Lanzhou Petrochemical Company to Build Large Refinery Complex in Northwest China

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Lanzhou Petrochemical Company, PetroChina's (NYSE:PTR) (Beijing) branch company in Lanzhou, in the northwestern province of Gansu, is planning to build 428,000 barrels per day (BBL/d) of refining capacity during the period of China's Twelfth Five-Year Plan (2011-15). Currently, China has only two oil refineries with capacities of this size. These include Sinopec's oil refinery in Zhenzhai, Zhejiang province, which achieved a capacity of 428,000 BBL/d in 2007 and PetroChina's oil refining base in Dalian, Liaoning Province, which achieved a 428,000-BBL/d capacity in 2008.

An official with Lanzhou Petrochemical said that the company now has a refining capacity of 214,000 BBL/d and constant decompress equipment under construction. Other expansion projects planned by Lanzhou Petrochemical still need to be approved by PetroChina.

To PetroChina, Lanzhou Petrochemical is much more than a company that simply sells oil and petrochemical products. The parent company has always viewed the Lanzhou branch as a company of strategic importance.

An official at PetroChina's headquarters said that western China, in particular the Xinjiang Uigur Autonomous Region, is vital for the future development of PetroChina. Statistics show that major oil fields in northeastern China have declined in production after having been exploited for 50 years. Meanwhile, western China has an estimated reserve of approximately 35 billion barrels, although proven resources account for only 22% of this total.

PetroChina also has quite a number of pipelines passing through Lanzhou: a 428,000-BBL/d crude pipeline, a 214,000-BBL/d refined-oil pipeline, and a 107,000-BBL/d refined-oil pipeline. Two other pipelines that are currently under construction are also set to pass through Lanzhou: the Shikong crude pipeline and the Lanzhengchang refined oil pipeline.

Lanzhou Petrochemical is PetroChina's largest branch in western China and integrates oil refining, petrochemical production and chemical fertilizer production. According to statistics, in 2007 the branch had a refining capacity of 225,000 BBL/d and an ethylene production capacity of 700,000 tons per year. Lanzhou Petrochemical had an annual revenue of $8.8 billion in 2008 and plans to raise income to $14.6 billion by the end of 2015.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.