Ministry clears deal for $8.7 billion refinery venture

The Ministry of Environmental Protection has granted clearance and approved a technical review of an US$8.7 billion oil finery and petrochemical joint venture between Sinopec and Kuwait, paving the way for final state approval.

The venture, to be built in southern coastal city Zhanjiang, Guangdong Province, includes a 300,000 barrels-per-day refinery and a 1million tons-per-year ethylene complex, at a cost in line with previous estimates of around US$9 billion.

"With both the MEP clearance and the technical review, it means the project is technically ready for final approval by the National Development and Reform Commission," The Reuters quoted one industry executive with direct knowledge of the Kuwait venture as saying Wednesday.

The venture will be 50-50 owned with Sinopec Group, but Kuwait is likely to hunt for a second or third foreign partner for joint funding once the final Chinese approval is granted, the executive said.

OPEC member Kuwait is on the lookout for direct marketing and retail access in China, the world's fastest expanding major fuel market which has long been dominated by oil giants Sinopec and PetroChina.

Kuwait, the world's seventh-largest crude exporter, aims eventually to export 500,000 bpd of crude to China.

Last year, state-run Kuwait Petroleum Corp briefly talked to potential investors Shell and Dow Chemical Co, but the firms did not make any commitment for a consortium.

The environmental clearance came after the venture was forced to relocate last year from Nansha on the Pearl River Delta due to strong opposition from environmentalists and residents.

The joint venture also committed to spend about $626million, or 7.22 percent of the total investment, on environmental protection, according to a statement on the website of the Ministry of Environmental Protection.

By People's Daily Online