US, Saudi, Chinese firms announce five-billion-dollar energy deal

BEIJING (AFP) - US oil giant Exxon Mobil, Saudi Aramco and Sinopec announced here Friday two joint ventures worth about five billion dollars to operate 750 service stations and a petrochemical refinery in China.
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The announcement of the project, Exxon Mobil's largest single investment in China, marked the culmination of 12 years of preparations, according to the American company.

"It's our biggest project so far in China," Sarah Du, a Beijing-based Exxon Mobil spokeswoman, told AFP.

"Developing this type of joint venture is a very complicated process and Fujian is the most complex so far in China due to the nature of its integrated business," she said.

In a joint statement, the companies called the two joint ventures "the first fully integrated refining, petrochemicals and fuels marketing project with foreign participation in China."

The refining joint venture, which will start operations in early 2009, will expand one that already existed in the southeastern province of Fujian between Sinopec and the Fujian government.

It will lead to a tripling of the production of refined Saudi Arabian crude to 240,000 barrels per day, the statement said.

A joint venture co-owned by Sinopec, China's top refiner, has a 50 percent stake in the venture, while Exxon Mobil and Saudi Aramco each have 25 percent.

The second joint venture will operate some 750 service stations and a network of terminals across Fujian province, according to the statement.

Sinopec holds a 55 percent stake in the service station venture, with Exxon Mobil and Saudi Aramco each holding 22.5 percent.

The partnership, which aims to meet China's rapidly growing demand for petroleum products and petrochemicals, also includes a long-term crude supply agreement with Saudi Aramco, the statement said.

"The cooperation benefits all parties. All the three companies get what they need," said Qiu Xiaofeng, an oil analyst with Everbright Securities.

"Sinopec can take advantage of capital and refining technologies provided by Exxon Mobil, and Exxon Mobil gets access to China's wholesale oil products market."

The three companies said the government had approved both joint ventures. A breakdown for the investment for each of the ventures were not provided.

"It will ... boost the development of China's petrochemical industry and contribute to the economic development of Fujian province," the statement said.

Earlier, state media reported that Sinopec reached a preliminary agreement to sell a 25 percent stake in an eastern China refinery to Saudi Aramco.

China is seeking to line up stable sources of crude oil and Saudi Arabia has been one of China's main suppliers.

According to
OPEC, Saudi Arabia regained its status title as China's top source of imported crude oil in August. Angola had occupied the position since February.