China Petroleum & Chemical Corp., Asia’s largest refiner, said its planned oil-processing and chemical venture with Kuwait in Guangdong province may cost 53 billion yuan ($7.8 billion).

The project in Zhanjiang city will have a refining capacity of 15 million metric tons a year, Dai Houliang, chief financial officer of the company known as Sinopec, said at a media briefing in Nanjing on Monday. The venture will also be able to produce 1 million tons of ethylene annually, he said.
Kuwait had been in talks to build the project since at least 2004 and an agreement was reached when China changed its fuel-pricing policy to ensure a profit for refiners. The complex, due to start operations by 2013, will overtake Exxon Mobil Corp.’s $5 billion Fujian project as China’s biggest refining venture with an overseas partner.
Kuwait Petroleum Corp. wants to be among the top five oil suppliers to the world’s second-biggest oil-consuming nation in three years, Fahad al-Shatti, a Beijing-based sales representative, said in April last year.
China and Kuwait signed accords to cooperate in oil and gas, transportation, education and environment protection during the visit of Emir Sheikh Sabah al-Ahmed al-Sabah in Beijing in May.
Sinopec shares have climbed 41 percent in Hong Kong trading this year, compared with the 45 percent gain in the benchmark Hang Seng index. The stock fell 0.8 percent to HK$6.62 at 10:14 a.m. local time on Monday.
------------Refinery expansions
Sinopec plans to boost capital expenditure by 4 percent this year, with spending on refining rising about 35 percent, the company said in a statement in April.
The refiner is boosting investments in oil processing after China introduced a price mechanism in December to set gasoline and diesel prices taking into account the cost of crude oil and a 5 percent profit for refiners.
Beijing-based Sinopec is planning a “large-scale” refining and chemical complex in Caofeidian, Tangshan, in Hebei province, Dai said. The project will consist of a 10 million metric-ton-a-year refinery and a 1 million ton-a-year ethylene plant, he said.
(Source: Bloomberg)