Chinese state body lands US$54M Saudi surveying contract

South China Morning Post

Posted at Oct 20 2020 08:51 AM

Saudi Arabia is now China’s biggest oil supplier. Reuters

A state-run Chinese organisation has landed a US$54 million surveying contract in Saudi Arabia, bringing Beijing a step closer to a key energy supplier.

The deal, the largest of its kind, is the latest sign of warming relations between Beijing and Riyadh.

“It is the beginning of a great cooperative relationship between the two sides and will surely open up new cooperative areas for both countries,” said Zhong Ziran, president of China Geological Survey (CGS) in a video call during the signing ceremony on Sunday.

“We have full confidence in all-round China-Saudi cooperation on geosciences in the future,” said Zhong, according to a report from Saudi state media.

The Chinese contract totalled around US $54 million for the geochemical survey, the report said, and will be used to assess the distribution of mineral resources for future mining operations.

The contract is part of a six-year project to map and survey 600,000 square kilometres of the Arabian Shield, a region in the west of the country bordering the Red Sea, according to a report from the state-run Saudi Press Agency.

CGS’s contract will require the state-run organisation to conduct a geochemical survey of 540,000 square kilometres of the Arabian shield project, according to China’s state broadcaster CCTV.

Other contracts associated with the project were won by Finnish and UK government geological organisations and companies from South Africa and Canada.

The Chinese contract marks deepening energy, but also strategic, cooperation between China and Saudi Arabia, amid an uncertain US-Saudi ties, said James Dorsey, senior fellow at the S Rajaratnam School of International Studies at Singapore‘s Nanyang Technological University.

“The Saudi-US relationship is shaky at the moment, and especially unclear ahead of the election,” said Dorsey.

“For Saudi Arabia, this contract is an easy way to throw a bone to China, but it must also anticipate that the US will step up pressure against technological cooperation with China regardless of who wins the election,” he said.

US President Donald Trump threatened to cut off military support to the kingdom in May, if it did not stop its oil price war with Russia.

The US still is the biggest supplier of arms to the Gulf nation, but it has remained open Chinese telecom giant Huawei, despite the global American campaign against the company over security concerns.

Energy still stands at the centre of the relationship between China and Saudi Arabia. The kingdom became China’s largest supplier of foreign oil in 2019, shipping 83 million tonnes over the course of the year, topping its former top supplier Russia.

But China’s strategic role in the country has also grown. The Wall Street Journal reported in August that China was helping the kingdom extract uranium yellow cake, which Riyadh denied. The material could be used to produce nuclear energy or weapons systems.

In 2017, China set up a drone factory in Saudi Arabia after the US placed curbs on drone sales to the kingdom.

And China’s defence minister Wei Fenghe pledged to strengthen military relations with the kingdom last year during a meeting with King Salman.

“China’s role in Saudi Arabia has been growing. While it will not become the prime military supplier, the Chinese have in some cases stepped in where the US has not,” said Dorsey.

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