Saudi Aramco and China’s Sinopec signed a multi-pronged memorandum of understanding (MoU) last week, which is considered a critical step in China’s ongoing efforts to strengthen ties with the Middle Eastern kingdom. The scope of the agreement is very expansive, covering deep and broad co-operation in refining and petrochemical integration, engineering, procurement and construction, oilfield services, upstream and downstream technologies, carbon capture and hydrogen processes. It also includes opportunities for China, particularly regarding its long term ambitions in Saudi Arabia, to construct  a huge manufacturing hub in King Salman Energy Park.

Aramco CEO Nasser made a comment in March 2021 during the annual China Development Forum in Beijing, saying “Ensuring the continuing security of China’s energy needs remains our highest priority – not just for the next five years but for the next 50 and beyond.” At that point in early 2021, Aramco had a 25% stake in the 280,000 barrels per day (bpd) Fujian refinery in south China through a joint venture with Sinopec and the U.S.’s ExxonMobil. It had also agreed in 2018 to buy a 9% stake in China’s 800,000 bpd ZPC refinery from Rongsheng. There were several more projects that had been agreed on principle but were delayed due to the pandemic, Aramco’s dividend repayment schedule, and concern from both sides, especially from Beijing, that Washington might be rattled against this threat to its own long-running interests in, and geopolitical relationship with, Saudi Arabia.

The U.S.-Saudi Arabia relations has been shaky due to a series of economic and political tensions, most important of which came when Russia emerged at the end of 2016 to support the then-beleaguered Saudi Arabia and OPEC in future oil production deals, given the lack of credibility in the global oil markets that both had at the end of the 2014-2016 Oil Price War. Russia agreed to support the late-2016 OPEC production cut deal. At that point, Washington knew its days of being able to count on Saudi Arabia may be over.

And then, China entered through the path opened by Russia, and started working on its own strategy to expand its influence over the Middle East’s lucrative oil and gas reserves. The critical point came in 2017 when Saudi Crown Prince Mohammed bin Salman (MBS) was still trying to establish his power in the Kingdom. MBS had portrayed himself to the senior Saudis whose support he desperately needed to stay in his new position as a man of canny international business and political instincts, and to this end he had promised them that he could float Saudi Aramco on international stock markets for a price that would value the whole company at US$2 trillion. But international investors were not that high on the company.

Just at this time, when MBS was trying to gain power, China stepped in and offered to buy a 5% stake in Aramco for a price that would guarantee the valuation for the whole company of the required $2 trillion. As the deal had taken shape, several senior Saudis at the time, most of them opponents to MBS’s ascension to power, opposed the deal on the basis that it would make Saudi Arabia beholden to China. The deal did not finalize eventually, but it could be that MBS has never forgotten Beijing’s willingness to bail him out.

Since Saudi Arabia promised to ensure China’s energy security for the next 50 years and beyond, that pledge has found concrete expressions from several officials. It has also found its way into U.S. intelligence agencies, which had found that Saudi Arabia is now manufacturing its own ballistic missiles with China’s help. Also considering China’s developing cooperation with Iran, makes Washington curious about what Beijing’s endgame might be.