Kuwait plans to increase the volume of crude oil exports to China to 500,000 barrels a day (bpd), and eventually to 800,000 bpd, an executive at the state-run Kuwait Petroleum Corporation (KPC) said Saturday.
"With new and mutual cooperation between the two parties, there is a good sign of increasing the volume of our crude oil exports to China up to 500,000 bpd in the next three years, which is subject to availability," Nasser Al-Mudhaf, KPC's Managing Director of International Marketing, made remarks in an interview with Kuwait News Agency (KUNA) in Hong Kong.
Al-Mudhaf is currently in the city, where he signed a 10-year landmark deal on Friday with Unipec, the trading arm of China's top refiner Sinopec, to supply 300,000 bpd of crude oil, the biggest ever contract in KPC's history.
"This agreement is one of the most important crude contracts for KPC, and is considered the biggest sales deal by volume and revenues in all regions," he said. According to the official, the contract is not related to an ongoing joint project between KPC and Sinopec for the construction of a 300,000 bpd refinery, of which feedstock will be also supplied by KPC when the plant goes on-stream. "If the joint venture materializes, China-bound shipments may hit 800,000 bpd." he noted.
Also on Friday, Al-Mudhaf and Unipec President Chen Bo agreed to enhance energy cooperation between the two state-owned companies. The two put great emphasis on bilateral future cooperation and decided that their executives will meet annually at their headquarters either in Kuwait or China.
Al-Mudhaf and Chen also agreed to hold monthly meetings between officials from KPC's Beijing Representative Office and Unipec headquarters from next month, with the aim of the smooth execution of their long-term crude supply contract and support for business operations of KPC in the world's second biggest energy market.
Asked about a Memorandum of Understanding in June signed by KPC Chief Executive Officer Nizar Al-Adsani and Sinopec Chairman Fu Chengyu in Beijing on enhanced cooperation between KPC and Sinopec in such areas as crude reserves storage and refinery project, Al-Mudhaf replied that KPC is studying utilizing crude storages within China to facilitate the storages for the Chinese customers and market.
"This will give us more flexibility in the crude movements and operations in China, and will add more services in addition to the ones we have already provided," he said. "Sinopec is always growing and expanding in refining capacity in particular. I believe there will always be a room for sales expansion, especially both managements share same interests, security and reliability of supply."
Noting that Kuwaiti crude oil shipments to China in the 1st half of 2014 were 157,000 bpd, increased almost 9-fold from 18,000 bpd of 2004, the official said the figures are clearly noticeable evidence that the business relationship between the two sides has been enhanced and flourished since the establishment of KPC Beijing Office in 2005. "The Beijing office has also opened more opportunities and other areas of business cooperation between Kuwait and world's second-biggest energy importer. In addition, it has closed the gap and shortened the distance between the supplier and consumer in particular," he said.
He went on to say that his department is attempting to have a foot hole around the globe, as diversification is one of KPC's strategic directions, while focusing on the growing Asian market. "Asia is the logical geographical viable market with the fastest growing in demand. Moreover, it has the highest netback among other markets." In 2004, crude and petroleum products shipments to Asia account for around 80 percent of KPC's total exports, according to Al-Mudhaf. KPC is also considering multiple joint ventures within Asia -- China, India and Indonesia, he added.
Al-Mudhaf was accompanied by International Marketing Deputy Managing Director Jamal Al-Loughani, Team Leader Mohammad Al-Qallaf, Senior Crude Oil Sales Representative Anwer Al-Huraiti and Sales Representative Fahad Al-Radi. KPC Beijing Chief Representative Ahmad Al-Sallal was also present.