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Refinery expansion in Xinjiang approved
By Xie Ye (China Daily)
Updated: 2005-02-17 02:11

A petrochemical facility has been given the green light to expand, a move which will make it the largest refinery and petrochemical complex in the country.

Most of the crude oil for the facility will come by pipeline from Kazakhstan, a source that is being exploited to ease the country's oil shortages.

The factory, in Dushanzi, the Xinjiang Uygur Autonomous Region, will have a crude oil processing capacity of 10 million tons a year, up from the current six million tons.

Meanwhile, the firm will also expand its facilities to produce 1.2 million tons of ethylene products a year. The factory is now able to produce 220,000 tons of ethylene a year.

The construction of the expanded petrochemical facility, which will cost 27.2 billion yuan (US$3.3 billion) is expected to start soon and will be completed by 2008.

Most of crude oil fed into the Dushanzi factory will be imported through a 1,200- kilometre cross-border pipeline.

This links Atasu in Kazakhstan to Dushanzi, and is China's first major land oil import route.

Construction of the pipeline started last September. When the first phase is completed by the end of this year, the pipeline will be able to deliver 10 million tons of crude oil to Dushanzi.

It is set to double its capacity to 20 million tons a year after the completion of the second phase of development.

Due to the lack of crude oil, the factory has so far not reached full capacity.

Facility managers said the plant can now process only 4 million tons of crude annually.

"When the China-Kazakhstan oil pipeline doubles the capacity in the second phase development, the plant may also expand its refinery capacity beyond 10 million tons," said one manager.

To market its oil products, PetroChina, owner of the Dushanzi petrochemical plant, also plans to build a 2,000-kilometre refined oil pipeline to link the complex in Dushanzi to Lanzhou in Gansu Province and elsewhere.

The company manager said once the refinery and petrochemical project is completed, it is expected to generate revenue of more than 26 billion yuan (US$3.1 billion) a year.

As the output of Daqing oilfield in Heilongjiang Province - China's largest oilfield - declines after decades of production, the government is now looking at the largely-untapped Xinjiang as its most important supply base.

Oil companies are pouring billions of dollars into exploration in Xinjiang. They are also expanding a number of refinery and petrochemical facilities, and building crude oil and refined oil pipelines.

(China Daily 02/17/2005 page2)

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