2007/8/22 Asia Pulse/Xinhua 中国石油化工、クウェートと石油精製で提携 広州で
Dow eye China's refining sector 2006/8/1 クウェートの中国進出
Lured by huge opportunities in the Chinese oil product market, Shell has come back to the country's refining sector through its participation in the Nansha greenfield refinery, a refining branch of China Petroleum and Chemical Corp's (Sinopec) Guangzhou Petrochemical.
Dow Chemical, a global chemical giant, has followed Shell's move. Of interest at the Nansha greenfield refinery is a soon-to-be-constructed ethylene plant with an annual capacity of 1 million tonnes.
With bigger ambitions, Shell is planning to enter both the refining sector and the chemical sector as they offer huge potential, even though the Chinese central government still controls oil product pricing rights.
China National Offshore Oil Corp's (CNOOC) Nanhai ethylene plant, with a capacity of 800,000 tonnes a year and now under operation, is the first attempt by Shell to enter the country's ethylene sector.
Shell hopes to develop the Nansha greenfield refinery as its first foothold in the country's refining sector, though the company withdrew from CNOOC's Huizhou greenfield refinery in late 2006. It is believed that Shell has now become optimistic over the prospect of China's refining industry and reform of the oil product pricing system.
A senior manager of Sinopec told China Oil Gas and Petrochemicals that both Shell and Dow Chemical had intentions to participate in the Nansha refining project. But it is not Sinopec but Kuwait Petroleum Company (KPC), the agreed partner of the refining project, that has invited Shell and Dow Chemical to invest in the project.
The manager said that negotiations over the Nansha refining project could become more complicated, but fortunately Sinopec will not conduct direct negotiations with Shell and Dow Chemical. It is KPC that carries out direct negotiations with the two foreign partners, but any results between the three parties will be handed to Sinopec for approval.
Insiders also believe that it is not necessary for Sinopec to invite any other foreign oil players to participate in the Nansha refining project if the crude oil supplier is settled. But it seems that Sinopec finds it hard to reject KPC's invitation, for Sinopec has to rely on the Middle East company to ensure crude oil supplies for the Nansha project.
Oil companies from the Middle East have been actively participating in China's refining projects in recent years. They have found a large, stable market for their crude exports and relatively convenient access to China's refining and oil product distribution sectors.
The key reason for Kuwait to ask Shell and Dow Chemical to enter is that Shell and Dow Chemical are so powerful in refining and chemical production. Their involvement should ensure the normal completion and operation of the Nansha project and reduce risks.
Apart from Shell and Dow Chemical's involvement, the joint venture of the Fujian refining/ethylene complex project between Sinopec, ExxonMobil and Saudi Aramco will help Sinopec accumulate expertise in building and operating a large-scale refining and ethylene project.
Besides the Fujian project, the Nansha project, with an estimated investment of US$5 billion, will be the second one involving both refining and petrochemicals, but this will be the largest Sino-foreign joint venture of its kind. If successful, the Nansha refinery will help Shell explore the country's wholesale oil product market.
Sinopec's manager said that negotiations were underway, but he was not clear when they would be finished and a joint venture would be established.
Sinopec's president Wang Tian Pu told Reuters on Friday the partners were preparing to do feasibility studies for the project in Guangdong, which could have daily capacity of 350,000 barrels and would meet Shell's hopes for a foothold in China's domestic market.
"What we need from foreign partners is management skills and technology," Wang said on the sidelines of a Sinopec board meeting.
Shell told Reuters in an interview earlier this year it was striving to gain entry to the world's second-largest oil consumer after hopes for taking a share in a new $2.5 billion CNOOC refinery were dashed late last year.
China gave initial approval last year to the joint venture valued at $5 billion in the Nansha area of provincial capital Guangzhou, which Kuwait's energy minister has said will likely have a capacity of between 300,000 and 350,000 barrels per day (bpd).
If it goes ahead, the deal would secure the OPEC producer crude sales of about 10 percent of China's current import level.
It would be one of the largest joint venture investments in China, similar to the $5 billion venture by Exxon Mobil Corp. and Saudi Aramco in the neighbouring province of Fujian and overshadowing the nearby Nanhai petrochemical complex built by Shell and CNOOC for $4.3 billion.
China and India have been leading a host of new refining projects to meet growing fuel demand. But many have been delayed or may be scuppered by surging costs. Based on Kuwait's recent higher cost estimate for a planned refinery, the Nansha refinery alone could cost up to $8 billion on a per barrel basis.
The talks also mark the return of U.S. chemical giant Dow to China's rapidly expanding petrochemical market after its long-time pursuit of a tie-up with the Chinese major. The petrochemical cracker would have a 1 million tonnes per year capacity, aimed at meeting surging demand for plastics.
But analysts said commercial negotiations could drag on due to the scale of the venture and parties involved.
The Fujian and Nanhai projects each took more than a decade to land a final joint-venture contract. The venture would also need to get clearance from Beijing's environmental watchdog.
"It may take long. This time there are four parties," said an official with an international major.
Foreign firms have been lured by China's huge retail market and double-digit economic growth, though oil refining margins have been crushed by state-controlled retail prices.
Beijing has pledged to eventually liberalise prices, and oil producers, flush with cash from crude prices above $70 a barrel, may be prepared to take a short-term hit to secure access to China's vast market.
Beijing is showing a preference toward teaming up with state-owned firms that can offer supply guarantees from producers such as Kuwait and Venezuela, with less need for the technology or financing offered by the majors, analysts say.
Big oil companies have also proved more reluctant than Asian state firms or major OPEC producers to invest in new refining facilities, fearing that the upcycle may crash when new Asian capacity comes online at the end of the decade.
Aug13 2007 Interfax-China 上に他の２記事
Sinopec, Kuwait's JV Refinery Negotiating With Shell and Dow Chemical
Sinopec's $5 billion refinery and ethylene joint venture with Kuwait Petroleum Corp. (KPC) in southern Guangdong Province is still in negotiations with two other potential foreign partners, Royal Dutch Shell and Dow Chemical, a company official with Sinopec's Guangdong petrochemical subsidiary told Interfax today.
The idea of having more foreign partners involved in the project was put forward by KPC, which would have more of a say in a final decision, the official, who asked to remain anonymous, said. The refinery will process imported oil from Kuwait.
"Despite Kuwait's position as a rich oil supplier, it lacks refining technology and project management experience, which could be supplemented by bringing in other international oil companies such as Shell and BP," Han Xiaoping, chief consultant with energy information portal China Energy Network, said.
"But if the offered shares in the project are too small, those international giants may not accept it," he added.
Though the exact scale of the project is yet to be decided, Sinopec's president, Wang Tianpu, told reporters in Beijing last Friday that the project's plant is expected to process 12 million tonnes of crude a year, while its ethylene unit will have an annual capacity of 800,000 tonnes to 1 million tonnes.
The project, which is an upgrade of the current facilities of Guangzhou Petrochemical in the city's Nansha area, was given initial approval by the Chinese government last year. If it goes ahead, the deal will be one of the largest joint-venture investments in China's refining and petrochemical sector, overtaking the nearby $4.2 billion Nanhai petrochemical plant that started operation in early 2006, which is equally held by the China National Offshore Oil Corp. and Shell.
Earmarked as a refining base to supply the energy-hungry local market, as well as markets in southwestern regions that lack large-scale refineries, Guangdong Province will be home to four refineries, which together will have a capacity of more than 10 million tonnes. They include Maoming Petrochemical, which was established in 1955 and now processes 13.5 million tonnes of crude a year and 380,000 tonnes of ethylene a year, the Huizhou Refinery, which was wholly invested in by CNOOC and will come on-stream in September of next year; and the joint-venture Nanhai and Nansha projects.
Oil giants from the Middle East have gained special favor with the Chinese government in recent years regarding such investment, as their ability to provide long-term supplies of crude oil and naphtha, the most important feedstock for petrochemicals, have fit comfortably with Beijing's quest for energy security.