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Chinese Petroleum to send delegation to UAE on oil deal

The state-run Chinese Petroleum Corp (CPC) will send a delegation to the United Arab Emirates (UAE) later this month to discuss an oil investment offer, a Chinese-language newspaper reported yesterday.

"CPC vice president Chiu Chi-hsiung (邱吉雄) will lead a delegation in mid-November to reconfirm the International Petroleum Investment Corporation's offer to invest in the Kuokuang Petro-chemical Co," the newspaper reported.

IPIC, based in Abu Dhabi, plans to take a 20 percent stake in Kuokuang as part of its global expansion but the move has been put on hold because Kuokuang's creation has not been finalized.

Kuokuang is being formed by six shareholders with the state-run CPC holding a 43 percent stake. The company will build Asia's largest petrochemical zone -- the Kuokuang Petrochemical Processing Zone -- possibly in Taiwan or the UAE.

On Friday, four of the six shareholders signed a letter of intent to invest in Kuokuang.

After the remaining two shareholders sign the letter next week, the shareholders will apply to the government asking that Kuokuang be established at the end of this month, the daily said.

The company will have an initial investment of NT$400 billion (US$12 billion). Of that, 30 percent will come from shareholders and 70 percent from loans.

The 1,200-hectare Kuokuang Petrochemical Processing Zone will have a refinery, a naptha cracker and 25 downstream petro-chemical plants.

Once complete in 2014, the refinery will refine 300,000 barrels of crude daily and produce 1 million tonnes of ethylene a year.

After IPIC expressed interest in investing in the zone, CPC was mulling whether the Kuokuang Petrochemical Processing Zone should be built in Yunlin County or in closer proximity to raw materials in UAE.

UAE was one of the stopovers made by President Chen Shui-bian (陳水扁) earlier last month en route back to Taiwan after concluding a diplomatic tour of various allies in Central America and the Caribbean. Chen spent a day in its capital, Abu Dhabi.

According to the foreign ministry, the two countries are set to step up bilateral trade and investment, and Taiwan also plans to open a representative office in Abu Dhabi.

The ministry added that the nation's economic clout and success in turning itself into a rich country was the main reason the UAE wants to forge closer ties.

During Chen's visit, Taiwan and the UAE had agreed to form a strategic partnership to boost military and trade ties, despite the lack of diplomatic relations.
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