Kuwait-China refinery construction to start in 2012

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State-run Kuwait Petroleum Corp (KPC) and China’s Sinopec will start the construction of their $9 billion joint venture oil refinery and petrochemical plant in China in the first quarter of next year, Kuwait’s news agency reported on Sunday.

The refinery and petrochemical complex will be built in the southern city of Zhanjiang, following China?s approval of the joint venture in March. Last month, Kuwait said it was in talks with BP and other major energy companies over a possible role in the refinery project. The country, the world’s fourth-largest crude exporter, aims to more than double its crude exports to China to reach 500,000 barrels per day (bpd).

The project will secure Kuwait a solid outlet for its oil, ahead of competitors such as Venezuela, Russia and Qatar, all of which are planning refineries in China.

The joint venture between Kuwait Petroleum Corp and Sinopec involves a 15 million-tonne-a-year (300,000 barrels per day) refinery, a 1 million-tonne-a-year ethylene plant and related utilities, as well as support facilities.

When this project will be realized, Kuwait will become the second Arab oil producer to achieve a desired result after Saudi Arabia, which finally put a refining and petrochemical joint venture into operations last year in the southeast China’s Fujian Province after lengthy negotiations with the Chinese authorities. Kuwait Petroleum International (KPI), KPC’s international refining and market unit, has been representing Kuwait in talks with the Chinese side.

Under Beijing’s initial approval in 2006, the integrated complex was originally planned for the Nansha district of provincial capital Guangzhou, but amid growing concern over the environment impact on the densely populated area, Kuwait and China agreed in May 2009 to relocate the project to much less crowded Zhanjiang City.

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