PetroChina Company Limited (NYSE:PTR) and INEOS Group Holdings plc have entered into a framework agreement stating the companies will work toward forming joint ventures related to trading and refining activities at the Grangemouth refinery in Scotland and the Lavera refinery in France.
All companies will work towards the formation of the proposed joint ventures by the end of June 2011.
PetroChina’s ultimate parent company, China National Petroleum Corporation (“CNPC”) and INEOS, are today also signing a strategic co-operation agreement to share refining and petrochemical technology and expertise between their respective businesses.
The signing of these agreements is to be witnessed by Li Ke Qiang, the Chinese Vice Premier, and Nick Clegg, the British Deputy Prime Minister.
If the deals are completed successfully, they will be of great importance for PetroChina’s global allocation of resources and market portfolio, exploring the high-end European market, as well as establishing PetroChina’s European oil and gas operation centre. They will improve the long-term sustainability of the INEOS refineries, enhance security of supply for customers and secure jobs and skills in both the UK and France. After the completion, both sites will remain integrated into INEOS’s downstream petrochemical production.
Senior managenement of both PetroChina and INEOS show support and appreciation for the deals, and believe that these deals are the start of a long-term relationship between PetroChina, one of the world’s largest integrated oil company, and INEOS, one of the world’s largest petrochemical companies. The deals are consistent with PetroChina’s strategy of building a broader business platform in Europe and of becoming a leading international energy company, and also present a clear opportunity for INEOS to progress its aim of growing and strengthening its business.
The Grangemouth refinery is located on the Firth of Forth with direct access to crude oil and gas from the North Sea. The Grangemouth refinery processes around 210,000 barrels of crude oil per day and provides fuel to Scotland, Northern England and Northern Ireland.
The Lavéra refinery processes 210,000 barrels of crude oil per day. It is located on the coast of the Mediterranean crude oil trading basin, next to the port of Marseille and adjacent to a crude oil terminal. The refinery supplies fuel by pipelines into France, Switzerland and Southern Germany.
Both sites are integrated into INEOS’s downstream petrochemical production and remain strategic to its long-term business.
Subsequent to the signing of the framework agreement which defines the principles under which PetroChina International and INEOS will work towards forming the joint ventures related to refining and trading, there will be a period of consultation prior to signing a binding agreement, subject to the approval of related regulatory bodies.