Total and Kuwait Petroleum Corporation on Tuesday signed a memorandum of understanding on a refining and petrochemicals joint venture in southern China in partnership with Chinese state-owned refiner Sinopec, the French major said.
The Zhanjiang project consists of a 300,000 b/d full-conversion refinery integrated with petrochemicals and marketing, Total said.
"The proposed refining and petrochemicals platform will be designed to process Kuwaiti crude as feedstock and to produce high-quality refined and petrochemicals products," the company said after the agreement was signed in Kuwait City by chief executives Christophe de Margerie of Total and Farouk al-Zanki of KPC.
De Margerie later told reporters that the deal married two strategic goals of developing relationships with producers and with countries where energy demand is increasing.
"It goes with our global strategy. The strategy is to develop our relationship with producing countries, particularly the Middle East, particularly in countries where there is growth in demand, as is the case in China," he said.
"The strategy ... is to do more with KPC and the group of companies joining our forces there to invest in China to meet the extra demand that is coming from that part of the world," he said.
ACCESS TO RESERVES
He added: "Is it a pure E&P deal? No, it is not. It is downstream. But it is a downstream [deal] with an NOC, with all the strength that is coming from its access to oil reserves ... At the end, what are we doing? We are going to turn these reserves into products that will be sold to the Chinese market."
De Margerie described the consortium as "a good combination where we have access directly to long term reserves, 300,000 b/d from Kuwait and [that] will go to the huge market, which is continuing to grow, which is China."
But the Total chief made the point that what had been signed was an MOU. and that the venture was at an early stage.
"We still have to make the decision to invest; KPC and Total with the agreement of the Chinese authorities," he said.
The MOU was signed between Kuwait Petroleum International, state-owned KPC's overseas arm, and Petrochemicals Industries Company, another KPC subsidiary.
