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Kuwait sees steady growth in energy cooperation with China

Miyoko Ishigami (with photos) BEIJING, Jan 2 (KUNA) -- Kuwait and China have witnessed steady growth in energy cooperation following an agreement between the two governments in July 2004, when His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah toured China in his capacity as the then prime minister.

Since the establishment of Kuwait Petroleum Corporation ( KPC ) Beijing Representative Office in 2005, Chinese refiners have significantly increased crude purchase from Kuwait, KPC has earlier said, noting that most of coastal refineries owned by Sinopec and CNPC, which cater to China's highly industrial areas such as Beijing, Dalian, Guangdong and Fujian, import Kuwaiti crude.

Sales of Kuwaiti crude oil and petroleum products were just USD 400 million in 2004, but currently amount to nearly USD 10 billion, driven by robust crude shipments.

The world's seventh-largest oil exporter supplied around 200,000 barrels per day (bpd) of crude to China in 2010, a 11-fold increase from 18,000 bpd in 2004, according to data from the Chinese government.

As one of the latest developments, in November, KPC signed a Memorandum of Understanding (MoU) with Chinese oil trader Unipec for a 10-year crude term contract starting from this year, which states that crude oil supplied to Unipec should be increased to at least 300,000 bpd.

Last month, KPC said its Beijing Representative Office has successfully developed new outlets for KPC products in the world's largest energy consuming market, including naphtha, gas and sulfur, in addition to crude oil. Kuwait became China's biggest liquefied petroleum gas (LPG) supplier in November, with its shipments surging 64.4 percent year-on-year to 80,500 tons to control a quarter of China's total LPG imports. It was the first in 2011 that Kuwait has topped the list of LPG importers.

In the field of joint energy project, Kuwait also attaches importance to a joint refinery project between its subsidiary Kuwait Petroleum International (KPI) and Asia's top refiner Sinopec to build a USD 9 billion refinery and petrochemical complex in south China's Guangdong Province.

Kuwait sealed MoU with China in 2005 to construct the plant in hopes of securing a foothold in China, not only for sales of crude oil, but also for refining and petrochemicals operations as well as retail network.

The planned refinery is designed to process 100 percent Kuwaiti crude with a capacity of 300,000 bpd and the ethylene cracker unit will have an annual production capacity of 1 million tons. The refinery part is expected to go on-stream in 2014.