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CNPC to expand Liaoyang project

By Wan Zhihong (China Daily)
Updated: 2009-07-17 08:03

China National Petroleum Corp (CNPC), the country's largest oil and gas producer, yesterday said it had started expansion of its Liaoyang refinery in northeastern China to prepare for more oil imports from Russia.

The company will add some facilities to the project, including hydrocracking unit, hydrorefining unit, and sulphur removing and recovering unit. It will also add other facilities, including reserve tanks, CNPC said on its web site yesterday.

After completion at the end of 2010, the Liaoyang project will be able to process 10 million tons of crude every year, with feedstock coming from Russia, said the company.

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An oil pipeline linking Russia's far east to China's northeast is set to start operation by the end of 2010, Zhou Jiping, vice-general manager of CNPC earlier said in Beijing.

The pipeline will transport 15 million tons of crude oil annually from Russia to China from 2011 to 2030.

China and Russia signed several energy cooperation agreements in February, which included the pipeline construction project, a long-term crude oil trading deal and a financing plan between the two countries.

China is further diversifying sources to ensure sustainable supplies. The Middle East, Africa and Asia-Pacific are presently its three main suppliers of crude.

The gap between domestic consumption and production is the main cause for the increase in imports. Statistics showed that China's oil consumption experienced around 5 percent annual growth in recent years. However, the country's crude oil production only saw 2 percent increase year-on-year.

Last year China imported around 179 million tons of oil, and imports accounted for 51 percent of total crude oil demand.

China imported 11.6 million tons of crude oil, mostly via rail, from Russia in 2008, down 20 percent from a year earlier, Chinese customs data showed.