Aramco’s China refinery deal in question

Sinopec Group will delay the startup of a $1.2 billion refinery in east China by at least nine months, adding uncertainties to a joint-venture and oil supply deal with Saudi Arabia, industry sources told Reuters.

Sinopec, parent of Asia’s top refiner Sinopec Corp., aimed to start the 200,000 barrels per day (bpd) refinery in the coastal city of Qingdao around September 2008 or later, they said, versus the firm’s original target of the end of this year.
The Chinese energy giant has yet to finalise a deal for state-run Saudi Aramco to take a stake in the project, or how much crude the world’s top oil exporter will sell to the plant.

A delay means Aramco will have to readjust its supply plans into Asia, with China its main buyer in the region.

Riyadh was expected to take a 25 percent stake in the Qingdao plant, its second China refinery deal, and supply up to 80 percent of the plant’s crude requirement.

‘It’s not certain now — the deal with the Saudis,’ said one source familiar with the situation.

Officials at Saudi Aramco’s Beijing office were not immediately available for comment.

The deferment is expected to put a damper on China’s hefty crude oil imports — growing at 11.2 percent in the first half of 2007 from a year ago — as the world’s second-largest oil user plans to raise its refining capacity by some 10 percent in 2008.

TradeArabia