BEIJING, 25 May 2007 — Saudi Aramco will soon conclude an agreement with China Petroleum & Chemical Corp (Sinopec) to set up a refinery joint venture in Qingdao in eastern China’s Shandong province, a Saudi Aramco official said.
“The agreement on the Qingdao joint venture will be reached soon,” Adil Al-Tubayyeb, vice president for joint venture development of Saudi Aramco’s refining and international marketing division, told XFN-Asia on the sidelines of an industry forum. He did not provide further details. Earlier, Du Guosheng, assistant to the president of Sinopec Group, told state media that Sinopec, the country’s largest refiner, is expected to sell a 25 percent stake in its Qingdao refinery to Saudi Aramco.
Sinopec and the Qingdao municipal government have reached a preliminary agreement with Saudi Aramco over a stake sale, Du said. The Qingdao refinery, which involves phase one investment of 1.2 billion yuan, is due to enter commercial operations by the end of next year.
It has annual crude processing capacity of 10 million tons with the potential to generate revenue of over 30 billion yuan. In April, Sinopec Group and Saudi Aramco signed a memorandum of understanding under which the Saudi company committed to supply Sinopec and its affiliates 1 million barrels per day of crude oil by 2010.
The MOU also covers Saudi Aramco’s two ongoing joint developments in China, the Fujian refining and ethylene project and the Qingdao refinery project. The Fujian integrated project, in which Saudi Aramco, Sinopec and ExxonMobil are equity partners, involves two joint ventures with a total investment of $5 billion to expand a Chinese petrochemical refinery and operate a chain of 750 fuel stations.
