Sinopec, Kuwait Petroleum to Invest More Than $8 Billion in Chinese Petrochemical and Refining Plant

---

Researched by Industrial Info Resources (Sugar Land, Texas)--China Petroleum & Chemical Company Limited (SHA:600028) (Sinopec) (Beijing), China's largest oil producer, and Kuwait Petroleum Corporation are reportedly planning to invest 53 billion yuan (US$8.15 billion) on a co-developed petrochemical and refining facility in Guangdong Province, South China.

The project marks the first time that oil giant Sinopec has officially released information about this eye-catching project. With an investment of 53 billion yuan (US$8.15 billion), this project is set to overtake Exxon Mobil Corp.'s (NYSE:XOM) (Irving, Texas) US$5 billion Fujian project and become China's biggest refining venture with an overseas partner.

A senior executive with Sinopec said that, at present, Sinopec and Kuwait Petroleum Corporation are negotiating on shareholdings distribution. Sinopec doesn't rule out the possibility that a third party may join the project. Rumors have been circulating that Royal Dutch Shell plc (NYSE:RDS-A) (The Hague, Netherlands) and The Dow Chemical Company (NYSE:DOW) (Midland, Michigan) have shown interest.

The project reportedly has a refining capacity of 15 million tons per year, besides producing 1 million tons of ethylene, and is due to begin operations by 2013. Project location recently has been moved to the city of Zhanjiang in Guangdong province from Guangzhou, the provincial capital.

The project was originally said to be in the Nansha district of Guangzhou, whose developments in the petrochemical industry have been hotly debated on the Internet because of air pollution concerns.

According to information released by Zhanjiang municipal government, the city has allocated a land of 9.02 square kilometers for the project, and the project's environmental-fallout evaluation report has been approved by China's National Environmental Program. The project is expected to bring 5.8 billion yuan (US$892.3 million) in tax revenue to local government.

Apart from this facility, Sinopec has two other projects that have attracted a lot of attention. One is a facility that Sinopec will build in the city of Tangshan, in Hebei province, that will produce 10 million tons of refined oil and 1 million tons of ethylene per year. This is the first time that Sinopec has confirmed its intention to develop this project. The other is the US$1.4 billion expansion of Sinopec and BASF SE's (OTC:BASFY) (Ludwigshafen, Germany) Nanjing joint venture chemical site. Through this expansion, the cracker in the site will be able to produce 140,000 to 740,000 more tons of ethylene per year, and 10 more chemical plants will be built.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.