new Delhi.Saudi Arabia has given a big blow to China. Saudi Arabia's state-owned oil company Aremco has backed down from a $ 10 billion refining and petrochemicals complex agreement with China. According to the Economic Times report, the Saudi Arabian company has decided to postpone the deal with China due to falling oil prices.
Due to the corona virus epidemic crisis, worldwide oil consumption has decreased. The drop in demand is witnessing a steep fall in oil prices. This situation is more challenging for Saudi Arabia because its economy is mainly dependent on oil. Aremco, the world's largest oil producer, announced investment in the proposed $ 44 billion Ratnagiri mega refinery project in Maharashtra along with India. Analysts are apprehensive that Saudi Arabia may withdraw from investing in India if the oil consumption continues to decrease due to the Corona outbreak and the oil prices continue to go down.
Sources associated with the case told the Economic Times that Aremco of Saudi Arabia has decided to stop investing in the complex in China's northeastern province. According to sources, this step has been taken due to the uncertainty in the market. No statement has been issued by Saudi Arabian company Aremco yet. China North Industry Group Corporation or Noronico, which was involved in the agreement, has not yet responded to this.
Aremco company is avoiding spending its remaining capital in the wake of rising debt and falling crude oil prices. Saudi gets a lot of revenue from Aremco but the government coffers have also come down due to falling oil prices. In February last year, when the Saudi Crown Prince Mohammed bin Salman visited China, the agreement was signed by both countries. Saudi Arabia wanted to expand its reach in the Asia market. In addition, Saudi has also encouraged Chinese investment in itself.
There were plans to set up the Huijin Aremco Petrochemical Corporation in collaboration with the Saudi Arabian Chinese company Norinco and Panjin Sinsen. Saudi Arabia was to supply 70 per cent of crude oil for this 300,000 barrel per day capacity refinery. People associated with the case say that China and Saudi may revisit the project in the future. The arrival of the corona virus epidemic has created challenges for refineries around the world. Profitability has come down due to reduced demand for oil, which is also affecting investment in the refining business. Saudi Arabia Aremco was also in talks with Indonesia's state-owned oil company Pertamina for a refinery project. However, the two countries could not reach any agreement.
This post was published on August 22, 2020 11:43 pm
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