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Exxon Mobil, China’s Sinopec and Saudi Arabia’s Aramco have reached agreement on design work for a US$3.5bn expansion of a refinery in China and the addition of a chemical complex.

Fujian Petrochemical claims in a joint statement the companies had agreed to jointly fund what they called front end loading design activity.

The concern is jointly owned by China Petroleum Chemical Corp (Sinopec), the Fujian government, along with ExxonMobil China Petroleum and Petrochemical Co Ltd and Aramco Overseas Co.

The work includes completing initial engineering and design, selecting contractors, finalizing cost estimates and the development of the pre-ordering of long-lead time equipment.

The parties will then make a final decision on joint venture formation and project construction.

Fujian Petrochemical will hold a 50% stake in the integrated project joint venture if it is formed, with ExxonMobil and Saudi Aramco each holding 25%.

The project would result in a world-class integrated refining and chemicals complex located at Quangang in southeastern Fujian province.

ExxonMobil, Sinopec and Saudi Aramco also agreed to submit a joint feasibility study for a fuels marketing joint venture in Fujian to the Chinese government.

The Fujian integrated project would expand the existing refinery in Fujian to 240,000 barrels a day from 80,000 barrels with a significant product upgrading capability, the three companies said.

The upgraded refinery will be designed to refine and process sour Arabian crude oil.

The project, expected to be completed in the first half of 2008, also involves the construction of an 800,000-ton-per-year ethylene steam cracker, polyethylene and polypropylene units and a new 700,000-ton-per-year paraxylene unit.

China’s demand for ethylene has been increasing by 10% a year in the last few years, with domestic capacity only able to meet 50% of demand, industry sources said.

The fuels marketing joint venture plans to manage and operate more than 600 service stations and a network of terminals, pending central government approval of the joint feasibility study and joint venture contract.