FINANCIAL TIMES: Shell is following BP with Kuwait Petroleum venture: “BP leads one of the consortia while Shell is part of a rival bidding team led by ExxonMobil. ChevronTexaco leads the third consortium.” (ShellNews.net) 23 March 05
By James Boxell
Published: March 23 2005
Royal Dutch/Shell has followed the lead of BP, its bigger rival, by striking a deal with the Kuwait Petroleum Corporation to explore refining and marketing ventures in China and India.
The Kuwaitis are keen to expand their refinery capacity to exploit Asia's rapidly growing oil markets and now have the option of working with either BP or Shell, the second- and third-biggest oil companies in the world, respectively.
BP and Shell will hope the closer relationship helps win them access to Kuwait's oil fields.
The Middle East's third-biggest oil producer, which aims to increase daily crude oil production from 2.5m barrels a day to 4m barrels a day, is considering bids from rival international consortia to participate in Project Kuwait, a $9bn (£4.7bn) plan to revitalise a cluster of its oil fields.
BP leads one of the consortia while Shell is part of a rival bidding team led by ExxonMobil. ChevronTexaco leads the third consortium.
The deals between Shell and BP and KPC come at a time when interest in refining is resurgent because of a lack of capacity and high margins, especially in countries such as China.
Much of the oil that Kuwait produces is cheaper heavy or medium-grade oil, so it is seeking more capacity to refine that into high-grade petroleum and oil products.
ExxonMobil, Saudi Aramco - KPC's regional rival - and Sinopec are spending $3.6bn to triple the size of an oil refinery and build a chemical plant in China's Fujian province.
Abdullatif Al-Houti, head of KPC's international operations, said the deals would "link our hydrocarbon resources with Shell and BP's technology and background" in China and India.
KPC has extensive refining and marketing operations in Europe, including refineries in the Netherlands and Italy. Kuwait holds the world's fourth-largest oil reserves.
Shares in Shell closed unchanged at 585½p.
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