China approves Kuwait Petroleum refinery project in S China

SHANGHAI -- The Chinese government has approved plans by Chinese and Kuwaiti oil companies to build a US$5 billion refinery and chemicals project in the southern province of Guangdong, Chinese oil refiner Sinopec says.

The National Development and Reform Commission approved "initial work" on the project in Nansha, which is at the mouth of the Pearl River, northwest of Hong Kong, Sinopec said in a notice on the Web site of its parent company, China Petroleum & Chemical Corp.

NDRC officials contacted Wednesday would not immediately comment. They requested that the inquiry be put in writing.

Approval of the project, one of the biggest joint investments in China ever, follows feasibility studies by China Petroleum & Chemical Corp., or Sinopec, and Kuwait Petroleum.

China and Kuwait signed a memorandum of understanding on the project in late 2005, with an agreement to use Kuwaiti oil at the refinery. At the time, the Chinese partner was reported to be China National Petroleum Corp., but that later changed to Sinopec, Asia's biggest refiner by capacity.

Sinopec's spokesman, Huang Wensheng, was in meetings and not available for comment, staff in his office said.

The project reportedly is slated to begin operations in 2010.

Earlier reports said the total investment for the project would be about US$5 billion (£á3.4 billion), compared to the US$4.3 billion being spent by Royal Dutch Shell and Chinese offshore oil giant CNOOC in a petrochemical plant at Huizhou, also in Guangdong.

Another joint venture involving ExxonMobil Corp., Saudi Aramco and Sinopec will expand a petrochemical refinery at Quanzhou, in neighboring Fujian province.

The refinery projects are intended to help relieve chronic shortages of oil products in the booming manufacturing region.

Kuwait, which has the world's fourth-largest oil reserves, has been moving to expand its sales to China. China's crude oil imports from Kuwait surged 49 percent in January-October from the same period last year to 3.28 million tons.