Exxon, Aramco join Sinopec in China''s largest petro sector investment

Energy and petrochemicals leader Exxon Mobil has announced its largest single Chinese joint venture investment to operate 750 petrol stations and a petrochemicals refinery.

Exxon Mobil will take a 22.5-per cent stake in the petrol pumps project, along with Saudi Aramco, which will also hold 22.5 per cent stake. Chinese refiner Sinopec will hold a majority 55-per cent stake.

The three firms will also working together on a refinery project in the Fujian province that will triple the capacity of the existing Fujian oil refinery to 240,000 barrels per day. Exxon and the Saudi oil firm will invest an estimated $5 billion for a 25-per cent stake each. The work on the capacity expansion is due to begin in 2009.

The participating companies have described the twin join ventures as "the first fully integrated refining, petrochemicals and fuels marketing project with foreign participation in China" and say they wanted to tap into China's growing demand for petro products and petrochemicals that also included a long-term crude supply deal with Saudi Aramco.

According to analysts, all the three companies stand to gain from this deal. Exxon Mobil will gain a foothold in China's oil refining and marketing sectors, while Saudi Aramco, which is the largest supplier of crude to China, will have a guaranteed source of demand for rising output. Sinopec will benefit from the deal by securing its supplies of petrol and petrochemicals.