Saudi Aramco Buys Into Chinese Refining.

The China Petroleum and Chemical Corp. (Sinopec), the country's largest oil refiner, plans to sell a 25% stake in an east Chinese refinery to Saudi Aramco. Sinopec and the municipal government of the port city of Qingdao have reached a preliminary deal with Saudi Aramco over the sale.

The Qingdao refinery, located in the province of Shandong, involves a first phase investment of 1.2 billion yuan ($150m) and is due to come into production by the end of 2007. Its annual crude processing capacity is expected at 10 million tons with revenue of over 30 billion yuan.

In April Sinopec and Saudi Aramco signed a memorandum of understanding under which the state-owned Saudi company committed to supply Sinopec and its affiliates 1 million b/d of crude oil by 2010.

Saudi Arabia, meanwhile, is opening up its oil refining sector to private capital, an official of the Ministry of Petroleum and Mineral Resources on Nov. 20 told the Saudi Energy Forum on its concluding day. The Saudi private sector, in association with international firms, has been invited to participate in a proposed oil refinery in the south-western province of Jizan.

Announced by King Abdullah, the proposed refinery in the under-developed Jizan area will have a capacity of between 250,000 and 400,000 b/d and will be integrated with a petrochemical or an electricity generation unit. The ministry has already commissioned a feasibility study for the oil refinery.

The National Industrial Cluster Development Programme was unveiled at the forum. The Supreme Economic Council (SEC) has already approved the project. The idea of cluster development is to give a boost to the non-oil GDP of the kingdom, which is currently well below the international average.

The programme aims to boost the industrialisation efforts in the country, generate new jobs for its people and substantially increase the non-oil GDP of the kingdom. Giving out details of the National Industrial Cluster Development Programme (NICDP), Azzam al-Shalabi of the Ministry of Petroleum and Mineral Resources said that 18 projects had been short-listed.

The selection, picked from hundreds of proposals, was based on locally available resources and skills. These 18 different manufacturing activities were then clustered into four groups: automotive, construction, appliances and metal processing. Participants of the forum said the NICDP could prove to be a revolutionary programme to help diversify Saudi industry.

In view of the interest shown by investors, the Jubail-2 industrial zone has been expanded further to accommodate most of those interested, said Faisal al-Rashid, of the Royal Commission for Jubail and Yanbu'. He said that both Jubail-II and Yanbu'-II were on target to accommodate industries under the newly unveiled NICDP.

Talking to the press, Prince Faisal ibn Turki, adviser to the Ministry of Petroleum and Mineral Resources, asserted that despite all talk of a shortage of feedstocks for the petrochemicals industry in the kingdom, the projects discussed at the conference had received their allocations. He underlined the fact that low feedstock pricing to petrochemical ventures in Saudi Arabia is due to the low oil and gas production costs in the Arabian kingdom.

The conference came to an end late in the evening on Nov. 20 with a session on energy support services required and another on financing for hydrocarbon chain projects in the kingdom. The three-day mega conference and exhibition, organised by the Ministry of Petroleum and Mineral Resources and the Eastern Province Chamber of Commerce and Industry in conjunction with CWC Associates Ltd was inaugurated by the Governor Eastern Province Prince Muhammad ibn Fahd on Nov. 18.