The storm had already claimed the lives of at least two people in China's Hainan and 16 people in the Philippines
asia11 hours ago
China National Aviation Fuel Holdings (CNAF), the country’s near-monopoly aviation fuel distributor, is expected to complete the 1.9 million-barrel storage base for clean oil products in southern Guangdong province by mid-2009, estimated to cost $40 million.
Kuwait Petroleum International (KPI) is interested in taking a stake in the venture, which CNAF plans to turn into one of China’s first government emergency stockpile for transport fuels, said a Beijing-based industry executive close to the project.
“They (the Kuwaitis) have expressed interest in the storage. They are keen to enter the Chinese market,” said the official who declined to be named, adding that the two parties have yet to start serious talks on how to cooperate.
KPI’s Beijing-based representative was not immediately available for comment. A China official with KPI’s parent, Kuwait Petroleum Corp (KPC), declined comment.
It is rare for a foreign firm to take a direct stake in a Chinese oil storage facility, as Beijing has barely started opening the state-controlled sector to foreign firms and local independents.
The Saudis and Iranians are similarly interested have joint oil stockpiling in China, industry officials have said, while BP owns part of a south China jet fuel distribution firm.
Race for market
If state-run KPI’s plan takes off, it would be the second major move by Kuwait -- sitting on 10 percent of the world’s oil reserves -- to entrench itself in the tightly controlled Chinese market and compete with OPEC peers Saudi Arabia and Iran.
KPC is also working with top Chinese refiner Sinopec Corp to build a $5 billion mega refinery and petrochemical complex near the oil storage project in Guangdong.
A refinery deal would allow Kuwait to boost its crude oil sales significantly from 2 percent of China’s 3.2 million barrels per day (bpd) imports, minuscule compared with Saudi and Iranian crude, which together make up nearly 30 percent of China’s imports.
Kuwait also wants to raise sales of refined oil products into China where annual fuel demand is set to grow at 5-7 percent in coming years.
In a recent push, KPI, KPC’s overseas vehicle for oil refining and distribution operations, sealed an initial pact with CNAF to cooperate on jet fuel trading, including swapping part of its European aviation fuel market for a slice of the Chinese market.
CNAF handles most of China’s 260,000-bpd jet fuel market.
Kuwait hopes to market its jet fuel directly into China, bypassing middleman trading houses now dominating the business, accounting for a third of China’s aviation fuel imports.
The Beijing oil executive said Kuwait will have to offer competitive prices to gain such a foothold, but that opportunity looks better within a few years with the start-up of its 615,000-bpd al-Zour refinery, the largest in the Middle East, in 2012.
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