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Kuwait, China agree on win-win outcome for JV refinery

Miyoko Ishigami-With Photos BEIJING, Jan 4 (KUNA) -- State-owned Kuwait Petroleum Corporation ( KPC ) and China Petrochemical Corp., known as Sinopec, agreed on Wednesday to step up cooperation towards the smooth execution of their planned USD 9 billion joint venture to build a refinery and petrochemical complex in south China. Speaking to Kuwait News Agency (KUNA) after his talks with Sinopec Chairman Fu Chengyu in Beijing, KPC Chief Executive Officer Farouk Al-Zanki said that they decided to continue dialogue and form a special team that will look into new ways to create a win-win situation. During their meeting in a cordial atmosphere, Al-Zanki and Fu also agreed to expand cooperation between the two companies in other areas and to forge a strategic alliance agreement next month when Fu will visit Kuwait.

The project with Asia's top refiner Sinopec, potentially to be the largest Sino-foreign joint venture in China, involves a 300,000 barrel-per-day refinery, a 1 million-ton-a-year ethylene plant and retail network in the southern Guangdong Province. Kuwait will be the sole supplier of crude oil to the world-class integrated complex, to be located on Donghai Island in the southern coastal city of Zhanjiang. With an eye to starting operations of the refinery part at the end of 2014, construction has already begun. As one of the pillars of KPC 's expansion strategy for 2030, the joint venture represents a highly significant step forward in plans to expand its business in China. With a population of some 100 million, Guangdong is China's largest oil consuming province that creates a huge energy market. Kuwait Petroleum International ( KPI ), KPC 's international refining and market unit, has been in intensive negotiations on behalf of Kuwait with the Chinese side since 2005. The meeting was attended by KPI President Hussain Esmaiel, KPI Deputy Managing Director Mohammed Rashed Jasem and KPI General Manager Meshari Al-Mahmoud. The high level delegation from KPC , who joined two other meetings with Chinese oil companies on earlier in the day, included KPC International Marketing Managing Director Nasser Al-Mudhaf, KPC Crude Oil Sales Manager Salah Al-Sabah, KPC Beijing Chief Representative Mohamad Al-Qallaf, and KPC Crude Oil Sales Team Leader Abdulqader Al-Furaih, were also present.

It is Al-Zanki's first visit to China as CEO since assuming the post in 2010. The talks between Al-Zanki and ChinaOil President Wang Lihua covered the latest developments in the energy market in the both countries and future cooperation between KPC and ChinaOil, which is PetroChina's oil trading arm. Al-Zanki told Wang that KPC attaches importance of developing relationship with China, expressing hope that sales of Kuwaiti crude to ChinaOil will grow in the coming years.

At the separate meeting with Wang Yilin, Chairman of China's largest offshore oil producer CNOOC, the two sides agreed to sign a technical service agreement, while Wang sought Kuwait's enrolment in a new exploration project in south China, nearby Yacheng gas field in which Kuwait Foreign Petroleum Exploration Company (KUFPEC) has participated.

projects in China. They also agree to further discuss joint exploration projects in a third country.