Kuwait to start talks on Thai oil refinery soon

Kuwait to start talks on Thai oil refinery soon

SINGAPORE (Reuter): Kuwait is seeking refining and trading opportunities in Asia and will start serious talks soon with petrochemical giant Thai Petrochemical Industry Plc on a new refinery in Thailand, a visiting oil official said.

"We will be talking seriously with TPI," Hani Hussain, managing director of state-owned Kuwait Petroleum Corp (KPC), told Reuters late on Wednesday.

"A separate KPC delegation will be in Thailand in the next two weeks and most likely they will discuss on setting up a grassroot refinery."

He declined to reveal where this refinery might be located or its projected capacity.

Among issues to be discussed is KPC's stake in the refinery. "We seek to have a substantial stake in the venture," he said.

The refinery's main product output would be used as feedstock for TPI's petrochemical plant, he said.

A key factor in the proposed contract is that the refinery must use Kuwaiti crude as the main supply input, Hani added.

Hani was in Singapore on the first leg of his East Asian trip. He left Thursday for South Korea and will be proceeding to Taiwan and Japan.

Before the Gulf War, Thailand had asked Kuwait to consider joint investment in a refinery in southern Thailand, as part of Thai government plans to develop port and oil facilities on the Southern Seaboard along the Isthmus of Kra.

Kuwaiti officials had previously said KPC was more interested in expanding an existing Thai refinery, rather than developing a new facility.

Hani said following its recent memorandum of understanding with Indian Oil Corp to build a refinery in the eastern Indian state of Orissa, KPC is now seeking a second joint venture for a refinery on India's west coast.

Hani said Kuwait is also in "advanced talks" with Pakistan to build a US$1 billion refinery in the country and he expects a memorandum of understanding to be concluded by the end of the year.

These projects are part of KPC's plan to establish at least 400,000 bpd of refining capacity through joint ventures in Asia by the next decade.

Hani said that so far Kuwait does not have "anything definite" in its plans for refinery developments in China.

Neither is KPC keen to invest in Indonesia as the Indonesian government is seeking export-oriented refineries, rather than facilities that are geared for the domestic market, Hani said.

KPC's policy is to develop refineries which would process Kuwaiti crude which could be sold in the domestic market, he said.

KPC has an ongoing deal to process some 30,000 barrels per day of Kuwaiti crude in Singapore Petroleum Co (SPC) from which it obtains jet fuel, diesel and fuel oil for its trading.

KPC also supplies products from Kuwait on a term basis to SPC and Indonesia.

In Singapore, KPC exchanged views with SPC but "there has not been anything of substance from the meeting," Hani said. "Asia is a very important area and one of our goals is to study ways to diversify our outlets. We look for secure outlets in the form of term contracts."

KPC is also in talks with Thailand and Vietnam to sell them products.