VZCZCXRO3445
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0641/01 3240516
ZNR UUUUU ZZH
R 200516Z NOV 09
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 1107
INFO RUEHOO/CHINA POSTS COLLECTIVE 0344
RUEHBJ/AMEMBASSY BEIJING 0883
RUEHRH/AMEMBASSY RIYADH 0001
RUEHGH/AMCONSUL SHANGHAI 0275
RUEHCN/AMCONSUL CHENGDU 0276
RUEHSH/AMCONSUL SHENYANG 0285
RUEHHK/AMCONSUL HONG KONG 0345
RUEHIN/AIT TAIPEI 0252
RUEHDH/AMCONSUL DHAHRAN 0001
RUEHJI/AMCONSUL JEDDAH 0001
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFISS/DEPT OF ENERGY WASHINGTON DC 0038
RUEATRS/DEPT OF TREASURY WASH DC
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC 0015
RUEAIIA/CIA WASHDC 0324
RUEKJCS/DIA WASHDC 0320
RHHMUNA/HQ USPACOM HONOLULU HI
RUEKJCS/SECDEF WASHDC 0010

UNCLAS SECTION 01 OF 02 GUANGZHOU 000641 
 
SENSITIVE 
SIPDIS 
 
EMB BEIJING FOR DOE 
USDOE FOR INTERNATIONAL AFFAIRS 
USDOE FOR FOSSIL POLICY AND ENERGY 
STATE FOR EAP/CM, S/CIEA AND EEB/ESC 
STATE ALSO PASS USTR FOR CHINA OFFICE 
 
E.O. 12958: N/A 
TAGS: ENRG ECON EPET SENV PGOV TRGY CH
SUBJECT: Fujian Province Triples Its Oil Refining Capabilities 
 
GUANGZHOU 00000641  001.2 OF 002 
 
 
(U) This document is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) Summary: The opening of the Fujian Integrated Refining & 
Ethylene Joint Venture Project (FREP) Commercial Operation will 
increase Fujian's annual refining capacity from 4 million to 12 
million tons.  The project is a joint venture between China's 
SINOPEC (50%), Exxon-Mobil (25%) and Saudi Arabia's Saudi-Aramco 
(25%).  U.S. and Saudi partners are skeptical about near-term demand 
growth, but China wants proceed with expansion plans.  Chinese 
officials estimate the facility and associated tie-in manufacturing 
will create 25,000 jobs in the province.  End summary. 
 
Higher Production and Job Creation 
---------------------------------- 
 
¶2. (U) The Fujian Integrated Refining & Ethylene Joint Venture 
Project (FREP) Commercial Operation formally came online after an 
opening ceremony on November 11.  FREP is a joint venture between 
SINOPEC, Exxon Mobil, and Saudi Aramco, where SINOPEC has a 50% 
share and Exxon-Mobil and Saudi-Aramco each have a 25% stake.  The 
project will increase Fujian's annual refining capacity from 4 
million to 12 million tons.  In addition, a series of large scale 
chemical facilities, including an ethylene plant, polyethylene and 
polypropylene units and an aromatics complex have been constructed. 
There are also plans for additional tie-in/by-product manufacturing 
facilities to be built in neighboring areas of Quanzhou.  A Fujian 
Foreign Affairs Office official commented that a similar project in 
Liaoning had created 25,000 jobs, including those associated with 
the "upstream" and "downstream" companies. 
 
¶3.  (U) ExxonMobil CEO Rex Tillerman, Fujian Governor Huang 
Xiaojing, Sinopec Chairman Su Shulin, Saudi Arabia's Oil Minister 
Ali Al-Naimi, Saudi Aramco CEO Khalid Al-Falih, the CG, and other 
dignitaries participated in the ribbon cutting ceremony.  (Note: 
While in Quanzhou, the Consul General also met with Acting Mayor Li 
Jianguo and other city leaders,  spoke with 160 students at Huaqiao 
University about President Obama's visit, promoted trade and 
investment, and visited companies involved in the shoe-manufacturing 
and stone industries.) 
 
Green Technology Featured Prominently 
------------------------------------- 
 
¶4.  (U) The complex also features a state-of-the-art 250 megawatt 
cogeneration3 facility, which will meet the majority of the site's 
power demands.  The facility uses waste-to-energy technology to 
produce electricity and heat by burning waste gases from the 
refinery, resulting in lower operating costs and significantly 
reduced greenhouse gas emissions. 
 
Villagers Moved to Make Way 
--------------------------- 
 
¶5.  (SBU) FREP is located on Meizhou Bay, an attractive location for 
this type of facility because of its accessibility by sea.  The 
Fujian provincial government reportedly re-located 30,000 people off 
the land where the plant was built.  Security was tight at the 
opening ceremony, with specific instructions given to guests to stay 
in designated areas; however, residential apartment housing was 
clearly visible at distances of about 10 meters from the outer 
perimeter walls of the plant. 
 
Domestic Demand Uncertain 
------------------------- 
 
¶6.  (SBU) A high-level executive associated with the project told 
 
GUANGZHOU 00000641  002.2 OF 002 
 
 
the Transformational Diplomacy Officer that the Fujian government 
still wants to expand the facility, but that the other members of 
the joint venture were not convinced that domestic market demand 
would support immediate expansion, and were therefore proceeding 
with caution.  The executive indicated that while Exxon viewed 
market access as an important step, the firm had some concerns with 
the central authorities' control over projects profits as well as 
access to downstream markets. 
 
 
GOLDBECK