Construction of CNOOC Huizhou Refinery Phase II delayed

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A notice published recently on the official website by China National Offshore Oil Corporation (hereinafter referred to as CNOOC) indicates that the second phase of CNOOC’s Huizhou refining project is expected to begin construction in May 2010. This differs from the company’s previous schedule, indicating that due to the impact of the financial crisis, the construction of large-scale domestic refining projects is being delayed. As CNOOC’s first large-scale refining project, the first phase of the Huizhou Refining Project was successfully put into operation on April 29 this year, putting an end to CNOOC’s history of having oil reserves but no refining capacity. The second phase of this project was originally scheduled to begin this year, but CNOOC’s announced start date is May 2010, indicating that its construction timeline has been delayed. CNOOC has not disclosed the exact original start date for construction, nor has it given any reasons for the delay; it merely announced that Guangdong Province and Huizhou City have officially expanded CNOOC’s 28-square-kilometer petrochemical industrial site in Daya Bay to 65 square kilometers. This expanded area includes the existing Phase 1 site, the Phase 2 site which is set to begin construction soon, a Phase 3 site covering 10 square kilometers, areas for mid- and downstream projects, fine chemical factories, and a deep-water operation base. “This is quite normal, as the market size is shrinking and there is no demand. ”Dong Xiucheng, deputy dean of the School of Business Administration at China University of Petroleum, said in an interview with our newspaper’s reporter. This has become yet another example of oil refining projects being delayed in the wake of the financial crisis. Previously, Liu Deshu, president of Sinochem Group, revealed that the commissioning date for Phase 1 of the Quanzhou refinery had been postponed from the originally planned 2010 to early 2011. Zhang Dafu, chairman of Jinling Petrochemical, which is part of Sinopec, also said in public that due to factors such as Sinopec’s tight cash flow and uncertain demand for refined oil products, the company will postpone its plan to expand its refining capacity by 48% by one to two years.