Chevron may await 'premier partner' to crack China

SINGAPORE, Sep 29 (Reuters) Chevron Corp., lagging its peers in China's downstream sector, may wait to find the right partner before breaking into the world's second-biggest oil market, as it did in India, a senior executive said on Friday.

Mike Wirth, Chevron's global head of refining, also said he believed the door was still open for foreign investment in the sector as China's shift toward strategic deals with oil-rich nations risked leaving it more exposed to disruptions.

''We've not found a larger opportunity that looks like the right one to us. A year ago, if you'd ask me about India, my answer would have been the same,'' he told Reuters in an interview. ''We continue to look at opportunities (in China).'' In April, Chevron paid 0 million for a 5 percent stake in a 580,000 barrels per day (bpd) refinery being built by Reliance Industries Ltd., with an option to buy another 24 percent. It is the only major firm with a stake in an Indian refinery after BP pulled out of a different venture earlier.

''We've found a unique relationship with a premier partner (in India), and I would not underestimate how important that is in our view of the long haul,'' he said.

Reliance, India's top private firm, operates one of the world's most advanced refineries at Jamnagar, which will become the biggest refining complex in the world when the new plant is completed. It is oriented to the export market, avoiding India's regulated retail sector, where refiners sell some fuel at a loss.

Chevron's pact with the Indian firm was broadly drawn to leave room for exploring more co-operation in the future, including possible joint investments overseas, Wirth said.

''We believe this is not just a refining deal,'' he said. ''We have not ruled a lot of things out as yet.'' BEHIND RIVALS China's downstream sector is dominated by state-owned Sinopec Corp. and PetroChina, whose plants tend to be older and smaller-scale than Reliance's, while Beijing has made clear new projects should be focused on domestic supplies.

Beijing, anxious to keep inflation tame and its farmers happy, has also not allowed retail fuel prices to rise as fast as global crude costs, causing refiners to lose billions.

''It's really looking at the strategic fit, the environment, the partner, your alternatives at the time,'' he said. ''It doesn't say we wouldn't do something with Sinopec or PetroChina either.'' The major would also considering partnering CNOOC, which it defeated last year in the battle to acquire Unocal, he said.

CNOOC is building a new refinery in Huizhou by 2008.

Chevron, the world's fourth-biggest listed oil major, says it was the first multinational oil firm to reestablish operations in China in 1979, but has not paced rivals in the downstream.

BP and Shell both own large stakes in major petrochemical plants that launched last year. Exxon Mobil Corp. is buying into a major refinery expansion in Fujian while Total owns a share in the export-oriented WEPEC plant.

By contrast, Chevron operates 94 Caltex-branded retail stations in Hong Kong and Macau, plus an LPG terminal, two lubricant-blending facilities and a small polystyrene plant.

''There have been a lot of announcements (but) translating an intent into a business in China is not a small task,'' Wirth said.

It does have a large presence in region, however, with joint-venture refineries in South Korea, Thailand, Singapore, Australia and New Zealand and most of its 2 million bpd global capacity located in the Pacific basin.

DIVERSITY KEY Wirth, who took up the post in March after five years as head of the company's global trading operations, held out hope that diversity might drive Beijing to seek out multinationals.

China made early deals with foreign majors, but lately has concentrated on new refining investments with Gulf suppliers such as Saudi Arabia and Kuwait as Beijing puts a greater emphasis on partners who can help it ease anxiety about its growing share of crude oil imports, now nearing the 50 percent mark.

''If you were to go into a bilateral relationship with a single producer you have concentrated your supply risk... It may prove to be wise, it may not,'' said Wirth.

''If you look at a multinational's upstream operations, we have crude production all around the world. I don't subscribe to the view that, in a place like China with its growth, the door is ever closed to well-constructed business ventures.'' REUTERS SBA HS1333