Top Asian refiner Sinopec signed landmark agreements on Sunday
to expand the Fujian petrochemical project and to jointly market
its output with foreign counterparts Saudi Aramco and Exxon
Mobil.
"It is a positive move for us to strike a refining capacity
enhancement deal and marketing agreement with our overseas
partners," Zhang Zhiguo, a press official with Beijing-based
Sinopec, said yesterday.
"We expect to meet the ever-growing local demand for fuel by
combining strong points of parties involved," he added.
In a joint statement, Sinopec, Saudi Aramco, and Exxon Mobil
said they will expand existing capacity from 4 million to 12
million tons per year at the Fujian Refining and Ethylene Joint
Venture Project in Quanzhou, Fujian Province. The upgraded refinery will primarily
process sour Arabian crude. Details on investment for the expansion
plan were not available.
The three parties also agreed to set up the Fujian Fuels
Marketing Joint Venture Project, which will manage and operate some
750 filling stations and a network of terminals in Fujian. Sinopec
holds a 55 percent stake in the marketing venture, with Exxon Mobil
and Saudi Aramco taking 22.5 percent each.
Joint venture contracts mark a significant milestone in the
development of China's first fully integrated Sino-foreign project
involving refining, petrochemicals, and fuels marketing, Saudi
Aramco said.
Zhang said the driving force for the collaboration is robust
market demand.
"Our partners requested a marketing venture from the beginning,"
he explained. "As oil product wholesaling opens up and demand for
fuel further picks up, it is a natural tendency for us to cooperate
more closely."
Processing sour crude requires advanced technology and
equipment, which will be provided by US-based energy giant Exxon
Mobil.
"We will benefit in refining technology and know-how by bringing
Exxon Mobil in," the Sinopec press official said. "The Saudi
Arabian partner will secure our crude oil supply and we will create
the best market environment. That is how we perceive the project as
mutually beneficial."
Han Xuegong, a veteran analyst with CNPC, China's top oil
producer, said that Chinese oil firms are strong in upstream
operations including exploration and production, but not in
downstream business such as refining and petrochemical
manufacturing.
"Our capability in sour crude refining is not mature yet.
Sinopec is China's leading refiner, but still lags behind global
powerhouses such as Exxon Mobil in refining expertise. That is why
Sinopec prefers to collaborate with foreign partners," Han
explained.
The Fujian joint refining project will see Sinopec take a 50
percent share, Exxon Mobil and Saudi Aramco 25 percent each.
Start-up of the project is scheduled for early 2009. An initial
accord was signed in August 2004 with the project valued at US$3.5
billion at that time, according to Bloomberg.
In addition to refining facilities, the project will include new
petrochemical equipment such as an 800,000-ton-per-year ethylene
steam cracker, an 800,000-ton-per-year polyethylene unit, a
400,000-ton-per-year polypropylene unit and an aromatics complex
based on a 700,000-ton-per-year paraxylene unit. Support
facilities, including a 300,000-ton crude berth, will also be
built.
(China Daily February 27, 2007)