Qatar, Shell Sign China Refinery, Petchem Deal

Although it supplies less than one percent of China's crude imports, the refinery and petrochemical venture represents Qatar's first foray into the massive Chinese oil market, following Middle East peers Saudi Arabia and Kuwait.

The deal, signed on Monday, cements China's energy ties with Qatar, the world's top exporter of liquefied natural gas (LNG), just two months after the Asian giant agreed to buy from Qatar a total of five million tonnes per year (tpy) of LNG for 25 years.

It will also help usher in Shell after years of hard work trying to break into the tightly state-controlled Chinese fuel market.

The deal, signed in Doha during Chinese Vice President Xi Jinping's state visit, reaffirms analysts' views that Beijing's energy industry policy favours foreign partners with a combination of access to resources and top-notch technology.

But Monday's letter of intent did not give an investment figure, nor the location, scale or timeframe of the proposed multi-billion-dollar venture.

PetroChina, Asia's top oil and gas producer and China's second-largest refinery, will own 51 percent in the proposed joint venture, while Shell and Qatar will own 24.5 percent each, Shell and PetroChina parent CNPC said in separate statements.

The deal also covers join marketing of products, Shell said.

The partnership started with the gas link rather than oil, as Qatar is among the smallest producers in crude oil cartel OPEC but the world's largest exporter of LNG.

China is keen to boost use of gas, either via pipelines from Turkmenistan in central Asia or tanker-shipped LNG, from Algeria to Australia, to fuel its rapid economic growth while trying to cut down carbon emissions.

In April, PetroChina agreed to buy from Qatar three million tonnes of LNG a year for 25 years from 2011. China's number three oil and gas firm, CNOOC, also signed a deal to buy from Qatar two million tpy of the clean fuel from 2009.