YASREF joint venture signing: remarks by Khalid Al-Falih

This newest act of collaboration between our companies and our countries is a significant new element in the relationship, for YASREF holds enormous potential and promise, says Khalid A. Al-Falih, President and Chief Executive Officer.

"Your Royal Highnesses, Your Excellency Ali Bin Ibrahim Al-Naimi, Excellencies, distinguished guests, ladies and gentlemen: a very good morning to each and every one of you, and for our esteemed visitors from China: zao shang hao. Allow me to begin with a word of welcome to Dhahran, and to the signing of this landmark agreement between Sinopec and Saudi Aramco. I am particularly pleased that we are launching this new venture among so many good friends — and that our signing takes place in the run-up to the auspicious Year of the Dragon in China.

Ladies and gentlemen, it is often said that “practice makes perfect,” and if that’s true, we and our partners at Sinopec must be getting very good at this, since the Yanbu Aramco Sinopec Refinery Company marks the fourth joint venture between our two enterprises. YASREF, as the former Red Sea Refinery will now be known, takes its rightful place next to our two downstream companies in China’s Fujian Province, and our in-Kingdom upstream joint venture, Sino Saudi Gas Limited. In fact, perhaps our most diverse and all-encompassing global relationship is with Sinopec, given that we have upstream and downstream ventures active in both Saudi Arabia and in China — in addition to the provision of oilfield and other services from various subsidiary companies of the Sinopec Group. Sinopec is also our largest crude oil customer, and of course China stands now as the Kingdom’s largest crude oil market, making Saudi Arabia the number one petroleum supplier to the People's Republic, accounting for roughly a fifth of total crude oil imports to China.

Khalid A. Al-Falih, President and Chief Executive Officer

"This newest act of collaboration between our companies and our countires is a significant new element in the relationaship, for YASREF holds enormous potential and promise."

Judging by this, I would only add that my friend Fu Chengyu and I will keep our pens ready, in anticipation of additional future partnerships which would provide mutual benefits to our two companies, and to the stakeholders we serve here in Saudi Arabia, there in China, and indeed around the globe.

But this latest joint endeavor is simply the most recent chapter in a long history of cooperation, collaboration and trade between Arabia and China. For many centuries, trade routes have linked these two poles of Asia, through an exchange of not only goods, but also of ideas, knowledge and culture — which led to greater prosperity for both of our civilizations.

This newest act of collaboration between our companies and our countries is a significant new element in the relationship, for YASREF holds enormous potential and promise. It will help to grow the domestic Saudi economy, and create new opportunities for local enterprises and entrepreneurs, including in the initial engineering, procurement and construction phases of the project. This ultra-modern, highly sophisticated grassroots refinery will process 400-thousand barrels per day of heavy crude oil, and convert every single crude oil molecule into high quality, clean transportation fuels which are in high demand and which meet the most stringent global standards. The facility’s location in Yanbu', next to two of our other refineries, is ideal for supplying both overseas markets and the fast-growing western region of the Kingdom.

Ladies and gentlemen, let me stress that the various world-class local and international refining and petrochemical investments Saudi Aramco is making is a testament to our firm belief that the downstream remains an attractive and profitable business. In fact, over the next decade our total global refining capacity is expected to approach eight million barrels a day, as a result of the largest expansion today by any oil company in the world.

That’s because large petroleum enterprises like us are especially well positioned to maximize long-term value creation from integrated activities encompassing our total value chains, from the wellhead to the gas pump, and to the manufacturing of value-adding fibers, polymers, rubbers and plastics. We are also able to achieve economies of scale, thus furthering competitiveness, as is exhibited by massive projects such as YASREF.

Combine these factors with the additional value which downstream conversion can add to national economies — including job creation — and one can vividly see the logic of our downstream strategy.

Ladies and gentlemen, Saudi Aramco is in the downstream for the long haul, and Sinopec is one company that shares our bullish outlook. I therefore believe Saudi Aramco and Sinopec should continue to collaborate in this mutually beneficial arena, both in the Kingdom and in the People’s Republic.

At the same time, we should recognize that YASREF also stands as testament to the sound climate for foreign direct investment in Saudi Arabia, and as yet another indicator of the attractive business opportunities this nation has to offer strategic investors, such as Sinopec. Saudi Aramco is engaged in a sustained capital program of infrastructure and industrial projects, and in fact the Kingdom as a whole is also pursuing a diverse range of world-scale undertakings in the transportation, utilities, urban construction and industrial sectors. As I have previously shared with our friends in China, I believe Chinese firms have a historic opportunity to invest in the Kingdom and play an important role in implementing those ambitious plans here in Saudi Arabia.

Of course, a project of this magnitude and scope cannot be launched without visionary leadership, and I would like to take this opportunity to thank His Excellency Ali I. Al-Naimi, our Chairman of the Board and the Kingdom’s Minister for Petroleum & Mineral Resources who recognized long ago back when he was the CEO of Saudi Aramco, the immense potential of partnering with Sinopec and His Royal Highness Prince Saʻud ibn Abdallah, the Chairman of the Royal Commission for Jubail and Yanbu' who facilitated access to the great infrastructure of the industrial city in Yanbu'; and their respective institutions for their continued encouragement and guidance. I would also like to express my appreciation to all those in the Kingdom and in the People’s Republic who worked in support of the creation of this venture.

Finally, let me return to our partner in this venture, Sinopec. In recent years, this world-class firm has gone from strength to strength, strategically expanding its business portfolio and entering new markets around the globe. It has nearly half of China’s total refining capacity, and accounts for three-fourths of that nation’s crude oil trade. Sinopec also brings to the table not only technical and market know-how and a proud history of achievement, but also a sound understanding of its role as a leader in the global energy landscape. Furthermore, it’s commitment to both technological innovation and the communities and economies wherever it operates is evident in Sinopec’s establishment of a joint research and development center in the Dhahran Techno Valley.

I am particularly pleased to sign this agreement with Mr. Fu Chengyu, the Chairman of the Sinopec Group, and one of the outstanding leaders in the global petroleum industry today. Throughout his career, Mr. Fu has exhibited tremendous market savvy, a spirit of entrepreneurship and dynamism, and a deep and abiding commitment to global partnerships as the most effective means of achieving strategic objectives in the energy sphere. Now, at the helm of Sinopec, he brings these traits to our many partnerships, and it is indeed a pleasure and an honor to share the podium and the signing table with him today.

Distinguished guests, ladies and gentlemen: there is a great deal of work ahead of us before we can cap the YASREF initiative with success. Engineering, building and commissioning a refinery of this scale, scope and sophistication isn’t easy. But we will have skilled teams at work on this project representing the best and brightest talents from both of our companies, a clearly defined set of objectives in our sights, the firm commitment of the world's best engineering and construction companies, and the continued support of a wide range of Saudi and Chinese institutions. With their collective efforts, I am confident we will implement our plans on schedule, within budget, and to the highest standards of professionalism and excellence. Therefore, I look forward to the day when we meet again in 2014 to formally inaugurate this landmark project, as well as to continued success in our work alongside Sinopec in every area of the business.

Thank you, and xie xie."