Sinopec to upgrade Changling, Baling refineries

Feb. 1, 2008
China Petroleum & Chemical Corp. (Sinopec) will invest about $2.2 billion to raise the production capacity of two domestic refineries.

Eric Watkins
Senior Correspondent

LOS ANGELES, Feb. 1 -- China Petroleum & Chemical Corp. (Sinopec) will invest about $2.2 billion to raise the production capacity of two domestic refineries.

The announcement came as Chinese officials, who have pledged a better system of supply, scrambled to meet growing domestic demand in the face of a particularly cold winter.

Sinopec will spend about $1.4 billion in expanding its Changling refinery in central China's Hunan province, by doubling its production capacity to 10 million tonnes/year.

It will spend an additional $834.3 million to upgrade its Baling plant, which processes oil from Changling into chemicals.

The move follows the central government's pledge to meet rising domestic fuel demand. The Chinese state-owned refiners are required to ensure the supply after transportation systems in many provinces were disrupted by the snowstorms.

The upgrade announcement came as Chinese officials struggled to cope with their country's worst winter storms in decades.

The China Meteorological Administration said the bad weather, including more snow, was expected to continue for at least the next 3 days in parts of eastern and southern China.

"Guizhou, Jiangsu, and Shandong have suffered their worst snowfalls in 50 years," the administration said. For Hunan and Shaanxi provinces, it was the worst in 20 years.

Sinopec's upgrade also coincided with reports that China reached new highs for oil production, imports, and consumption in 2007.

During the year, China produced 186.7 million tonnes of crude, up 1.6% from 2006, while its net oil imports were 159.28 tonnes, up 14.7%.

The country's oil consumption, representing the sum of net imports plus output, rose 7.3% to 346 million tonnes in 2007, meaning that that imports account for about 46% of China's oil consumption.

China refined 326.79 million tonnes of crude in 2007, representing a growth of 6.4%—about the same as the 6.3% recorded in 2006.

The output of refined oil products, comprised of gasoline, diesel, and kerosine, stood at 195 million tonnes, up 7.2% year-on-year or about 2.5% higher than in 2006.

Officials said that the diesel shortage that occurred in the country in second half 2007 led to an especially sharp rise in diesel imports, rising by 130.1% to 1.62 million tonnes, while diesel exports fell by 14.9% to 660,000 tonnes.

Contact Eric Watkins at [email protected].