29-11-04 ExxonMobil and Saudi Aramco started engineering work on a $ 3.5 bn refinery in China's southern Fujian province, a Saudi official said.
"We have begun some basic engineering work on the refinery," Abdulaziz al-Khayyal, Saudi Aramco's senior vice president of refining and oil marketing, said. "We expect to sign a final joint venture agreement by next year."

Exxon, Aramco and China Petroleum & Chemical Corp. plan to expand the refinery to process 240,000 bpd of oil from 80,000 bpd. Exxon and its partners are also building chemical plants, including an 800,000-tpy ethylene plant among other chemical units.
Saudi Arabia, the world's biggest oil exporter, is investing in oil refineries to secure outlets for its crude oil exports, half of which are consumed in Asia. The kingdom may expand its oil output capacity by 14 % to ease concern of shortages as demand rises in China and other markets.

China passed Japan as the world's second-largest oil consumer last year, after the US. It will need more than 10 mm bpd of crude by 2030, up from 6.3 mm now, according to the International Energy Agency, an adviser to 26 industrialized nations. China's crude imports rose 34 % in October as domestic production failed to keep up with soaring demand.
Saudi Arabia was the second-largest overseas supplier of crude to China in October after Angola, supplying the Asian country with 1.5 mm tons (10.6 mm barrels), Beijing-based Customs General Administration said.

Saudi Aramco wants to invest in Asia and elsewhere to expand its market share. The company has holdings in refineries in the US, Japan, Greece, the Philippines and South Korea that process close to 2.3 mm bpd of oil into fuels.
"We are looking to invest in other refineries with other partners, but we have a higher priority in the Far East because that's where the growth is," al-Khayyal said.
Aramco owns 35 % of S-Oil Corp., South Korea's third-largest oil refinery; 40 % of Petron, the largest Philippine refiner; 42 % of Motor Oil Hellas, Greece's second-largest oil refiner; and 15 % of Showa Shell Sekiyu, Shell's Japanese refining unit. Aramco is also considering a stake in Hindustan Petroleum, India's second-largest state refiner, and may get more Asian sales by taking part in China's plan to build an oil stockpile by 2005.

The company also may expand the capacity of Aramco's joint-venture refineries with Shell in the US, which process close to 840,000 bpd of oil from four facilities. Aramco supplied the US with 1.5 mm bpd of oil last year. Aramco also might invest in refineries outside the US that can serve the market, al-Khayyal said.
Saudi Aramco is pumping about 9.5 mm bpd of oil. It tries to maintain spare capacity of 1 mm to 1.5 mm bpd of oil. Saudi Arabia is expected to replace the United Arab Emirates as the top oil exporter to Japan this year after Aramco acquired a stake in Shell's Japanese refining unit and agreed to supply it with at least 300,000 bpd of oil, he said.
"The joint venture has gone into effect and we havestarted to bring crude to Showa," al-Khayyal said.

Aramco agreed in July to buy a stake in Showa Shell, Japan's fourth-largest oil refiner, which processes about 545,000 bpd of oil, according to the company website. Japan's imports of Saudi oil in the first half of Japan's fiscal year, which starts in April, rose 0.3 % to 17.9 mm kiloliters (112 mm barrels) from a year earlier period, the Ministry of Economy, Trade and Industry said in a trade report.
About 43 % of Aramco's oil exports, which reached 6.5 mm bpd of oil last year, went to the Far East. Aramco produced about 8 mm bpd of oil in 2003.