OREANDA-NEWS. January 16, 2012. Kuwait Petroleum Corporation (KPC) Chief Executive Officer Farouk Al-Zanki’s just-concluded visit to China and Vietnam has taken Kuwait’s vital projects in the two countries many steps further, as the parties agreed on new approaches to deal with outstanding issues.

Upon completion of the two projects, Kuwait will enjoy exporting additional 500,000 barrels per day (bpd) of crude oil to these rapidly-growing energy markets.

The highlights of his talks with Vietnamese Deputy Prime Minister Hoang Trung Hai included a basic agreement to jointly look into a new methodology to ensure 100 percent foreign currency guarantees required for the joint refining and petrochemical project.

“At the same time, we plan to discuss other financial issues with co-lenders in a meeting in Kuwait,” Al-Zanki told Kuwait News Agency (KUNA) in the Vietnamese capital at the end of his successful two-nation Asia tour.

The meeting with Hoang also touched on issues such as evacuation of sea site, performance guarantee and price formula, which will also drive the project forward, according to Al-Zanki. “Once foreign exchanges and financial issues come clear, we will be in a position to submit it to the KPC board for final decision,” he said.

During a separate meeting with Al-Zanki, PetroVietnam President and CEO Do Van Hau pledged his full support to secure Vietnamese government’s foreign currency guarantees for the project.

The Nghi Son Refinery Petrochemical Complex, the largest and most important refining project in energy-hungry Vietnam, will be located in the northern province of Thanh Hoa, some 180 kilometers south of Hanoi.

KPC will supply 100 percent crude oil for the vital joint venture with Vietnam and Japan. The state-of-the-art refinery will have an annual oil processing capacity of 10 million tons, or 200,000 bpd with a view to going online in four years after commencement of construction. Al-Zanki said the contract for Engineering, Procurement and Construction (EPC) will be awarded after outstanding issues are resolved.

KPC’s international unit Kuwait Petroleum International (KPI) established the joint venture in April 2008 with PetroVietnam, Japan’s Idemitsu Kosan Co. and Mitsui Chemicals Inc. KPI and Idemitsu each own a 35.1 percent stake in the joint project, with PetroVietnam and Mitsui Chemicals Inc. putting up 25.1 percent and 4.7 percent, respectively.

The projects in Vietnam and China are in line with KPC’s strategy to invest in the growing energy markets and maximize the value-added benefits of the Kuwaiti crude.
The USD 9 billion project with Asia’s top refiner Sinopec, potentially to be the largest Sino-foreign joint venture in China, involves a 300,000 barrel-per-day refinery and a 1 million-ton-a-year ethylene plant in Guangdong Province.

Kuwait will be the sole supplier of crude oil to the world-class integrated complex, to be built in the southern coastal city of Zhanjiang with an eye to starting operations at the end of 2014.

Earlier this week in Beijing, Al-Zanki and Sinopec Chairman Fu Chengyu agreed to continue constructive dialogue and form a special KPC-Sinopec team that will look into new ways to create a win-win situation for the project, which Al-Zanki described “great accomplishment.” Kuwait became the second Arab oil producer to construct a refinery in China after Saudi Arabia, which finally put a refining and petrochemical joint venture into operations in 2009 in neighboring Fujian Province after more than 10 years of negotiations with the Chinese authorities.