Dow, Shell to join Guangzhou C2-refinery project

17 July 2007 04:34  [Source: ICIS news]

SINGAPORE (ICIS news)--Dow Chemical and Shell are in talks with Sinopec and its Kuwaiti partners to join a cracker (C2) and refinery project in south China, increasing the number of shareholders to five, a source close to the project said on Tuesday.

The Chinese major could hold a 51% stake while the remainder will be split among the foreign companies including two from Kuwait, he added.

Kuwait Petroleum Corp and Sinopec won an initial approval from the central government last year to conduct a feasibility study on the $5bn (€3.7bn) refinery project in southern China.

The Kuwaiti oil major, which will be investing in the project through its subsidiaries Petrochemical Industries Co (PIC) and Kuwait Petroleum International (KPI), had requested that the project included a cracker and a foreign partner.

PIC already has a joint venture Equate with Dow Chemical.

Talks are under way among the five partners to decide if they will form two ventures for the project, the source said.

“Shell’s expertise is in refining while Dow’s is in chemicals,” he said, adding that talks could take longer than usual as there were many parties involved.

ExxonMobil, which was earlier in talks to join the project, was no longer involved, the source said.

The 12m tonnes/year refinery project will be located at Nansha district, Guangzhou, Guangdong province and the companies will still need to submit a study to the Chinese government for final approval.

Spokeswomen from Dow Chemical and Shell China declined to comment.

($1=€0.73)

By: Florence Tan
+65 6780 4359

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