March 6, 2006 at 1:37 am #4236
SINGAPORE, March 1, 2006 (Reuters) – China’s Sinopec Corp. has revived plans to expand its second-largest refinery as confidence grows on future profit margins, and could bring in Kuwait as partner, company officials said on Wednesday.
The refiner, Asia’s largest, is set to seek approval from the National Development and Reform Commission (NDRC) to raise the capacity of its Maoming plant in southern Guangdong province by 50 percent to 400,000 barrels per day (bpd) by 2010, they said.
Officials have also held early discussions with Kuwaiti officials over joining the expanded plant or building a new one together, threatening to eclipse a fledging agreement that OPEC-member Kuwait sealed last year with rival PetroChina .
“Sinopec is set to expand Maoming. And we are also talking to Kuwait on a possible joint-venture plant,” said a Maoming-based Sinopec official.
Sinopec , partially privatised and increasingly sensitive to profit margins, had shelved the Maoming expansion last year amid heavy losses caused by low domestic fuel prices.
But the prospect that Beijing would either hand out another big subsidy, as it did last year, or change its rickety oil pricing system to lift refineries out of losses, has prompted Sinopec to firm up the plan, which requires NDRC approval.
“If the government makes clear that no new site is allowed (in Guangdong), then we can move on to discussions with Kuwait about their participation,” said a senior Sinopec official from Beijing.
Kuwait struck a deal with PetroChina late last year to build a greenfield $5 billion, 300,000-bpd refinery and petrochemical complex in Guangdong, China’s manufacturing heartland, which consumes some 15 percent of the country’s oil.
The Gulf state’s energy minister said in December that Kuwait Petroleum Corp. (KPC) was eyeing a second refinery joint-venture in China, without elaboration, but it now appears that Kuwait is in talks with both Chinese refiners.
“We highly value partners who can bring in oil supply,” said the senior Sinopec official.
If a joint venture gets through, Kuwait will become the second producer nation after Saudi Arabia to secure a place in China’s state-dominated downstream sector.
Guangdong has three refineries now, all owned by Sinopec, although number-three oil company, China National Offshore Oil Corp. (CNOOC), is building a fourth.
The Sinopec official said a task force from the NDRC, China’s powerful economic planning body, was in Guangdong to examine the refinery sites before formalising a policy.
Industry officials say the NDRC appears to favour expanding existing oil plants to building new ones.
March 6, 2006 at 1:39 am #7645
It appears Sinopec has renewed its Maoming coking refinery expansion plans by 2010, and is joining PetroChina is discussions with Kuwait about a new Greenfield refinery venture.
The Guangdong province already has 3 Sinopec refineries like Maoming and a fourth by CNOOC, because it is an industrial heartland for China.
Sinopec added an new coker at Jinling in 2005, and CNOOC is rumored to have a coker addition in the planning stage.
So it would seem that China is part of the current global coking expansion that differs from the last cycle that was mostly North America & Gulf Coast/Caribbean phenomenon.
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