OGJ Oil Diplomacy Editor
LOS ANGELES, Mar. 9 -- China National Petroleum Corp. (CNPC) and Russia's OAO Rosneft, following their respective governments' recent agreement on the construction of the East-Siberia Pacific Ocean pipeline spur, may soon begin construction of their long-planned 200,000 b/d oil refinery in the Chinese coastal city of Tianjin.
The Sino-Russian refinery project has the firm support of the Tianjin city government. It has published a plan aimed at completing a feasibility study and an application report by June as well as winning approval by yearend from China's macroeconomy regulator, the National Development and Reform Commission.
The Tianjin city government said construction of the 21 billion yuan ($3.07 billion) plant, to be located in its Binhai chemical area, could be completed by 2012.
The idea for the refinery project received new life after Russia last month agreed to supply 300,000-bd of crude oil via a planned pipeline spur to China in return for $25 billion of Chinese loans (OGJ Online, Feb. 17, 2009).
Russia is constructing Phase 1 of the ESPO line, which extends from Taishet to Skovorodino near the border with China. Under the agreement between the two countries, Russia will build a 60-km spur from Skovorodino to the border, while China will construct a 970-km link to Daqing.
China then hopes to extend a pipeline from Daqing southward to Tianjin [See Map] to ensure feedstock supply to the new refinery.
Plans for the construction of the oil refinery were laid in November 2007, when CNPC and Rosneft founded the joint venture Vostok Energy Petrochemical (Tianjin). The JV aims at establishing the oil refinery as well as related facilities within the Tianjin Lingang industrial area during 2010-12 and enables the companies to jointly work on upstream and downstream oil and gas projects.
CNPC and Rosneft had planned to sign the contract last fall for the 51-49 joint venture, which is expected to refine as much as 15 million tonnes/year of oil at the rapidly developing Binhai New District, according to Liu Changbin, a spokesman for Tianjin Harbor industrial park.
However the signing apparently was delayed by suspension of talks between Russia and China over the ESPO pipeline spur last autumn. Although the two sides had agreed on the basic outlines of the spur development, they disagreed on interest rates connected with $25 billion in loans offered by the Chinese.
The project, to be developed in phases, would be one of the biggest investments in the oil and petrochemicals-oriented industrial park inside Binhai, Liu said.
He said the oil refinery development would not only feed an energy-hungry nation, but also fuel the future growth of Binhai, an emerging economic, financial, and hi-tech zone in the Bohai region.
Last April, anticipating the agreement, CNPC said that it would build 20 crude oil tanks and 20 oil products tanks in Tianjin, all to be located near the refinery planned with Rosneft.
CNPC said the crude oil tanks would have a combined capacity of 2 million cu m, or 12.58 million bbl, and the oil products tanks will have a combined capacity of 1 million cu m.
Earlier last April Shell Global Solutions said it also would join the CNPC-Rosneft joint venture refinery in Tianjin.
"Shell, with its global experience of applying technologies in an integrated way will complement Rosneft's strengths and experience on the Russian market," said Shell CEO Jeroen van der Veer.
In October of 2006, Vostok Energy won exploration licenses for two oil and gas blocks in eastern Siberiaboth located near the route of the ESPO line.
Contact Eric Watkins at email@example.com.