Saudi Arabia can utilise petroyuan to pay for Chinese engineering and construction services in the Kingdom or invest in firms or projects in China, S&P Global said in a new report.

The strengthening of bilateral ties is anticipated to boost the use of the renminbi in the Saudi-China oil trade in the coming decades.

Nearly $30 billion worth of projects in Saudi Arabia have been awarded to international contractors, the report said, citing UAE-based project intelligence company MEED. 

Six of the top 10 largest companies by contract value are Chinese companies such as China Harbour Engineering Company, China Machinery Engineering Corporation, Sinohydro, China Railway Construction Corporation, China State Construction Engineering Corporation, and China Gezhouba Group Corporation.

The report said future petroyuan inflows may be directed toward industrial and renewable sectors.

During Chinese President Xi Jinping’s 2022 visit, ACWA Power, 44 percent owned by the Public Investment Fund (PIF), secured agreements for renewable energy projects in the Kingdom with various Chinese companies, including a $1.5 billion project with Power China.

Additionally, Riyadh can invest petroyuan inflows in China, with outlets including Saudi Aramco’s expanding downstream operations and PIF’s investment diversification into Chinese firms, S&P stated.

However, S&P cautioned that yuan-based oil trade between Saudi Arabia and China faces significant challenges and may take decades to achieve substantial scale.

(Editing by Anoop Menon) (anoop.menon@lseg.com)

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