China has granted the future Tianjin refinery, a joint project of Russia's Rosneft and China National Petroleum Corporation (CNPC), the right to export its oil products, Russia's President Vladimir Putin said at a conference Friday.
"Today, at a bilateral meeting the leader of the People's Republic of China, Hu Jintao, has informed us that the Tianjin joint venture will receive the right to buy and sell oil products, export them and supply to the domestic market," Putin said at the Asia-Pacific Economic Cooperation CEO Summit in Russia's Vladivostok.
It is the first time Chinese authorities have granted such a right to a project with foreign capital, Putin said, adding that this is another step in further improving economic relations between China and Russia.
The decision is to support efficiency of the joint project, Rosneft CEO Igor Sechin told reporters on the sidelines of the summit.
"This decision drastically raises the efficiency of [the refinery's] operations," Sechin said.
Rosneft and CNPC signed an agreement to conduct the front-end engineering design study for the 260,000 barrels/day refinery in northern China and held a groundbreaking ceremony to mark the start of the construction in September 2010.
Under the agreement, the partners also planned to build around 500 service stations in northern China.
Little progress has been seen on the project since then, with questions raised over the plant's economic viability.
In June, Rosneft deputy CEO for refining Igor Pavlov said that the two partners were looking into ways to make the Tianjin project more economically attractive.
"[We are] considering economic criteria in order to make the project mutually beneficial," Pavlov told reporters, when asked if the project was shelved.
The partners "are considering several options to make it economically efficient in a situation when domestic prices of oil products in China are below [international] market prices," Rosneft deputy CEO Larry Bates added.
He could not say when the discussions could be finalized.
A source familiar with the talks told Platts previously that the partners are also discussing possible construction of a petrochemical complex "to improve the economics of the project."
Initially, the refinery was expected to be built by 2015, at a cost of $5 billion.
Rosneft and CNPC hold 49% and 51% in the refinery, respectively.
