Sinopec-KPC to move Nansha JV complex to Zhanjiang

11 May 2009 06:33  [Source: ICIS news]

By Judith Wang

SHANGHAI (ICIS news)--Asia’s largest refiner, Sinopec, will likely move its joint venture (JV) refinery-petrochemical complex with Kuwait Petroleum Corp (KPC) to Zhanjiang from the earlier planned site in Nansha, a media contact from Sinopec said on Monday.

“We are talking about this, but a final decision has yet to be made,” the source said in Mandarin when contacted by ICIS news but declined to elaborate the reason for relocation. Both Zhanjiang and Nansha are in Guangdong province, south China.

Nansha district of Guangzhou was originally chosen as the site of the complex when the project was first announced in 2006 and would include a 15m tonne/year refinery as well as a 1m tonne/year cracker.

“I think the key reason for relocation is environmental concern, just like [the] paraxylene (PX) plant in Xiamen,” said Li Guangzan, an analyst from Hangzhou-based brokerage house, Founder Securities .

Nansha is at the heart of the heavily populated Pearl River Delta region and is only 37km from Hong Kong. Also, the Hong Kong-Macau-Zhuhai bridge would pass within 40km of the project, which has sparked strong opposition from Hong Kong and Macau over environmental concerns, according to report from South Morning Post.

The $9bn (€6.57bn) investment for the project reported by Bloomberg could not be explicitly confirmed. “It is just the initial figure,” the source said. The companies had previously estimated an investment cost of $5bn.

“We are doing the feasibility study and the environmental impact assessment (EIA) for the complex. The EIA is almost done and is pending approval by the Ministry of Environmental Protection,” the source said, adding that the project would still need the final nod from the National Development and Reform Commission (NDRC).

An overseas, third-party oil producer would join the Sinopec-KPC team in building the complex, said Zhang Guobao, head of the mainland’s National Energy Administration on Sunday after the Chinese and Kuwaiti governments had signed the trade pacts in Beijing.

Zhang had identified the third party as being BP or Royal Dutch Shell.

“We are discussing with Kuwait Petroleum Corp now, and other talks with foreign companies are also ongoing,” the source from Sinopec said without giving details.

BP had “given up” its petrochemicals trading business to Singapore-listed China Aviation Oil Corp (CAO) back in October 2008 as it said that the segment was “no longer a strategic fit within its core trading business.”

($1 = €0.73)

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