May 13, 2009 (China Knowledge) - China and Kuwait on Monday inked a long-anticipated deal to set up an oil refinery in Southeast China's Guangdong Province with a total investment of US$9 billion, the Kuwait News Agency reported.

The agreement, signed in Beijing by Kuwaiti oil minister Sheik Ahmed Al Abdullah Al Sabah and Chinese National Energy Administration Chairman Zhang Guobao, requires that refinery be located in Zhanjiang, a city on Guangdong's coast, instead of in Guangzhou, due to environmental concerns, according to the Kuwaiti report.

Sinopec<600028><0386>, the largest refiner in Asia by capacity, will hold a 50% share in the new venture, the largest ever Sino-foreign joint venture in China, while state-owned Kuwait Petroleum International will hold 30%. The other partners are U.S.-based Dow Chemical Co and Royal Dutch Shell PLC, which will each own a 10% share.

The new refinery is expected to be put into operation by 2013 and will have a daily output of 300,000 barrels.

The deal will help Kuwait, which boasts 10% of the world's proven oil reserves, realize its target of daily crude oil exports of 500,000 barrels to China by 2015.

In early April, a unit of Sinopec signed a five-year agreement worth US$350 million to build five oil and gas rigs for Kuwait Oil Co. This is the biggest rig project Sinopec has won so far, according to an earlier report from China Knowledge.