BP President: Company Not Ready to Build Refineries in China

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Researched by Industrial Info Resources (Sugar Land, Texas)-- BP Plc (NYSE:BP) (London) celebrated the opening of its new office in Shanghai in late January, but BP President Gary Dirks said at the ceremony that the company is not prepared to start building refineries in China. He cited the government's interference in pricing as one of the reasons.

Oil refining is the only business that BP does not have in China. Before the company makes a large investment needed to build a refinery, it said it will make sure to secure all related business aspects, including ones that involve the government.

BP has been developing its business since the 1970s and has become one of the largest foreign investors in China. The company recently announced a series of agreements with Sinopec and others when British Prime Minister Gordon Brown was visiting China. BP now operates businesses in the commercialization of clean energy, wind power and large-scale acetic acid production.

Analysts say BP's main concerns are policy limitations and the pricing system currently in place in China to regulate processed oil supply.

A Shanghai Security report stated that Dirks voiced criticism against China's processed oil pricing system, saying that the government's long-term low-price policy will distort information and harm the market.

Although BP is not yet ready to build refineries, it is steadily developing the business in China. The new offices in Shanghai comprise more than 20 departments, including retail, natural gas, industrial lubricant oil and some regional departments responsible for olefin and liquefied natural gas businesses in Asia.

The Shanghai offices will be BP's operating and support center in China, as Shanghai and its neighborhood are fast developing, said Dirks, who regards the new offices as a milestone for BP's development in China.

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