Kuwait gets oil outlet under US$9b JV
By Chen Aizhu |
March 8, 2011, Tuesday
|
Print Edition
Print Edition
CHINA has approved a US$9-billion oil refining and petrochemical joint venture between Kuwait and Sinopec, two sources said yesterday.
The project, to be built in the southern coastal city of Zhanjiang, will secure Kuwait, the world's seventh-largest crude exporter, a solid outlet for its oil, ahead of competing investors such as Venezuela, Russia and Qatar, all of which are planning refineries in China.
Kuwait aims to more than double its crude exports to China to 500,000 barrels per day, versus last year's sales at under 200,000 barrels per day.
For China, which imports some 55 percent of its crude needs, a commitment to lock up long-term oil supplies is essential. The Guangdong Province venture includes a 300,000 barrel-per-day refinery and a 1 million ton-per-year ethylene complex. It makes Kuwait the second OPEC producer after Saudi Arabia to have a major refining presence in the world's fastest growing major oil market.
China, which burned some 9 million bpd of oil last year, the world's second-largest after the United States, has rapidly expanded its refining sector over the last two decades to feed a robust economy now the world's second-largest.
But the industry, long dominated by oil duopoly PetroChina and state-owned Sinopec, increasingly favors expanding the business on its own, leaving scope only for partners equipped with big supply resources.
"It has all the elements needed for a successful case for approval," said Victor Shum of energy consultancy Purvin & Gertz.
"It has a petrochemical element as China is a huge importer of basic petrochemicals. It's located in the fast growing south with high demand for fuels. And it has credible crude supply lined up with a major OPEC partner."
The project, potentially one of China's largest foreign investments, would be 50-50 owned by Sinopec Group, parent of top Asian refiner Sinopec Corp.
"NDRC gave the approval last week," said one Chinese industry official with direct knowledge of the government's decision, referring to the top economic planning body, the National Development & Reform Commission. The announcement should be soon, the source said.
The project, to be built in the southern coastal city of Zhanjiang, will secure Kuwait, the world's seventh-largest crude exporter, a solid outlet for its oil, ahead of competing investors such as Venezuela, Russia and Qatar, all of which are planning refineries in China.
Kuwait aims to more than double its crude exports to China to 500,000 barrels per day, versus last year's sales at under 200,000 barrels per day.
For China, which imports some 55 percent of its crude needs, a commitment to lock up long-term oil supplies is essential. The Guangdong Province venture includes a 300,000 barrel-per-day refinery and a 1 million ton-per-year ethylene complex. It makes Kuwait the second OPEC producer after Saudi Arabia to have a major refining presence in the world's fastest growing major oil market.
China, which burned some 9 million bpd of oil last year, the world's second-largest after the United States, has rapidly expanded its refining sector over the last two decades to feed a robust economy now the world's second-largest.
But the industry, long dominated by oil duopoly PetroChina and state-owned Sinopec, increasingly favors expanding the business on its own, leaving scope only for partners equipped with big supply resources.
"It has all the elements needed for a successful case for approval," said Victor Shum of energy consultancy Purvin & Gertz.
"It has a petrochemical element as China is a huge importer of basic petrochemicals. It's located in the fast growing south with high demand for fuels. And it has credible crude supply lined up with a major OPEC partner."
The project, potentially one of China's largest foreign investments, would be 50-50 owned by Sinopec Group, parent of top Asian refiner Sinopec Corp.
"NDRC gave the approval last week," said one Chinese industry official with direct knowledge of the government's decision, referring to the top economic planning body, the National Development & Reform Commission. The announcement should be soon, the source said.
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