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Kenneth Ko

Oil refiner joins partners in US$4b project - its first investment venture in China

SAUDI ARAMCO is pushing ahead with its first investment venture in China to develop a world-class oil refining and petrochemicals complex.

The group's unit Aramco Overseas last month entered an agreement with Fujian Petrochemical and ExxonMobil China Petroleum and Petrochemical to launch the joint venture.

The US$4 billion  project involves expansion of a refinery in Fujian and the addition of a chemical complex.

The partners envisage a world-class integrated refining and chemicals complex at Quangang in Quanzhou near Meizhou Bay. Fujian Petrochemical is equally owned by China Petroleum & Chemical Corp (Sinopec) and the Fujian government.

Abdullah al-Subaiyal, senior representative of Aramco Overseas, said this was the group's first joint-venture investment in China and its first venture to build an oil refinery outside Saudi Arabia.

The project was also a reflection of the good relationship between the governments of China and Saudi Arabia, he said.

'It is the first project by Aramco in China, and definitely not the last one,' he said.

The world leader in crude oil production, Saudi Aramco is wholly owned by the Saudi Arabian government employing about 60,000 staff worldwide. It also owns and operates an extensive network of refining and distribution facilities, and is responsible for the gas processing and transport installations that fuel Saudi Arabia's industrial sector.

An array of international subsidiaries and joint ventures deliver crude oil and refined products to customers around the world.

The group's Hong Kong office was set up in 1997 to facilitate the mainland project and investment.

Mr  Subaiyal said Hong Kong, a world finance centre with international accessibility, would serve as the base for the company to explore business ventures in China.

He said China, being a growing consumer of petroleum and petrochemical products, was full of opportunities.

The growth of business prospects in the mainland was higher than any other country, he said.

The group is also looking at potential oil refinery projects in Shandong in northern China.

Mr Subaiyal, who had high hopes for the Fujian project, said it was going to be a profitable venture.

The integrated project will expand the existing refinery capacity from 80,000 barrels per day (four million tonnes per year) to 240,000 barrels per day (12 million tonnes per year) with significant product upgrading capabilities.

The upgraded refinery will be designed to refine and process sour  Arabian crude.

In addition, the project involves construction of a new 800,000 tonne-per-year ethylene steam cracker, polyethylene and polypropylene units, and a new 700,000 tonne-per-year paraxylene unit.

The production facility is expected to be completed in the first half of 2008.

The Fujian project will be 50 per cent owned by Fujian Petrochemical, 25 per cent by Saudi Aramco and 25 per cent by ExxonMobil.

Saudi Aramco, ExxonMobil and Sinopec also agreed to submit a joint feasibility study for a fuel-marketing joint venture in Fujian to the central government.

The proposed marketing joint venture will promote petroleum goods produced by the upgraded Fujian facility.

This marketing initiative will be 55 per cent owned by Sinopec, with the remainder equally owned by Saudi Aramco and ExxonMobil.



Aramco in pact to build top oil refinery on the mainland