UPDATE 2-CNPC, Shell refinery JV in deal with local govt

* Shell likely to lead in the Shell-Qatar side* Imported condensate eyed as feedstock for petchemBEIJING, Oct 13 (Reuters) - A proposed oil refining and petrochemical joint venture between China’s CNPC, Royal Dutch Shell Plc and Qatar signed an initial agreement with local authorities in east China’s Zhejiang province, where the mega project will built, the Chinese company said on Thursday.The project, to include a 400,000-barrel-per-day oil refining and 1.2 million tonnes-per-year ethylene plant, was approved by the National Development and Reform Commission, the country’s macro planner, in June, industry officials said.Pending final government approval, which also includes environmental clearance, the greenfield refinery would give Shell and Qatar their first solid foothold in the world’s second biggest oil consumer, which is in the midst of a refinery building boom.The Taizhou venture, in coastal Zhejiang province, will use imported condensate and other raw materials to produce ethylene and other petrochemicals, CNPC said in a company newspaper.”The agreement further clarifies work scope and targets for each side, reflecting sincere intentions to cooperate,” it said.Qatar is the world’s largest liquefied natural gas (LNG)producer and pumps increasing amounts of condensates as a by-product of its gas production.In January, Qatar Oil Minister Abdullah al-Attiyah and Wang Yong, head of the state-owned Assets Supervision and Administration Commission (SASAC), which is both a regulator and shareholder in most of China’s big state-owned companies, pledged to strengthen cooperation in the oil and gas sector and discussed the Taizhou project.Industry experts told Reuters that the project, likely to cost close to $10 billion, would be led by Shell on the foreign partners’ side. Such an alliance follows a giant supply agreement between Qatar and China.”The project looks promising to win Chinese government’s final blessing, as China may see Qatar as quite a stabilising factor among the Middle East resource nations,” said an industry veteran.CNPC, parent of PetroChina , Asia’s top oil and gas firm, will take 51 percent stake in the project and Shell and Qatar to have 24.5 percent each, according to Chinese media reports.China guards its fuel market tightly against foreign participation. So far only a few foreign firms, including Exxon Mobil , Saudi Aramco and Total , via joint ventures with Chinese partners, have direct marketing access to the roughly 9 million bpd fuel market, the world’s second largest after the United States.

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