LONDON�Megamajors BP, ExxonMobil Corp., and Royal/Dutch Shell Group each has signed up to a strategic joint-venture agreement with China's state oil and petrochemical company, Sinopec Corp., to pave the way for their individual company's expansion plans in the country.
BP announced Monday it would invest as much as $400 million in Sinopec's initial public offering (IPO), scheduled for next month, in keeping with its strategy of making inroads into "the world's fastest growing economies." The energy giant, under a stand-alone deal, has inked a memorandum of understanding with Sinopec that will extend a cooperative agreement in downstream fuels retailing, LPG distribution and marketing, and purified terephthalic acid (PTA) manufacturing and sales, while developing "options for cooperation" in the upstream sector and integration of refining and petrochemical activities in East China.
The two companies have also agreed to form a joint venture to buy, revamp, or build some 500 "dual-branded" gas stations in China's Zhejiang province; and undertaken a project to build a "world-scale" PTA manufacturing facility�"ideally progressed," in BP's opinion, "with and integrated into the Caojing ethylene cracker projects."
ExxonMobil subsidiary ExxonMobil Guangdong Petroleum & Petrochemical Co. Ltd., meanwhile, has entered into an agreement with Sinopec that the oil company stated would "significantly increase" its presence in China and "strengthen the cooperation between the two."
Under the deal, ExxonMobil and Sinopec will "jointly study" the development of a number of manufacturing and fuels marketing JVs in the country's Guangdong province. The possibility of doubling refinery capacity at the Guangzhou Petrochemical Complex�from its current level of 150,000 b/d�will be evaluated, as will be existing petrochemical facilities in the province, and the longer term prospect of developing a "world-class" petrochemical complex there.
ExxonMobil suggested that a fuels marketing JV with Sinopec in Guangdong, that could translate in to the construction of as many as 500 service stations in under 3 years, is also on the slate for the two companies.
The US megamajor's proposal to develop a world-scale petroleum and petrochemical complex at the Fujian Petrochemical Co. Ltd. refinery site in the Fujian province�a project put forward jointly by ExxonMobil, FPCL, and Saudi Arabia national oil company Saudi Aramco�is with government authorities now. ExxonMobil said approval of is plans is "expected imminently."
Elsewhere, Shell Overseas Investments BV, a Royal/Dutch Shell company, has signed a strategic alliance agreement with Sinopec to jointly develop a "range of opportunities" in exploration and production, oil products and gas marketing, and coal gasification. Shell, at the same time, has agreed to purchase 14% of China's state oil and petrochemical company's IPO up to a maximum of $430 million.
As part of the alliance deal, Shell intends to set up a JV to operate a network of 500 gas stations in "major cities" in the Jiangsu province on China's East Coast. The companies' feasibility study is now under way with a view to having the JV operational sometime next year.
Another facet of the agreement will see Shell and Sinopec exploring for and developing natural gas fields in areas including the Ordos basin in Inner Mongolia and Shaanxi provinces, and the Tarim basin in the Xinjiang Autonomous Region.
The deal also covers a $150 million JV project to build in Shell coal gasification technology at a Sinopec fertilizer plant in Dong Ting in Hunan province, a project that will followed by two similar schemes at plants in Hubei and Anhui provinces.
Investment in Sinopec's upcoming IPO has not been limited to oil companies, with Swiss technology group ABB AS announcing it has signed up to an outlay of $100 million as a "strategic investor" in China's state oil and petrochemical company. Through its ABB Lummus Global unit, the company notes, ABB has been involved in supplying technology for 62% of China's overall ethylene capacity to date.