PetroChina, Sinopec await government okay

PetroChina and Sinopec, China’s leading oil firms, are awaiting final government approval to jointly construct a US$1.6 billion refinery to process Sudanese oil in Southwest China’s Guangxi Zhuang autonomous region. It will be the first time that the rival companies will work together on a joint project. The Qinzhou refinery would involve a total investment of RMB13 billion (US$1.64 billion). Sinopec, which enjoys a stronger marketing presence in the south than PetroChina, wanted to build a separate 8-million-ton-per-annum refinery in Beihai, a port city 100 kilometers from Qinzhou. Sinopec already operates a small refinery at Beihai, with an annual crude-processing capacity of 600,000 tons. Because of concerns about overlapping investments, the authorities ordered both companies to compromise on a joint plant in Qinzhou, which has a planned capacity of 10 million tons a year. Expected to go on-stream by 2010, the refinery will benefit from the huge market demand in southwestern China. (August 24, 2006)