Exxon Corp. is moving to expand its operations in China.
Esso China Ltd. (ECL) advanced plans to step up exploration in western China, and two Exxon affiliates signed agreements for downstream Chinese deals.
ECL in two agreements with China National Petroleum Corporation (CNPC) obtained exploration rights to a 2.9 million acre tract in the Qaidam basin and a 7.4 million acre tract in the Songliao basin.
In letters of intent:
- Exxon Chemical Eastern Inc. (ECE) agreed with Sinopec Gaoqiao to build an integrated normal paraffin-linear alkyl benzene plant in Pudong New Area, Shanghai.
- Esso China Inc. (ECI) and Sinopec Guangzhou agreed to investigate the formation of a joint venture to manufacture and market petroleum and petrochemicals.
UPSTREAM ACTION
ECL plans to begin joint geological and geophysical evaluation of its exploration acreage with Chinese technical organizations upon approval by the Chinese Ministry of Foreign Trade and Economic Cooperation.
The Qaidam basin contract gives ECL the right to explore and develop the Dafengshan block, the second onshore tract in western China under contract by the Exxon unit. The Qaidam basin lies 1,350 miles west of Beijing.
With its contract in the Songliao basin, ECL gained the right to explore and develop zones under currently producing zones in the western and northern portions of the basin.
The contract area is adjacent to Daqing oil field, about 850 km northeast of Beijing.
DOWNSTREAM PROJECTS
ECE's agreement with Sinopec Gaoqiao would set up a joint venture aimed at supplying the domestic biodegradable detergent industry by 1998 with normal paraffin and linear alkyl benzene.
The joint venture's manufacturing plant, to be built next to Sinopec Gaoqiao's refinery/petrochemical complex, would have initial design capacities of 70,000 tons/year of normal paraffins and 72,000 tons/year of linear alkyl benzene.
ECI and Sinopec Guangzhou in their letter of intent agreed to conduct a prefeasibility study for a joint venture refinery expansion project and marketing operation.
The refinery expansion would more than double to 240,000 b/d the crude charge capacity of refining units at Sinopec Guangzhou's Guangdong province petrochemical complex in southern China.
BUILDING A RELATIONSHIP
Exxon Chairman Lee Raymond, in China to meet with key government and industry leaders and to attend the contract signings, said the agreements further strengthen ties between Exxon and China's energy and petrochemical industries.
Raymond noted the agreements build on a relationship Exxon has had with China dating back more than a century, when Exxon's predecessor company, Standard Oil Co. of New Jersey, pioneered the marketing of kerosine for lamps and cooking stoves in China.
Exxon in 1979 began a relationship with China's energy sector with an offshore exploration cooperation agreement that included a seismic acquisition program in the South China Sea. That was followed with the acquisition of two tracts in 1983.
In 1982, Exxon opened a service station at Shenzhen, the first foreign brand service station in China. In 1985, ECE opened a liaison office in Beijing and 3 years later entered a technology licensing arrangement with Sinopec Lanzhou for manufacture of lubricant additives.
A little more than a year ago, Exxon further strengthened its relationship, agreeing with China National Offshore Oil Co. to explore a tract in the East China Sea and signing with CNPC the first production sharing agreement in the Tarim basin.
Copyright 1995 Oil & Gas Journal. All Rights Reserved.
