State-run Kuwait Petroleum Corporation (KPC) and China's UNIPEC signed a landmark deal on Friday that will almost double crude oil deliveries over a decade, the biggest-ever contract in KPC's history.
Under the agreement, KPC will provide Unipec crude oil, starting from 2014, with the volume exepeted to reach 300,000 barrels per day (bpd).
KPC reached the historic 10 year deal with Unipec, the trading arm of China's top refiner Sinopec, to replace the 160,000-170,000 bpd supply contract that had lapsed. According to KPC, it is a strategic contract based on cost-and-freight (C&F) basis, which will involve utilizing of Kuwait Oil Tanker Co. fleet. Friday's deal is within the same direction of a Memorandum of Understanding (MoU) signed by KPC and Unipec in November 2011.
In a statement to Kuwait News Agency (KUNA) after the signing ceremony in Hong Kong, KPC International Marketing Managing Director Nasser Al-Mudhaf, who led the Kuwaiti side, said the successful conclusion of the agreement is important not only for KPC, but also for His Highness the Prime Minister of Kuwait Sheikh Jaber Al-Mubarak Al-Hamad Al-Sabah, Oil Minister Dr. Ali Al-Omair and KPC Chief Executive Officer Nizar Al-Adsani. "We are very proud to sign this 10-year contract, which marks an excellent achievement as a package," said Al-Mudhaf.
"The deal comes at a right time, because this is the first contract on C&F basis with the use of our own vessels to deliver crude oil. It will help smooth operation, production and exports from Kuwait," the official said. According to Al-Mudhaf, with changes in Europe and the US, which KPC used to deliver crude oil on C&F basis, those markets are almost closed currently. "China is our new outlet where we will use more than 50 percent of our fleet for deliveries of crude oil," he noted.
Stressing that China is world's second-largest importer of crude oil and petroleum products with its fastest growth in oil demand, Al-Mudhaf said such market is considered to be one of the most strategic and promising energy markets.
"Therefore, KPC has placed China on its priority list, and this is agreement is one of the most important crude contracts for KPC. With this landmark contract, I think we will be the third-largest crude oil supplier to China." The world's seventh-largest oil exporter supplied about 160,000 bpd of crude to China in the first half of this year, a nine-fold increase from 18,000 bpd in 2004, according to data from the Chinese government.
The ceremony was also attended 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 at the event.
Established in 1993, UNIPEC is a wholly-owned subsidiary to Sinopec and is China's largest international trade company. UNIPEC trades on the international market in crude oil, refined products, natural gas and chemical feedstock and handles Sinopec's logistics business.