Foreign investors are eyeing more opportunities as China's demand for oil
refining and petrochemicals increases.
According to a think-tank affiliated to China National Petroleum Corp (CNPC),
China's oil demand will hit 455 million tons while the country's total refining
capacity will surpass 400 million tons by the end of the 11th Five-Year Plan
period, set from 2006 to 2010.
"From this year to 2010, the average annual oil demand of China will grow at
6.5 percent per year. One forecast shows demand reaching 455 million tons in
2010," Gong Jinshuang, a veteran researcher at the Economic and Technology
Research Institute of CNPC, China's largest oil and gas producer, said on
According to a national industrial deployment plan, there will be many
refineries and ethylene crackers on stream by 2010 and China will witness 18
million tons of ethylene produced by 2010.
The country's refineries will run at 90 to 95 percent capacity by 2010, Gong
said. Ethylene output of China was 9.41 million tons last year, up 24.5 percent
To seize opportunities arising from the downstream sector of the oil
industry, not only State-owned giants, but also foreign investors are gearing
for more investment.
Mustafa Al-Sahan, general manager in charge of China investment at Sabic Asia
Pacific Pte Ltd, told China Daily that his firm plans to invest $5 billion to
set up an integrated refining and petrochemical project in Dalian, Northeast
The industrial complex is expected to include a 10-million-ton refinery, a
one-million-ton ethylene cracker and an 800,000-ton aromatics plant, according
to the blueprint.
Al-Sahan said the project will be a joint venture formed by several parties,
holding equal stakes. So far, there are already two parties involved, Sabic and
a private Chinese company.
Sabic is looking for another State-owed energy giant to join, Al-Sahan added.
The project is still subject to approval by the National Development and
Reform Commission (NDRC), China's top economic planner.
Sabic has invested in a petrochemicals plant in Tianjin, in partnership with
Sinopec, Asia's top refiner.
The Tianjian project has been given the green light by the NDRC and is
expected to be on stream by the fourth quarter of next year, the Sabic chief for
the investment in China said.
CNPC and Sinopec are either planning or expanding their refining and
petrochemical projects, such as in Sichuan, Fujian provinces and Guangxi Zhuang
Autonomous region, to better meet the country's future fuel and industrial
demand. China now is the world's fastest growing major oil market
Al-Sahan said the downstream segment of the Chinese oil industry has good
potential because of the robust future demand.
He said Sabic will not produce gasoline, which is
oversupplied in the market, but oil and petrochemicals that are in big demand.