Sinopec to Reselect Site for Joint Venture Refinery with Kuwait

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Researched by Industrial Info Resources (Sugar Land, Texas)--Shulin Su, General Manager of China Petroleum Corporation (Sinopec Group) (Beijing) and Chairman of China Petroleum & Chemical Company Limited (NYSE:SNP) (Sinopec) (Beijing), held a meeting with a delegation led by Saad Ali Al-Shuwaib, CEO of Kuwait Petroleum Corporation (KPC) (Kuwait), at the headquarters of Sinopec on May 8, 2009. Although no details about the meeting were disclosed by Sinopec Group, an insider said that both parties discussed related issues regarding the largest joint venture refinery so far in China.

As the largest joint venture project ever in China, the project has an initial planned total investment of $7.3 billion. According to the initial arrangement, Sinopec and KPC will build a large-scale joint venture refining and chemical enterprise in Nansha, the capital city of the Guangzhou province. The insider disclosed that both parties had discussed the reselection of a new site for the project. The reason for the change of site is mainly because of environmental factors. The original site is located in a place with dense population, which has caused many disputes. However, the final site will still be in Guangdong province, the economic powerhouse of southern China.

"Zhanjiang, Zhuhai or Huizhou will be the most probable alternative sites for the project," said our informant. "In the past few weeks, Sinopec and KPC have had several discussions about the project." KPC hopes that the refinery can be put into operation in 2013-14, but the project is subject to the final approval of Chinese authorities.

According to the planning for the petrochemical industry of Guangdong, the province will build five petrochemical bases, including the construction of five new refineries or expansion projects, five ethylene projects and a large quantity of downstream chemical projects during the Eleventh Five-Year Plan, 2006-2010. Among the five refineries, Sinopec has three expansion projects, namely the Guangzhou Petrochemical Expansion Project, Maomen Petrochemical Expansion Project and Zhanjiang Petrochemical Expansion Project. The 240,000-barrel-per-day refinery just commissioned in Huizhou is an upstream support project for CNOOC-Shell's 800,000-ton-per-year ethylene project.

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