China’s First Joint Oil, Petrochemical Venture Secures Financing

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Researched by Industrial Info Resources (Sugar Land, Texas)--Fujian Refining and Petrochemical Company Limited (FRPC), China’s first joint venture in oil and petrochemical that integrates oil refining and petrochemical production, successfully signed a financing agreement with a loan consortium in Beijing this month. FRPC, established in March this year, is a joint project invested by China Petroleum and Chemical Corporation (Sinopec, Beijing, China), Fujian Province, Saudi Aramco and Exxon Mobil’s group companies. Eleven key Chinese banks and Sinopec’s finance company make up the bank consortium.

The loan to FRPC is arranged on a limited recourse basis and is made up of long-term and working capital in yuan and U.S. dollars (USD). FRPC’s total loan was $4 billion. It is so far the largest loan a joint venture company has ever obtained in China. Long-term yuan loan was up to 20 years, and its USD loan was up to 15 years. The bank selection was done after competitive bidding between Chinese and international banks.

Sinopec Senmei (Fujian) Petroleum Company Limited is a joint venture refined oil sales company that was established by Sinopec, Saudi Aramco and Exxon Mobil at the same time as FRPC. Sinopec Senmei’s financing was recently completed, as well. Two Chinese banks provided Senmei with $440 million loans in yuan. This loan is made up of long-term and working capital as well.

The ownership and investment percentage at FRPC is 50: 25:25 between Fujian Petrochemical Company Limited (a Sinopec related company), Exxon Mobil Chemicals (China) and Saudi Aramco’s China Company. The foundation of FRPC is Fujian’s existing refineries. Expansion work will be done on these existing facilities, and petrochemical units will also be built. The project is expected to be completed as a whole and to start production in 2009.

Sinopec Senmei is owned by Sinopec (55%), Exxon Mobil Chemicals (China) (22.5%) and Saudi Aramco’s China Company (22.5%). Senmei manages and operates about 750 gas stations and several oil storages in Fujian Province.

Fujian Petrochemical Company Limited is a joint enterprise owned equally by Sinopec and Fujian Province. Exxon Mobil Chemicals China is an Exxon Mobil-owned affiliate company. Saudi Aramco’s China Company is an Aramco-owned affiliate company.

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