Saudi Arabia's Aramco is building on its ties with China, with plans to supply crude to a refinery in the south-west of the country, where Beijing is building an oil and gas pipeline that slices through Myanmar. Aramco Overseas Company, a subsidiary of Saudi Aramco, said it had signed a memorandum of understanding with PetroChina Company Ltd, a subsidiary of China's state-owned oil giant CNPC, this week.
The deal involves the "planned development" of a 10 million metric tonnes per annum "grassroots full conversion refinery" in Yunnan, the Chinese province that borders on Myanmar.
"Saudi Aramco will supply the project company with up to 200,000 barrels per day of Arabian crude via a long-term contract," according to an Aramco press release.
The announcement did not say how the oil would be delivered to land-locked Yunnan. But it appears likely the oil could ultimately come through Myanmar, formerly called Burma.
CNPC is building the China-Myanmar oil and gas pipelines, intended to bring energy supplies overland from the Middle East, via a crude oil port in Myanmar, which CNPC is also building.
This pipeline will make the Saudi crude very competitive because it would slash the journey time through the congested Malacca Strait that links Asia with the Middle East.
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