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China National Offshore Oil Corporation (CNOOC), China's largest offshore oil producer, laid the cornerstone for its wholly-invested oil refining project in Huizhou City, south China's Guangdong Province on Thursday.
Fu Chengyu, President of CNOOC, called the move "significant" for CNOOC to achieve its goal of establishing an integrated energy company which boasts not only an upper stream business including exploration and production, but also middle and downstream businesses such as oil refining and petrochemicals.
Located in the Dayawan economic and technological developing zone, the project covers an area of 2.37 square kilometers. With an investment of 19.3 billion yuan (US$2.38 billion), the project is the second largest project of CNOOC settled in Huizhou City with an investment of over 10 billion yuan.
Boasting an annual refining capacity of 12 million tons, mainly sour crude from CNOOC's offshore fields, the project is capable of producing 7.3 million tons of gasoline, diesel, and kerosene a year in line with international auto emission standards. Annual sales are expected to reach over 34 billion yuan.
Having been focusing on oil and natural gas exploration and production offshore China, CNOOC has been trying to expand its business to the middle and downstream of the oil industry in recent years.
The launching of the project is considered a significant step for CNOOC to achieve this goal.
When the project is put into production in 2008, most of the oil products will be sold in Guangdong Province, China's largest energy market, boasting 20 percent of oil product demand in the country, said Zheng Changbo, General Manager of the Refining and Petrochemicals Company of CNOOC.
Then CNOOC will operate gas stations in this region, he said. Currently, China National Petroleum Corporation, China's largest oil producer, and China Petroleum and Chemical Corporation, China's largest oil refinery, occupy most of the gasoline retailing market of the country while CNOOC has none.
The number of gas stations should be in line with CNOOC's oil refining capacity by then, said Zheng.
Huizhou City has become a major base for CNOOC to develop its refining and petrochemical business.
China's largest Sino-foreign jointly-invested project is just nearby the refining project. With an investment of 4.35 billion U.S. dollars, the petrochemical project will be put into production at the end of this month. Shell holds a 50 percent share in the project, CNOOC, 45 percent and the Guangdong provincial government, five percent.
An LNG power plant of CNOOC, with an investment of 8.5 billion yuan has also settled in the zone.
(Xnihua News Agency December 15, 2005)
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