Top oil producer PetroChina is set to build another large
refinery and an ethylene plant in Sichuan Province.
The energy conglomerate inked a strategic framework agreement
with the provincial government in Beijing yesterday to set up the
downstream facilities in Chengdu, capital of Sichuan, Zhang Ping, a
senior press official of the China National Petroleum Corporation
(CNPC), PetroChina's parent company, told China Daily.
According to industry insiders, the deal involves an investment
of more than 50 billion yuan, with the ethylene cracker costing
around 20 billion yuan.
The ethylene facility plan has been given a green light by
China's top economic planner, but it's not clear if the refinery
has official approval from the National Development and Reform
Commission (NDRC).
The refinery will process 10 million tons of oil every year. The
ethylene plant will produce 800,000 tons of the chemical annually,
Du Qinglin, Party secretary of Sichuan, was quoted by Bloomberg as
saying yesterday.
The NDRC this year approved a new PetroChina refinery in Guangxi, with an investment of 15.2 billion
yuan and a planned processing capacity of 10 million tons. It's
supposed to supply fuel to not only Guangxi, but also Yunnan and Guizhou provinces.
"Both facilities will better meet the rising demand from the
southwestern region. As the western part of China attracts more
investments for development, the southwest will witness robust
demand for fuel and chemical products. So, it makes sense to plan
new projects there," said Han Xuegong, a CNPC analyst.
Western China boasts sufficient energy facilities, but lacks
downstream processing capabilities, such as refineries and
crackers. "Therefore, it is of strategic significance to set up
downstream facilities there," the analyst said.
Western China's abundant oil and gas reserves will secure the
raw material supplies for PetroChina's planned refinery and
cracker, Han added.
Huang Wensheng, spokesman of Sinopec, Asia's top refiner,
declined to make any comment specifically on PetroChina's plans in
Southwest China; but, he said that before building a cracker, any
company has to be sure about its potential clients.
"Also, price and product quality are key elements to the success
of downstream business," Huang said.
(China Daily March 8, 2007)