China makes geopolitical calculations through Aramco stake

Aramco is the biggest oil company in the world. The jewel in Saudi Arabia's crown. A nation could soon own 1 per cent of Aramco.

Saudi Crown Prince Mohammed Bin Salman has said that 'a huge country' was willing to buy a 1 per cent stake in Aramco. He did not take any names.

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Which country is the Crown Prince referring to? Is it China?

As per Reuters, Saudi Arabia is in talks with several Chinese national oil companies for investments. The most likely investor is China Investment Corporation or CIC.

It is currently in talks for the acquisition.

A stake of 1 per cent would amount to around 19 billion dollars based on Aramco's current capitalisation.

The deal has not been finalised yet. Mohammed Bin Salman has refused to divulge the details.

"Aramco selling shares will continue, but I can't announce details, but there might be something very soon, and there might be some other offering to international investors within the next year or two.I don't want to give promises but there's a discussion on the acquisition of one percent (of Aramco) by one of the world's leading energy companies, and this will be a very important deal to boost Aramco's sales in that country, which I can't name but it's a huge country. If it took the 1% it will boost Aramco's sales in both Saudi and that country itself," said Mohammed Bin Salman.

The deal is not surprising. Oil has always been the backbone of Saudi-China relationship. Beijing is the biggest buyer of Saudi crude.

In 2020 it imported more oil from the Kingdom than it did from any other country. And this year, the CEO of Aramco said that the company will ensure that China remains its biggest priority for the next 50 years & beyond.

The Saudi Crown Prince says this does not mean other countries are any less of a priority.

"We are working on producing new partnerships with everyone, whether Russia, India, China, Latin America, Africa or others, for the interest of the kingdom of Saudi Arabia, without harming any other country in the world. Today, China announced that Saudi Arabia is a strategic partner, also India and Russia. Saudi Arabia is still a strategic partner for the united states of America. We are enhancing our interest with all countries for the sake of our interest, their interest and the international interest," he said.

Riyadh has economic diversification on its mind. By all means it is working in its own interest. but Beijing is known for its predatory partnerships, owning a tiny stake in a prized company of another country. So this is not just a financial deal. It is also a geopolitical one.