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Beijing: Kuwait Petroleum Corp (KPC) has shortlisted Royal Dutch Shell and Dow Chemical Co as potential partners in a joint-venture Chinese refinery it aims to build with Sinopec, a KPC executive said on Tuesday.
Abdul Latif Al Houti, managing director for international marketing, said the foreign players would have minority stakes in the new refinery and petrochemical plant in southern China, with Sinopec holding 50 or 51 per cent.
British firm BP, which had been in talks with KPC over the plant in the manufacturing hub of Guangdong province, appeared to have been ruled out. The Nansha refinery has a planned capacity of 250,000 to 300,000 barrels per day, and while Al Houti said it was too early to calculate investment figures, he quoted a 'rule of thumb' that new refineries cost about $30,000 per barrel.
This suggested an eventual price tag of $7.5 billion to $9 billion - far more than the $5 billion that has been floated in the past.
Petrochemical unit
Extra cash will be needed for a petrochemical plant with annual ethylene output of one million tonnes, which Al Houti said was a key requirement of both the Kuwaiti and Chinese sides.
Petrochemicals help ensure profitability in a market where fuel prices are tightly controlled by the government, and in recent years they have often been set at loss-making levels.
KPC is now awaiting fin-al approval for what would be one of the largest joint ventures in China.
"We are in talks with Shell and Dow. They are very strong candidates to be partners, and their names have been submitted to the authorities," he said.
KPC aims to become one of China's top five crude suppliers in three years.
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