China National Offshore Oil Corp (CNOOC), the nation's third
largest oil producer, plans to buy small refineries in Shandong
province to expand its oil processing business.
The company has signed a framework agreement with the Shandong
provincial government, company spokesman Liu Junshan told China
Daily yesterday.
"CNOOC will cooperate further with the refineries in the
province and boost its investment there," said Liu, without
disclosing details.
The company also signed cooperation agreements with other
provinces such as Hebei and Liaoning, he said, adding that it will
focus on the coastal areas.
Analysts said the move is part of CNOOC's efforts to widen its
focus on offshore oil and gas exploration to become an integrated
oil firm with a strong presence in the downstream sector.
Now is a good time for State-owned companies to buy so-called
teapot refineries, said Han Xiaoping, senior vice-president of
Beijing Falcon Pioneer Technology Co Ltd. Shandong and Guangdong
provinces are home to many teapot refineries that account for
around 10 percent of the country's total refining capacity.
These refineries are losing money from record-high crude costs,
as the price of refined oil products is controlled by the
government.
According to company officials, CNOOC's first oil refinery is on
track to start operating in October and it plans to add more
refining facilities to meet fast-growing demand for fuel.
The plant, located in Huizhou in Guangdong province, is key to
CNOOC's plans to become a fully integrated oil firm. The
21.8-billion-yuan project has an annual refining capacity of 12
million tons of crude oil.
Other Chinese oil companies have also quickened their pace in
Shandong. China National Petroleum Corp (CNPC), the nation's
largest oil producer, plans to build a refinery in the province to
boost its capacity.
The company has signed an agreement with the provincial
government. "CNPC will have all-round cooperation with Shandong on
large projects and an oil and natural gas sales network," the
company said.
CNPC will build the Shandong project in the coastal city of
Weihai, a company source earlier told China Daily.
The CNPC source said that apart from Shandong, it recently
signed cooperation agreements with other provinces such as
Shandong, Henan and Gansu.
The company's listed arm, PetroChina, is poised to increase its
oil refining volume by nearly 12 percent in 2007, reaching some 120
million tons, Liu Hongbin with PetroChina told China Daily
earlier.
China's largest refiner Sinopec Group is also building a 12.5
billion yuan refinery in Shandong's Qingdao. The project is
designed to process 10 million tons of crude annually. It will
produce 7.6 million tons of refined oil per year, a source with
Sinopec said.
The plant's annual sales revenue is expected to exceed 30
billion yuan, the source said.
(China Daily January 8, 2008)
