Fuzhou, China- Saudi Aramco, Exxon Mobil Corp and top Asian refiner Sinopec signed a $3.5 billion deal on Friday to expand a refinery in south China, sealing what they called the country”s largest oil project.
The deal gives Exxon, the world”s top oil firm, and Saudi Aramco a foothold in China”s insular 6.2 million barrel-a-day (bpd) refining sector, now dominated by state giants Sinopec and PetroChina, according to reports of foreign news agencies.
China, the world”s number two oil consumer, is trying to raise its refining capacity to feed a racing economy that grew 9.4 percent in the first quarter after expanding 9.5 percent in 2004.
Beijing also has to address surging imports, now exceeding 40 percent of its crude oil demand, prompting it to tie up with oil producing nations.
Saudi Aramco, Exxon and Sinopec ink $3.5b refinery deal 2 Fuzhou, China
The agreement will triple the capacity of a refinery in Fujian province to 12 million tons per year (tpy) the equivalent of 230,000 barrels per day and add an 800,000-tpy ethylene cracker, the companies said in a statement.
Several downstream facilities would be built as part of the deal, including a 650,000-tpy polyethylene plant, a 400,000-tpy polypropylene unit and a 1 million tpy aromatics plant.
Polyethylene and polypropylene are commonly used to produce plastics, while aromatics are used as blending agents in the production of gasoline.
The agreement also gives the foreign partners access to China”s protected retail sector, where rivals such as Royal Dutch/Shell Group and France”s Total are already active.
"The retail portion is an important part of the project," Exxon chief executive Lee Raymond told reporters on the sidelines of the signing ceremony.
"This is an integrated project in the sense of refining, chemicals and marketing, which makes it unusual."