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Saudi Arabia’s sovereign wealth fund PIF signed a preliminary deal for investments in China’s renewable energy sector during the visit of Crown Prince Mohammed in China, Reuters reports, citing state news agency SPA.
“The MOU will enable PIF to support and develop manufacturing, power generation and emerging technologies over the next ten years,” the original report said.
The news about the renewables investment commitment comes on the heels of another report from the Crown Prince’s visit in China: the signing of a US$10-billion agreement for the construction of a refinery featuring a petrochemicals complex in oil-hungry China.
This deal, in turn, comes after Aramco signed an early commitment to invest US$100 billion in India’s infrastructure and energy industries.
"We want Saudi Aramco to be a household name in India," Energy Minister Khalid al-Falih said as quoted by S&P Global Platts, adding that India was the number-one priority for the Kingdom’s oil giant.
The two visits, to China and India, signal Saudi Arabia’s drive to secure long-term markets for its crude oil but also opportunities to expand its revenue from oil and gas derivatives in line with a strategy to diversify its sources of income and stop being over-reliant on crude oil exports.
However, the Kingdom would have to tread carefully around both India and China which both have close ties with its regional arch-rival Iran. While both China and India have clearly indicated their top priority is security and affordability of crude oil deliveries, geopolitical affiliations are also on the agenda and directly related to this security and affordability of deliveries.
The latest Chinese deal, however, also suggests Saudi Arabia is not going to overlook any opportunity to grow in Asia, even outside fossil fuels. The Kingdom has several ambitious projects planned at home as well, but with China being the leader in renewable energy investment, it makes for a natural target for solar and wind investments for the Saudis.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.