Energy

Sinopec wary of high cost of Saudi refinery investment

(Agencies)
Updated: 2010-05-18 14:38

China's Sinopec Corp said on Tuesday it has not yet entered formal discussions with Saudi Aramco over investing in the giant Yanbu refinery in Saudi Arabia, due to concerns about the high investment cost there.

"A 400,000 bpd (barrels per day) refinery costs around 30 billion yuan ($4.4 billion) in China, but would require 50 billion yuan investment in Saudi Arabia. We are concerned about the returns on investment," Sinopec Corp Chairman Su Shulin told reporters.

"We are monitoring the projet, but have not entered formal talks."

Related readings:  Sinopec gets upstream foothold with $2.5b deal  Net profit of Sinopec more than doubles in 2009  Sinopec mulls oil refinery JV with ExxonMobil, Aramco  Analysts upbeat on cooperation with ExxonMobil, Saudi Aramco

Top management of Saudi Aramco and Sinopec Corp met last month in Beijing and the topic of jointly financing and building the 400,000 bpd Yanbu refinery may have been part of the discussions, industry sources have said.

Aramco has approached firms that could replace Conocophillips as partners for the project after the US firm's decision last month to pull out.

The Saudi oil giant was also likely to go ahead by itself if it failed to find a new partner, industry sources have said.

Aramco holds a 25-percent stake in the 240,000 bpd Fujian refinery in the eastern coastal province of Fujian, a joint venture with Sinopec Corp and Exxon Mobil.

Saudi supplies just over 20 percent of China's crude imports.