Sinopec to Increase Production by Building Refinery in North China’s Hebei Province

---

Researched by Industrial Info Resources (Sugar Land, Texas)--China Petroleum & Chemical Corporation (Sinopec) plans to increase refining capacity by building a 10 million-ton refinery and a 1 million-ton ethylene plant as an important part of the integration of the Oil Refining and Chemical industries. The large-scale refinery will be located in the Caofeidian Industrial Zone in northern China’s Hebei Province, making it the first of its kind in the province.

A supplemental cooperation agreement was signed between Sinopec and Hebei Province. Sinopec will “go all out” with Hebei to promote the integration of the industries in Caofeidian, improve the transformation of the Oil Refining Industry in Shijiazhuang and extend the sales network of refined oil in Hebei Province, Sinopec General Manager Su Shulin said.

PetroChina Company Limited (PetroChina), another oil giant in China, also said it plans to build a petrochemical base in Caofeidian after it discovered the Jidong Nanpu Oilfield in China's Bohai Bay in which the three-level geological reserves of oil and gas are confirmed to be up to 1.18 billion tons. (For details see May 15, 2007, news article - CNPC Finds Large Oilfiend in Bohai Bay with Reserve up to One Billion Tons.)

But the Sinopec plan has priority, Su said.

Sinopec also announced that the construction of a 300,000-ton crude oil terminal in Caofeidian is underway.

According to the state’s development plan of oil refining and ethylene production, China will soon rapidly increase its capacity in the coming years. It will increase an annual processing capacity of 90 million tons of crude oil by 2010, enabling it to refine 400 million to 420 million tons of oil every year. Its annual production capacity of ethylene will reach 18 million tons, with an annual increase of 10 million tons.

As the engine of the national economy, Chinese coastal areas continue to be the most energy-demanding regions. So, oil companies have divided northern and southern China, increasing capacities in both regions.

Analysts say the main market of the Petrochemical Industry is in the south, so consolidation of market share in coastal areas is the goal for oil companies.

PetroChina and Sinopec are the only two companies that have integrated upstream and downstream processing in China, accounting for 51% and 36% of the national refining capability, respectively.

Industrial Info Resources (IIR) provides marketing communication services ranging from industrial database solutions to market forecasting, custom analytics, and specialty promotions that support high-level image campaigns.