Dalian refinery to receive Saudi oil in August

Saudi Arabia will launch in August its first shipment of oil to PetroChina's newly expanded refinery in the northern port city of Dalian.

Eric Watkins
Senior Correspondent

LOS ANGELES, July 28 -- Saudi Arabia will launch in August its first shipment of oil to PetroChina's newly expanded refinery in the northern port city of Dalian. This delivery will come a month ahead of the previously announced schedule and just a week after a similar shipment from Kuwait.

The Dalian refinery is scheduled to receive a very large crude carrier transporting 2 million bbl of Saudi Arab Light crude—the first of at least one such shipment a month for the rest of 2008, in line with a long-term supply agreement reached at end of 2007.

The Saudi cargo follows the Dalian facility's first intake of 270,000 tonnes of Kuwaiti crude, which the plant will start processing in August, according to China Petroleum News, an in-house paper run by PetroChina's parent China National Petroleum Corp.

The Dalian facility, the largest operated by PetroChina, is in the final stages of a 10.7 billion yuan expansion program aimed at doubling its capacity to 400,000 b/d.

Dalian is the second major Chinese refinery this year to begin processing Saudi oil. In May, China Petroleum & Chemical Corp (Sinopec) began taking Saudi crude for its new 200,000 b/d Qingdao refinery in eastern Shandong province.

Sinopec commissioned the 12.5 billion yuan Qingdao refinery in June. The new refinery has capacity to process 10 million tonnes/year of oil, enabling production of 7.08 million tpy of products and 2.03 million tpy of petrochemicals.

The Saudi shipments to Dalian and Qingdao are part of a 1-year agreement reached between China and Saudi Arabia for a 38% increase in supply for 2008 versus 2007 at about 720,000 b/d.

According to Chinese state media, Saudi Aramco is expected to sell 41% more oil this year to Sinopec alone.

The China Daily quoted Mohammed Al-Madi, regional vice-president and chief representative of Aramco in Beijing, as saying the company wants to deliver 32.4 million tonnes of oil to Sinopec this year compared with the 23 million tonnes delivered in 2007.

Al-Madi also said Aramco expects to increase its exports to Sinopec to 1 million b/d by 2010 and to 1.5 million b/d by 2015.

Contact Eric Watkins at hippalus@yahoo.com.

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