China Petroleum & Chemical Corp. (386) and Kuwait Petroleum Corp. may start building a $5 billion oil refinery and chemical project in southern China's Guangdong province as early as this year, an official from the Kuwaiti company said.
Sinopec, as China Petroleum is known, and Kuwait Petroleum will submit a feasibility study for the refinery to the National Development and Reform Commission within a month, Mohammad Rashed Jasim, vice president of the company's international unit, said in Beijing today. Construction will start as soon as they obtain the approval ``hopefully this year,'' he said.
China, the world's fastest-growing major economy, wants to increase oil-processing capacity by 25 percent by 2010 to meet rising consumption of fuels and petrochemicals. The Guangdong complex would be the largest joint venture in China, exceeding the nearby Nanhai petrochemical facilities built by Royal Dutch Shell Plc and China National Offshore Oil Corp., the central bank said May 30.
Kuwait Petroleum will make investments in China in an ``integrated business model'' to include refining, petrochemicals and retailing, Jasim said at the second China Petrochemical Focus conference in Beijing.
China will eventually relax government restrictions on fuel prices, which will allow the country's refiners to pass on higher crude oil costs, Jasim said.
``For a foreign investor coming with a huge investment in a market, we would like to be exposed to the deregulated market risks, not regulated market risks,'' Jasim said. ``We believe that China is moving towards this.''
Kuwait Petroleum is in talks with other potential overseas partners to invest in the refinery, Jasim said, without identifying the companies.
Sinopec will take a 50 percent stake in the project and the ``Kuwait Petroleum consortium'' will own the rest, he said.
The Kuwaiti oil company targets supplies of 500,000 to 700,000 barrels of oil a day to China by 2015, Jasim said.
The company won't provide long-term crude supplies to a refinery Sinochem Corp. is planning in the southeastern province of Fujian unless it owns a stake, Jasim said. Sinochem signed an accord to import crude oil from Kuwait for the refinery, company President Liu Deshu said in March.
``The Kuwait Petroleum policy is clear: no commitment to long-term crude supplies without investing in a successful joint venture,'' Jasim said.
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