Sinopec Plans to Build a 250,000-Barrel-Per-Day Oil Refinery in Shanghai

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Researched by Industrial Info Resources (Sugar Land, Texas)--China Petrochemical Corporation (Sinopec Group) (Beijing), the parent company of China Petroleum & Chemical Corporation (NYSE:SNP) (Sinopec), signed a strategic cooperation framework agreement with the Shanghai Municipal Government on October 11, 2008. According to the agreement, both parties will enhance cooperation on an integrated oil-refining and chemical project in Shanghai Chemical Industry Park. The first project will be the construction of a 250,000-barrel-per-day oil refinery. This will be the third oil refinery of Sinopec in Shanghai. Upon completion of the project, total oil refining capacity of Sinopec in Shanghai will reach about 850,000 barrels per day. However, the final partner for the project has not yet been determined, and the project is also subject to the approval of the National Development and Reform Commission.

Sinopec currently owns Gaoqiao Petrochemical, which has an annual processing capacity of about 240,000 barrels per day, and Shanghai Petrochemical, which is expected to process 218,000 barrels per day of crude oil this year and will be expanded to process 300,000 barrels per day in the future.

The agreement also mentions the ethylene expansion project at Shanghai Petrochemical. In July 2008, Sinopec received approval to relocate and expand its No. 1 ethylene unit from 150,000 tons per year to 600,000 tons per year. As the project application was made three years ago, Sinopec will make new arrangements based on current situations.

The newly proposed integrated project in Shanghai will be able to supply raw materials for Shanghai SECCO Petrochemical Company Limited, a joint venture of Sinopec and BP East China Investment Company Limited, a subsidiary of BP plc (NYSE:BP) (London), ensuring the supply of oil in Shanghai.

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