an estimated half a billion of Saudi oil a day.

The emergency stockpile will be over and above China’s daily needs as the world’s second largest petroleum consumer after the United States, and support its rapid growth rate with an assurance of energy stability.

The project is still in rough outline; its precise location and financing yet to be hammered out. But the Saudi king has ordered the heads of the Saudi oil industry to go to work with Chinese colleagues on ways, means and figures.

DEBKA-Net-Weekly’s sources add: This scheme has the power to bind China and Saudi Arabia as strategic allies in the full sense of the word.

The importance the Beijing government’s foreign policy already attaches to the Middle East – and the oil kingdom, in particular – was spelled out in the speech Hu delivered before the Saudi Shura Council, in which he stressed Beijing’s commitment to collaboration and regional stability.

The two rulers also drew up a contract for the sale of Chinese defense systems.

The items covered were not made public, but DEBKA-Net-Weekly’s military sources believe the Saudis want advanced ballistic missiles to replace the obsolete Chinese-made CSS2 missiles they bought in the late 1980s.

The Saudi have re-configured their arms purchases to include long-range missiles capable of carrying non-conventional warheads, as part of a deterrent they are planning against a potential Iranian nuclear weapons capability.

The Saudi rulers heaped unusual honors on the Chinese president.

Hu was the second foreign ruler to address the Shura Council after Jacques Chirac. The volume of their bilateral trade rose to $16bn last year, $2.7 bn in the first two months of 2006.

Projects approved during the Chinese president’s visit included a joint venture to build a $5.3 bn naptha plant in China, one of five economic deals King Abdullah signed during his February trip to Beijing.

China Sinopec is drilling for gas in the Saudi desert and building a refinery with Aramco in the Chinese province of Fuijan.

The Saudi monarch was keen on reciprocating the warm welcome he received in Beijing. He places great emphasis on a strong Saudi link to Asia hinging on an active Riyadh-Beijing partnership. He is charting this policy partly to outdo the Asian policy launched by Saudi defense minister Crown Prince Sultan, which hinges on strong ties with Japan, Singapore and Pakistan.

Sultan’s pro-American Asian orientation was highlighted when he toured the Far East earlier this month. Implementation of the Saudi-Chinese Strategic Petroleum Reserve scheme would give King Abdullah the edge over Sultan.

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