State-owned Kuwait Petroleum Corporation (KPC) signed a memorandum of understanding (MoU) with Sinopec to build a new refinery in the south of China, the Kuwait oil ministry said in a statement on 25 October.

The oil ministry did not provide any further details, but Kuwait has long been in talks with China to investment in its downstream sector. Sinopec began construction at its long-planned 300,000 barrels a day (b/d) Zhanjiang refinery and petrochemicals complex in late-2016. KPC signed an initial agreement to form a joint venture before construction began. The complex is expected to be completed in 2020.

Under Kuwait’s 2040 strategy, KPC plans to boost its oil production capacity to 4.75 million b/d, up from around 3.2 million b/d currently. Kuwait also wants to significantly build out its downstream sector, with a planned capacity of 2 million b/d by 2035, from 936,000 b/d currently.

This includes 1 million b/d of refining capacity outside of the Gulf state, along with integrated petrochemicals complexes at each site.

KPC is currently working to expand capacity to 1.4 million b/d, which includes starting up the greenfield 615,000 b/d Al-Zour refinery in 2020. Alongside Al-Zour, Kuwait plans to build a new integrated petrochemicals facility, known as the Olefins-3 project; it will use entirely liquid feedstock from the refinery.

Kuwait already has significant overseas refining assets, operated by Kuwait Petroleum International, a KPC subsidiary, including the 268,000 b/d Milazzo refinery in Sicily in a joint venture with Eni.

KPI also has a 35 per cent stake in Vietnam's new 200,000 b/d Nghi Son refinery which started operations this year. Construction is underway at another 230,000 b/d Duqm joint venture refinery in Oman, which should be ready in 2021.

Kuwait has been looking at potentially buying a stake in an as yet unidentified Indian refinery. All of these will consume Kuwaiti crude, providing KPC with a captive market.