A world-class collaboration

March 31, 2010

Major new supplies of transportation fuels and petrochemical feedstocks are flowing to emerging markets in China following the startup of the Fujian Integrated Refining and Ethylene Joint Venture Project and the Fujian Fuels Marketing Joint Venture.

These two collaborations created China’s first integrated refining, petrochemical and fuels marketing ventures with international participation and represent the outcome of 10-plus years of collaboration between China Petroleum & Chemical Corporation (Sinopec), the Fujian Province, Saudi Aramco and ExxonMobil.

A spirit of real victory
More than 70 dignitaries gathered at a ceremony in November in Quanzhou, Fujian Province, to mark the full commercialization of the refining and petrochemical complex. Participants offered congratulations in English and Mandarin to colleagues and employees.

“There was a spirit of real victory at the event,” says Sherman Glass, president, ExxonMobil Refining & Supply Company. “All of the participants conveyed a deep appreciation for the strong partnership that led to this remarkable achievement. The specialized knowledge, skills and capabilities of each partner were essential to the project’s success.”

The partners’ contributions included ExxonMobil’s refining and petrochemical integration expertise and management systems, which deliver greater efficiency and cost savings; Sinopec’s construction know how and intimate understanding of the Chinese market; Saudi Aramco’s reliable supply of crude oil; and the Fujian government’s deep insights into the local environment, people and processes.

Parallel to the refining and petrochemical project, a related agreement among ExxonMobil, Sinopec and Saudi Aramco bolsters the venture’s presence in China’s fuels-marketing business. Diesel and gasoline products produced at the complex will be marketed in Fujian through some 750 retail outlets and a supporting network of distribution terminals managed and operated by the joint venture.

Long-term focus
Concept discussions for the Fujian projects date back to 1995 when ExxonMobil and Sinopec signed a letter of intent to jointly study refining opportunities, and Saudi Aramco joined the venture the following year. As the Chinese government gradually opened more of its energy sector to foreign participation, discussions began in 2004 that led to the signing of both the manufacturing and fuels marketing joint-venture agreements three years later.

Work to triple the size of an existing refinery at Quanzhou and build an adjoining worldclass petrochemical plant began in 2005. Construction peaked in 2008 with more than 25,000 workers on-site, followed by facilities startup in 2009. The expanded complex covers more than 1,200 acres.

Capitalizing on opportunities
ExxonMobil’s participation in the Fujian ventures is an integral part of the company’s efforts to enhance its business presence in China and the Asia-Pacific region. China, with more than 1.3 billion people and rapidly rising demand for fuels and petroleum-based consumer products, is a booming economy, bringing with it significant opportunities.

“It’s extremely important to grow our presence in the Chinese market,” says Steve Hart, vice president of planning and project execution, ExxonMobil Refining & Supply. “China is the second-largest energy consumer behind the United States, and its energy use is growing at more than double the rate of many nations.”

Adds Hart: “We felt that the best way to capitalize on business opportunities in China was to align with strong joint-venture partners and build a worldclass, integrated refinery and petrochemical manufacturing complex, along with a marketing joint venture. The Fujian complex supplements ExxonMobil’s already strong presence in the Asia-Pacific region.”

The power of integration
ExxonMobil considers the integration of its refining and chemical operations a key competitive advantage. “A real benefit of integrating refining and chemical facilities is the synergy of feedstocks,” explains Scott Sullivan, lent by ExxonMobil to serve as deputy general manager of the Fujian Refining & Petrochemical Company joint venture. “Refining streams are used as feedstock in the production of petrochemicals, and byproducts from the chemical facilities are returned to the refinery for conversion into high-value products such as motor fuels.

“Integration maximizes operating flexibility and captures associated cost savings,” says Sullivan. “It also allows sharing of utilities, mechanical shops, security, medical and other essential services. It’s quite an efficient operation and is typical of how ExxonMobil optimizes its refining and chemical businesses around the world.”

A steadfast belief
In looking back on the Fujian project accomplishments covering more than a decade, Glass cites the contributions of many talented people across ExxonMobil.

“Our employees were dedicated to this effort and held a steadfast belief that we could make this project a major success.”

That belief led to the formidable Fujian complex, which should bring long-lasting benefits to ExxonMobil, its co-venturers and the entire Asia-Pacific region — just like the proverbial Chinese dragon.