French supermajor Total has agreed to take a stake in a Chinese refinery in a joint venture with two subsidiaries of Kuwait Petroleum Company (KPC).
The parties signed a memorandum of understanding yesterday which, if brought to completion, will see Total and KPC take 20% and 30% respective interests in the 300,000 bpd Zhanjiang downstream complex. Chinese state firm Sinopec will hold the remaining 50%. The parties and Chinese government have not yet fully signed off on the deal.
The expanded facility will be designed to produce high-quality refined and petrochemicals products from Kuwaiti crude, Total said in a company statement.
No party has disclosed the financial terms of the deal or the investment required at Zhanjiang.
The move further seals ties between Kuwait and China. Kuwait’s crude oil exports to China surged 58.9% last December over 2010 to 853,000 tonnes, according to official data, and the Gulf state currently meets 3.9% of Chinese oil demand.
"I truly believe that in the long-run this is a good combination where we have direct access to long-term reserves, 300,000 barrels per day, from Kuwait to go to the huge market which is continuing to grow," said Total CEO Christophe de Margerie.
In an interview with Oil & Gas Middle East, Total exec Arnaud Breullac discussed the company's innovate policy of combining with national oil companies.