China Petroleum Spending Spree
About 800 attendees were at the International Petroleum and Natural Gas Enterprise Conference (IPEC) that took place in the Zhejiang province. This gathering has attracted investors into the archipelago that was once a pirate’s nest in past centuries. The world giant’s energy companies were all at the rendezvous.
Exxon Mobil and Saudi Arabian Oil were among the firms that signed a $24 billion preliminary deals in Zhoushan. The main island in a group of over 1,300 off china’s east coast.
Rongsheng Petrochemical is planning on building a refinery at Zhoushan, Saudi Arabia’s state oil company has agreed to buy a stake in the future refinery.
Zhoushan is becoming a high-profile deal that will play a critical role into the energy market. The local government plan is to build a processing, storage and trading hub. This has created a buzz that is attracting investors from around the world.
With the trading war between the U.S and China it has impacted its economy to slowdown from the breakneck speed of the previous decade. The energy demands are still growing, with America as the world biggest buyer of overseas crude and is now also the top importer of natural gas.
China is revamping its economy, by creating several free trade zones that will benefits foreign investment by providing fewer regulatory hurdles, better government rules transparency and looser restrictions. One of the Free Trade Zones was established at Zhoushan.
By promoting Free Trade Zones, it advances the reform and open policies.
“This is where incremental demand can be seen for the foreseeable future, and with its ambition to build a global trading hub, it could potentially rival Singapore,” said Li, an analyst with Shanghai-based commodities researcher ICIS China. “It will remain as a hot spot of focus in the oil market.”
A total of 25 deals were signed with an estimated total of 165.6 billion yuan. Those agreements are subject to changes later.
Zhoushan is a strategic location that was used in the past by pirates. With the new upcoming refinery in the works Rongsheng’s energy and petrochemical complex, it is expected 400,000 ppd will be process. The refinery should be in operations by the end of 2018. The plant could double its capacity by 2020 which could place the refinery at the ranks of the largest refineries in the world.
In the meantime, ENN Energy Holdings Ltd has begun its operations at a LNG receiving terminal in Zhoushan. The terminal is estimated to handle 3 MM metric tons a year in its first phase, with an annual capacity to increase to 5 MM tons by 2021.
Exxon Mobil signed a preliminary deal to supply 1 MM metric tons of LNG to Zhejiang Provincial Energy Group for 20 years beginning in the early 2020. BP is in process to form an oil-trading venture Wuchan Zhongda Group which is controlled by the local government. Zhejiang Petroleum and Glencore is planning to trade 10 MM tons of oil a year.