BEIJING/MOSCOW (Reuters) - Private conglomerate CEFC China Energy and Russia’s largest oil producer Rosneft (ROSN.MM) have agreed to study the possibility of building a petrochemical complex in South China, Rosneft said on Friday.
The deal will deepen strategic cooperation between Rosneft and CEFC, which agreed in September to buy 14.2 percent of the Kremlin’s energy champion in a deal valued at over $9 billion (6.84 billion pounds).
Rosneft and CEFC signed an agreement to carry out a joint preliminary study into the possible construction of a petrochemical plant in China’s Hainan province on the sidelines of a summit of Asia-Pacific Economic Cooperation (APEC) leaders in Vietnam, the Russian company said.
“The companies will set up joint working teams to discuss technical configurations of the project as well as commercial and economic matters,” Rosneft said in a statement.
The companies will also jointly analyse the long-term supply of feedstock for the proposed new plant, it said.
Earlier on Friday, China Business Network reported, citing a CEFC executive, that the companies had agreed to build a petrochemical complex using liquefied petroleum gas and condensate to make petrochemicals.
The complex would be built in Yangpu, a port in China’s southernmost island province of Hainan, China Business Network reported, citing a CEFC executive.
“Once a feedstock supplier joins the investment of the petrochemical facility ... the supply chain will be strengthened further and shall benefit the project’s profitability,” Cai Feng, an investment official of CEFC was quoted as saying.
A senior company source at CEFC said part of the feedstock supply may come from Abu Dhabi National Oil Company (ADNOC).
CEFC operates an oil tank farm at Yangpu used partly as a state crude oil reserve, the company’s largest physical oil asset in China.
The companies did not provide any financial details of the deal or specify if it was a binding agreement.
A CEFC spokesman could not immediately comment.
Reporting by Chen Aizhu in BEIJING and Vladimir Soldatkin in MOSCOW; Editing by Tom Hogue and Adrian Croft