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#Geoeconomics, Saudi energy minister: working together with China to address energy sector challenges

Saudi Arabia is cooperating with China in areas such as petrochemicals and renewable energy, and expanding into supply chain issues

Speaking at the Boao Forum for Asia (BFA) Riyadh Conference on May 6, 2024, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman highlighted the prospects for cooperation between the two countries in various fields under the Saudi Vision 2030 and China's Belt and Road Initiative (BRI).

Launched in 2016, the Saudi government's Vision 2030 aims to diversify the economy, society and culture and commits to a target of 50 percent renewable energy generation by 2030.

Saudi Energy Minister Prince Abdulaziz bin Salman Al Saud (R) speaks in a dialogue at the Boao Forum for Asia (BFA) Riyadh Conference in Riyadh, Saudi Arabia, on May 6, 2024. The Boao Forum for Asia (BFA) Riyadh Conference kicked off here on Monday, with a focus on energy transition for sustainable development. (Xinhua/Wang Haizhou)

Prince Abdulaziz clarified that Saudi Arabia has chosen to cooperate with China rather than compete, believing that such cooperation will create significant synergies.

Saudi Arabia is cooperating with China in areas such as petrochemicals and renewable energy, and expanding into supply chain issues.

Abdulaziz also revealed that Saudi Arabia, together with the sovereign wealth fund PIF, will cooperate with China in a number of challenging areas such as mining, manufacturing, and localized Saudi projects to ensure that after the upstream and downstream conversion of oil into chemicals, the chemicals can once again flow through the value chain and finally produce a finished product.

Regarding changes in China's hydrocarbon consumption in the context of the energy transition, Abdulaziz said that while demand for hydrocarbons might change in the transportation sector due to the advent of new modes of transportation, such as streetcars, overall demand is growing and will continue to do so, albeit at a slower pace. At the same time, he pointed out that as fields "mature" and investment costs rise, production could be scaled back in many countries, putting pressure on global energy supplies.

Saudi Arabia has made continuous efforts to expand its downstream oil activities, not only focusing on the local and Chinese markets, but also hoping to get projects in India, South Korea and other places.

The large-scale startup of the Sino-Saudi Gulay Ethylene Project is one example. It is a joint venture between SABIC and Fujian Energy & Petrochemical Group, with a huge investment, demonstrating the ooperation between China and Saudi Arabia in the energy sector.

In a discussion on the future of energy transition and sustainability, Abdulrahman Al-Faji, CEO of SABIC, emphasized the importance of the chemical industry's role in reducing carbon emissions in the global market, noting that this will require close international collaboration among companies along the chain. He also highlighted the challenges facing the energy transition, including cost, regulation and compliance, and technology disruptions, stressing the need for more exploration, cost investments, and supply chain and logistics support to promote renewable energy.

He also said that policy makers and regulators need to take into account the maturity of existing technologies, while disruptive technologies need to wait for their actual maturity before they can be used. This shows that on the road to energy transition and sustainable development, not only government advocacy and business efforts are needed, but also cooperation and collaboration on a global scale to tackle the challenges together, Abdulrahman Al-Faji concluded.

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