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April 1, 2007

 

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A busy SINOPEC gas station in rural China, near Chengdu. (Photo: Patrick Ryan)

 

U.S./Saudi/Chinese Five Billion Dollar Energy Deal

 
 

Last year King Abdullah traveled to China for his first foreign visit after assuming the throne.  King Abdullah arriving in Beijing for his landmark January 2006 visit to China. (Photo: SPA)The trip was characterized as a "watershed" and, as Jean Francois Seznec told SUSRIS last month, signaled that Saudi Arabia's future involved "being much closer to Asia."  At the time of the visit there were reports of pending deals among Chinese, Saudi Arabian and American energy organizations for joint ventures in China.  This week one of those deals, the first " fully integrated refining, petrochemicals and fuels marketing project with foreign participation" was formalized in Beijing.

For its part China welcomes the new partnerships as it continues to expand sources and infrastructure to meet its sizzling energy demands that have seen it surpass Japan as the number two oil consumer and the world's third largest oil importer.  Its burgeoning requirements, which are a major factor in managing global energy supply and demand, were highlighted in a report titled, "China's Search for Energy Security: Implications for U.S. Policy" published by the National Bureau of Asian Research last year.  The authors noted, "China's strong economic growth is spurring a concomitant growth in energy demand that together are outstripping energy supply and infrastructure capabilities. This supply-demand gap will become more acute over time, particularly in light of the fact that, ever since 2000, China has become far less efficient in energy use per incremental dollar of (GDP).  Oil is a particularly sensitive problem.  Over the next fifteen years, demand is expected to roughly double.  By 2020 China will likely import 70% of its total oil needs, compared to 40% today."  The implications for Saudi Arabia and the United States are obvious.

We are pleased to present for your consideration a report provided by Arab News on the specifics of the newly announced deal.    

Aramco in $5bn China Deal
Arab News

BEIJING, 31 March 2007 � Sinopec, ExxonMobil and Saudi Aramco yesterday held an inauguration ceremony at the Great Hall of the People in Beijing to mark the formal government approval of contracts and granting of business licenses for their two joint ventures in Fujian province � Fujian Refining & Petrochemical Company Limited and Sinopec SenMei (Fujian) Petroleum Company Limited.

The two joint ventures, with a total investment of about $5 billion, are the first fully integrated refining, petrochemicals and fuels marketing project with foreign participation in China.

The Fujian refining and ethylene joint venture project, located in Quanzhou, will expand the existing refinery from 80,000 barrels per day to 240,000 barrels per day. The upgraded refinery will primarily refine and process sour Arabian crude.

In addition, the project will construct an 800,000-ton-per-year ethylene steam cracker, an 800,000-ton-per-year polyethylene unit, a 400,000-ton-per-year polypropylene unit and an aromatics complex to produce 700,000 tons per year of paraxylene. Support facilities including a 300,000-ton crude berth and power cogeneration will also be built.

The joint venture company, formally registered as �Fujian Refining & Petrochemical Company Limited�, will be owned by Fujian Petrochemical Company Limited (50 percent), ExxonMobil China Petroleum and Petrochemical Company Limited (25 percent) and Saudi Aramco Sino Company Limited (25 percent). The project is expected to start up in early 2009.

The Fujian fuels marketing joint venture, formally registered as �Sinopec SenMei (Fujian) Petroleum Company Limited�, will manage and operate approximately 750 service stations and a network of terminals in Fujian province. It will be owned by Sinopec (55 percent), ExxonMobil China Petroleum and Petrochemical Company Limited (22.5 percent) and Saudi Aramco Sino Company Limited (22.5 percent).

The ceremony was attended by Chen Jinhua, former vice chairman of the Chinese People�s Political Consultative Conference; Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi; Huang Xiaojing, governor of Fujian province; Chen Tonghai, president of China Petrochemical Corporation (Sinopec Group) and chairman of China Petroleum & Chemical Corporation (Sinopec Corp.); Abdallah S. Jum�ah, president & CEO of Saudi Aramco; and Steve Simon, director and senior vice president of ExxonMobil Corporation.

Together, the Fujian refining and ethylene joint venture project and the Fujian fuels marketing joint venture will serve to meet China�s rapidly growing demand for petroleum products and petrochemicals. Minister of Petroleum and Mineral Resources Ali Al-Naimi, third from left, and Saudi Aramco President and CEO Abdallah S. Jum’ah, second from left, with ExxonMobil and Sinopec officials at the inauguration ceremony in Beijing on Friday. (AN photo)

Synergies from these two world-scale, integrated businesses, closely coupled with the strengths of the four partners and a long-term crude supply agreement with Saudi Aramco, will significantly enhance the competitiveness of this project, and help ensure its world-class performance. It will also boost the development of China�s petrochemical industry.

Source: Arab News
   

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