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Sinopec unsure on Kuwait role in China refinery
Beijing, October 18, 2012
Asia's largest refiner Sinopec has yet to decide whether to build a $9 billion refinery in Southern China's Zhanjiang by itself or in a joint venture with Kuwait Petroleum Corporation (KPC) and Total.
KPC is keen to gain access to the Chinese domestic market, but industry observers think it would be a tough goal to negotiate. The ongoing talks involve whether Sinopec would give it access through a network of Q8-branded filling stations.
"This is in our commercial negotiations, still going on," Sinopec Corp Vice Chairman Wang Tianpu told Reuters on the sideline of its shareholder meeting on Tuesday.
"It is not decided yet. China's fuel pricing mechanism is not in place, so it is hard to make decision."
Chinese refiners have suffered losses as global crude prices have outstripped state-set retail prices, giving Sinopec second thoughts on the joint venture.
Sinopec and KPC signed a memorandum of understanding in 2009 to jointly build the 300,000 barrels per day (bpd) refinery and petrochemical complex in Guangdong province.
Earlier this year, KPC brought Total in to the project as a minor stake holder. Under the plan, KPC would have 30 per cent, Total 20 per cent, and Sinopec would have 50 per cent.
The $9 billion refinery project, potentially one of China's biggest foreign investments, has been under negotiation for more than six years.
China's government approved the joint venture between Kuwait and Sinopec in March last year.
The project would secure Kuwait, the world's seventh-largest crude exporter, a stable outlet for its oil as it aims to more than double its crude exports to China to 500,000 bpd.-Reuters