BEIJING, Oct 26 – Chinese state-owned banks are financing a multi-billion dollar Saudi Arabian gas project despite the country’s sovereign wealth fund opting out of a related deal led by BlackRock, according to three sources with direct knowledge of the matter. The project, known as the jafurah basin development, is Saudi Aramco’s largest natural gas field and is crucial to the Kingdom’s plans to boost gas production and reduce reliance on oil.
While Saudi Arabia’s Public Investment Fund (PIF) participated in a $15 billion deal with BlackRock to invest in energy infrastructure, it declined to invest directly in Jafurah, sources said. This decision created space for Chinese banks, including Industrial and Commercial Bank of China (ICBC) and Bank of China, to step in and provide substantial loans for the project’s development. the move highlights China’s growing economic influence in the Middle East and its strategic interest in securing energy supplies.
the Jafurah basin, discovered in 2019, holds an estimated 200 trillion cubic feet of natural gas. Saudi Aramco aims to produce 2.4 billion cubic feet per day of gas from the field by 2030, a significant increase from current levels. The project involves the development of a massive gas processing plant and extensive pipeline infrastructure.
The Chinese banks’ involvement comes as Saudi Arabia seeks to diversify its partnerships beyond conventional western investors. The Kingdom is increasingly looking to Asia, particularly China, as a key economic partner. The loans from ICBC and Bank of China are reportedly structured as project finance deals,secured against the future revenues of the Jafurah field.
“The PIF’s decision not to directly invest in Jafurah presented an possibility for Chinese banks to strengthen thier ties with Saudi Aramco and gain exposure to a strategically significant energy project,” said one source. “This is a clear signal of China’s commitment to the Saudi energy sector.”
the BlackRock-led deal, announced in September, focuses on investing in a broader range of energy infrastructure projects, including renewable energy and traditional oil and gas. The PIF’s participation in that deal reflects its broader strategy of diversifying its investment portfolio.