Sinopec adds 160,000-bpd crude unit in E.China plant

BEIJING, Oct 22 (Reuters) - Top Asian refiner Sinopec Corp (0386.HK) is building a new 160,000 barrel-per-day crude distillation unit at an eastern China plant, part of a plan to process more local crude and cut processing costs, company sources said.

The new crude facility, at Qilu refinery in Shandong province, is scheduled for start-up around June 2010, sources told Reuters on Thursday. Qilu has a capacity to process 220,000 bpd crude currently.

With this new unit, Sinopec wants Qilu to process more local crude -- a sour, acidic and heavy grade from Shengli field -- the country's second-largest onshore crude producer after Daqing, and relocate imported crudes for plants that are closer to big ports.

"The idea is to let Qilu source half its crude needs from the nearby Shengli field and let coastal plants take more imported crude. Cost-wise, it makes more sense," said one company official familiar with Qilu's development plans.

But that would barely affect Qilu's crude throughput next year, as the state refiner aims to mothball one old unit and switch off a second, so the total processing capacity will be about 240,000 bpd after the start of the new unit, they said.

Qilu is also adding a 900,000 tonne-per-year gasoline desulphurising unit due for completion by February, to meet the country's tighter fuel specifications for petrol starting Jan. 1, 2010, said a second company official.

After a decade-long boom of building multi-billion-dollar greenfield refineries along its east coast, China is shifting its focus towards upgrading existing plants.

The plants include those not on the coast but reached by an expanding pipeline network, part of an effort to be more cost efficient, an industry executive told Reuters this week. (Reporting by Chen Aizhu; Editing by Jacqueline Wong)