* Total owns 22.4 pct stake in WEPEC plant
* Export-oriented WEPEC made losses on fuel exports - source
* Total lacked access to China's domestic fuel market
(Adds source comments on reasons for planned divestment)
By Chen Aizhu and Judy Hua
BEIJING, July 2 France's Total is in
talks with PetroChina to sell its stake in a Chinese
refinery after nearly two decades of investment, in what could
be the latest foreign energy firm giving up on a vast but
tightly regulated oil market in China.
Early this year, sources said BP was dropping plans
to invest in another PetroChina refinery in southern China,
mirroring the moves of several other projects that worried about
a slowdown in growth in the world's second-largest economy.
Total was the first foreign firm to get a toehold in China's
refining business, as an investor in the 200,000 barrels-per-day
West Pacific Petrochemical Corp (WEPEC) in the northeastern port
city of Dalian in the mid-1990s. The plant was then designated
as the country's first and only export-oriented refinery.
The French firm owns 22.4 percent of the plant which started
operations in 1996. It's jointly owned by state-run Sinochem
Corp and firms backed by the Dalian city government, but
PetroChina manages and operates it.
Industry officials familiar with WEPEC's operations said the
French firm has decided to divest the refinery stake due to
years of losses the plant incurred, and also due to lack of
access to the local Chinese market.
"Exports of most of WEPEC's fuel are making losses, due to
heavy taxes levied," said an industry official with direct
knowledge of WEPEC's fuel marketing.
"Now it's time to revamp the plant as facilities are old, to
produce cleaner fuels. And that requires new investment from
investors, I believe the French could not stand it any more,"
the industry official said.
A Total spokesman in China was not immediately available for
PetroChina has held talks with Total on the potential
purchase of the latter's stake in WEPEC, PetroChina's parent
company China National Petroleum Corp (CNPC) said on Wednesday.
PetroChina President Wang Dongjin met a Total vice president
on Tuesday, CNPC said on its website (news.cnpc.com.cn).
"Both sides exchanged views on domestic and overseas
upstream projects and a stake transfer in the WEPEC refinery,"
(Editing by Muralikumar Anantharaman)