The two companies signed a memorandum of understanding in the year 2005 to set up a refinery and petrochemicals complex with a producing capacity of 30,000 barrels per day.
Zhanjiang is expected to use crude supplied from Kuwait.
Due to the high crude prices at the global level the Chinese refiners are incurring losses which resulted in Sinopec hesitancy with regards to the joint venture project.
Chinese refiners have suffered losses as global crude prices have outstripped state-set retail prices, giving Sinopec second thoughts on the joint venture
Sinopec vice chairman Wang Tianpu was quoted by Reuters as saying that the deal is in the company’s commercial negotiations and is still going on.
"It is not decided yet. China’s fuel pricing mechanism is not in place, so it is hard to make decision," Tianpu added.
The deal between the two companies was approved by the Chinese government in March 2011.
In 2012 Sinopec introduced France-based multinational oil and gas company Total as a partner in the project.
Sinopec holds 50% interest, KPC has 30%, and Total owns 20% equity in the refinery.
