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Kuwait-China mega refinery eyes approval in six months

KPI Beijing Representative Office
KPI Beijing Representative Office

By Miyoko Ishigami

(with photos) BEIJING, June 20 (KUNA) -- Kuwait and China are currently in the phase of reviewing candidate locations for a mega refinery and petrochemical complex project in south China's Guangdong Province, and gearing up for construction approval this year, a Kuwaiti diplomat said Saturday.
"The province's southwestern cities of Zhanjiang, Maoming and Taishan in the Jiangmen municipality, as well as Daya Bay of Huizhou in the southeast part are on the list," Kuwaiti Consul General in Guangzhou Nameer Al-Quraini told Kuwait News Agency (KUNA).
He also said Kuwait Petroleum International (KPI) plans to send a delegation of experts and technicians to the four cities for field research next week.
The Sino-Kuwaiti mammoth plant was originally planned to be built in the Nansha district of provincial capital Guangzhou. However, amid growing concern over the environment impact on the densely populated area earlier this year, the Guangdong government suggested Zhanjiang as the new site for the project.
Given its infrastructure, transport links and environmental approvals, which are considered to be KPI's top priority, Zhanjiang would be far better positioned than the other cities to be the selected for the joint venture project, according to Al-Quraini.
With an eye to starting operations in 2013, the envisaged 300,000 barrels a day (bpd) refinery will be designed to process 100 percent Kuwaiti crude and the ethylene cracker unit is to have an annual production capacity of one million tons.
The joint venture by state-run Kuwait Petroleum Corporation (KPC), Asia's top refiner Sinopec and international oil giants aims to gain Chinese government approval for the project in 2009, Al-Quraini said.
KPI, which oversees KPC's international downstream marketing operations, represents Kuwait in the talks.
Besides construction of a brand-new integrated complex, the possible plans include nearly doubling crude processing capacity at Sinopec's existing 270, 000 bpd Maoming refinery -- currently China's second-biggest refinery, according to Sinopec.
All the four candidate locations lie on the provincial petrochemical industry belt, which has already hosted major international joint venture projects such as Shell-CNOOC and Venezuela-PetroChina.
Estimated at USD nine billion, the proposed project would become the largest Sino-foreign joint venture in China. It is also expected to serve as a driving force for the Gulf emirate towards achieving its China-bound crude oil export target of 500,000 bpd by 2015. KPC and Sinopec each hold an equal 50 percent stake in the joint venture.
To revive the stalled project, Kuwait and China struck a deal on May 11 in Beijing, which was signed by Kuwaiti Oil Minister Sheikh Ahmad Al-Abdullah Al-Ahmad Al-Sabah and Zhang Guobao, Vice Chairman of the National Development and Reform Commission (NDRC), China's top economic planning agency.
With a view of going on-stream on schedule, the agreement contained specific clauses calling for the Chinese authorities to speed up approval for the project, KPC has said earlier. The two sides also agreed to move the refinery's location from "the environmentally challenging Nansha site." To apply for NDRC final go-ahead, environmental studies will be conducted upon determination of the location, followed by the engineering design process.
The refinery and petrochemical complex is expected to shore up Guangdong's rapidly growing economy, which expanded 10.1 percent in 2008. With a population of over 100 million, the province is also China's major consumer of gas and diesel.
In line with its long term investment strategy for large-scale downstream operations in energy-hungry Asia, Kuwait signed MoU with China in 2005 to construct the plant in the world's second-biggest energy market. In 2006, the NDRC gave the green light to KPC and Sinopec to launch preliminary studies with the Guangdong provincial government.
Kuwait exported 224,000 bpd of crude oil to China in April, a 12-fold increase from 18,000 bpd logged in 2004. The OPEC's fourth-largest producer sticks with a goal of raising its oil output capacity to four million bpd by 2020 from the current three million bpd. (end) mk.ema KUNA 200900 Jun 09NNNN