China National Petroleum Corp (CNPC) is scheduled to sign a multibillion-dollar, 20-year deal today to buy fuel from what is expected to be Malaysia's largest oil refinery, part of an effort to enhance energy security and hedge domestic fuel price risks, sources said.
The mainland's largest oil and gas producer is also in talks to buy a stake in the planned US$10 billion refinery, which is being developed by privately owned Merapoh.
Building of the refinery in Kedah, northwest Malaysia, is to begin later this year and be completed by 2013. It will have a daily processing capacity of 350,000 barrels of crude oil.
CNPC signed a memorandum of understanding in late 2007 to buy all of the Malaysian refinery's output of products including petrol, diesel and kerosene. At the time, Merapoh estimated the deal would be worth US$6 billion a year.
Merapoh says the project will be funded by local and international financial institutions in addition to investors from China, Dow Jones reports.
A Merapoh source said yesterday the agreement to be signed today would include CNPC's commitment to buy fuel but not an investment in the refinery.
'They are still in talks on CNPC's wish to take a stake in the refinery, but no deal has been sealed,' the source said.
