Saudi Arabia's state oil company has suspended a deal to build a US$10 billion refining and petrochemicals complex in China, according to people familiar with the matter, as the company slashes spending to cope with low oil prices.[SINGAPORE] Saudi Arabia's state oil company has suspended a deal to build a US$10 billion refining and petrochemicals complex in China, according to people familiar with the matter, as the company slashes spending to cope with low oil prices.
Saudi Arabian Oil, or Aramco, decided to stop investing in the facility in China's North-eastern province of Liaoning after negotiations with its Chinese partners, said the people, who asked not to be identified as the matter is private. The uncertain market outlook was behind the decision, they said.
Aramco declined to comment. China North Industries Group, or Norinco, one of the partners, didn't immediately respond to an email seeking comment. No one answered a call to Panjin Sincen, the third partner, outside office hours, or responded to an email. The oil-price crash and the virus's impact on energy demand have changed the calculations for energy companies' projects around the world. Aramco plans deep cuts to its capital spending as it tries to maintain a US$75 billion dividend amid low crude prices and rising debt. The kingdom - Aramco's main recipient of those dividends - is suffering a major squeeze on its public finances.
The joint venture was signed when Crown Prince Mohammed bin Salman was in Beijing in February last year - and at the time was seen as a landmark deal with a key ally. Saudi Arabia wanted to increase market share in Asia and also has encouraged Chinese investment in the kingdom.
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