By Michael Peel in Abu Dhabi and Leslie Hook in Beijing
China will this week launch its highest-level diplomatic visit to the Gulf for more than two years, seeking to bolster its growing energy ties to the region amid jitters over possible western sanctions on Iranian oil and Tehran?s counter-threat to block the Strait of Hormuz.
Premier Wen Jiabao?s six-day trip will take him to Saudi Arabia, Qatar and the United Arab Emirates, while China?s state-owned Sinopec is poised to sign a joint venture deal to develop a refinery on the Saudi Red Sea coast.
Tension between Iran and its Arab oil-producing neighbours has highlighted the delicate path Beijing needs to tread to preserve both as big oil suppliers, while unrest across the Middle East has triggered wider concerns in China about its dependence on the region?s oil.
?Half of China?s oil imports are sourced from the Middle East, so the region?s instability is a major concern,? said Ben Simpfendorfer, founder of Silk Road Associates, a Hong Kong-based consultancy. ?Conflict with Iran tops the lists of worries, should it disrupt physical oil supplies. There is also the risk that the Middle East will start to call on China to play a bigger role in the region, no different to the other major powers.?
While few details have been disclosed about Mr Wen?s visit – the most senior Chinese mission to the Middle East since President Hu Jintao went to Saudi Arabia in 2009 – his choice of countries suggests energy will be high on his agenda. Saudi Arabia is China?s largest supplier of crude – and Beijing is expected soon to overtake Washington as the biggest buyer of Saudi oil – while Qatar recently became China?s top supplier of liquefied natural gas.
Analysts say the expected confirmation this week of a deal between Sinopec and Saudi Aramco, Saudi Arabia?s state-owned oil company, to build a 400,000 barrel a day refinery at the Red Sea port of Yanbu is an early sign of an effort to deepen a relationship previously based on the simple equation of Saudi Arabia producing oil for China to consume.
The Yanbu facility is Sinopec?s first overseas refinery and comes after a similar joint venture with Aramco to build a refinery in China?s Fujian province.
Aramco has been increasing its Chinese presence by building a refinery in the south of the country with PetroChina, and by sending students to Chinese universities – mirroring similar programmes in the US and elsewhere.
?Chinese-Saudi oil relations are expanding annually – for mutual benefit,? said Walid Khadduri, a consultant for Middle East Economic Survey, a newsletter.
?It?s a commercial relationship. It?s not political.?
Elsewhere in the region, Chinese oil companies have landed service contracts in Iraq, where Cnooc and Sinochem are helping develop the Maysan oilfield, while CNPC is working in the Rumaila field with BP.
Chinese companies are working in Iran, although progress has been slow there because of UN sanctions on the oil sector.
While China?s diversified relationship with Middle East oil producers is in one sense a strength, the Arab uprisings and conflict between the west and Iran over Tehran?s nuclear programme have highlighted potential pitfalls. Relations between Saudi Arabia?s Sunni Muslim monarchy and the Shia rulers of Iran have chilled further, after revelations of an allegedIranian plot to kill Riyadh?s ambassador to Washington.
? The Financial Times Limited 2012