China gives nod to biggest petrochem complex JV

China has approved a multi-billion dollar oil refinery and chemical project in the biggest joint investment on the mainland, state media reported.

Sinopec, the country's second biggest oil producer, and Kuwait Petroleum have been given approval to start "initial work" in Nansha of Guangdong Province, China's economic hub, the China Daily said.

The green signal from the National Development and Reform Commission, the top planning body, came following months of feasibility studies, it said, adding it would be the biggest joint investment ever since China launched its opening-up policy in 1978.

Earlier reports had put the investment at $5 billion, surpassing the $4.3 billion petrochemical complex in Huizhou, Guangdong, which is co-owned by Shell and CNOOC, China's third biggest oil company.

Quoting an NDRC official, the newspaper said the proposed ethylene plant has an annual production capacity of one million metric tonnes but said he did not disclose the capacity of the refinery.

An official of Guangdong said, "the initial work will be started soon". The facilities are expected to begin operation in 2010. China and Kuwait had signed a memorandum of understanding on the refinery in December 2005.

In August, Sinopec said the Nansha plant would be able to process 12 million tonnes of crude oil a year and the ethylene unit would have an annual capacity of 800,000 to one million tonnes.

The Guangdong Province is the manufacturing and chemical powerhouse of China and contributes 10 per cent of the country's economic growth but has been hit by tight fuel supplies for years.