CNPC’s 20 million-ton oil refining project in Huilei, Guangdong approved

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The 20 million tons per year oil refining project in Huilei, Guangdong, jointly developed by CNPC and PDVSA, has been approved at the State Council level following prior approval from the National Development and Reform Commission to carry out preliminary work. The final implementation of this project enabled CNPC to fill the gap in refining capabilities in South China. According to media reports, this project is jointly developed by CNPC and Venezuela’s **Petroleum Company, with the Chinese side holding 60% of the shares and the Venezuelan side holding 40%. The project is located within the Dainanhai International Petrochemical Complex Industrial Park in Jieyang (Huilai). It is planned to build a world-class, super-large refinery with an annual refining capacity of 50 million tons, along with an ethylene production facility capable of handling millions of tons per year. The initial investment alone amounts to 58.5 billion yuan, with an annual oil refining capacity of 20 million tons. At present, CNPC has established seven refining bases with a capacity of 10 million tons each, giving it a total primary refining capacity of 150 million tons. Its large-scale refining capacity is concentrated in the northwestern provinces such as Xinjiang, Gansu, and Ningxia, as well as in Heilongjiang, Jilin, and Liaoning. However, since China’s consumption areas for refined oil are mainly in the southeast, CNPC has always lacked refining capabilities that could directly serve the South and East China regions; as a result, it has to rely on transporting oil from the north to the south or from the west to the east in order to allocate refined oil resources. In addition to the HuiLai project in Guangdong, the 20 million tons per year oil refining project in Taizhou, Zhejiang, which is being built with an investment of 80 billion yuan by CNPC and its joint venture partners, is also under construction. In addition, a 10 million tons per year oil refining project in Sichuan is also under construction. Upon completion of the aforementioned projects, CNPC’s refining and chemical production infrastructure in East China, South China, and Southwest China will become more comprehensive. According to CNPC’s annual report, in 2011, the company’s capital expenditures in its refining and chemical sector amounted to 42.781 billion yuan, of which 21.653 billion yuan was spent on the construction of refining facilities. CNPC expects its capital expenditures for the refining and chemical sector in 2012 to amount to 43.90 billion yuan, of which approximately 31.70 billion yuan will be used for the construction and expansion of refining facilities, primarily for large-scale refining projects such as those in Sichuan Petrochemical, Guangdong Petrochemical, North China Petrochemical, Yunnan Petrochemical, and Hohhot Petrochemical. With the commencement of construction of CNPC’s HuiLai project in Guangdong, companies located in the surrounding area are expected to benefit from its progress.