BEIJING, July 2 (Reuters) - Russia's Rosneft ROSN.MM and its Chinese partner, China National Petroleum Corp (CNPC), will make a final investment decision in August on the planned multi-billion-dollar refinery in northern China, a Rosneft official said, more than four years after an initial deal.
Both companies have yet to agree on the supply of crude oil, after CNPC diverted the 300,000 barrels-per-day Russian crude earlier earmarked for the refinery to other Chinese plants, said the Rosneft official directly involved in the investment plan.
“Now the crude supply is the most complicated issue for the project to move ahead,” said the official, who declined to be named. The refinery was first agreed between the firms in 2006.
Under a $15-billion oil-for-loan deal agreed in April 2009, the Russian oil major agreed to transport 15 million tonnes, or 300,000 bpd of crude from 2011 to China via the East Siberian Pacific Ocean pipeline (ESPO) slated for operation in late 2010.
The pipeline has an extension to northeast China, where CNPC, parent of China's second-largest state refiner PetroChina 0857.HK, operates about ten refineries.
Rosneft was hoping the crude would go to feed the planned Tianjin refinery but CNPC allocated the oil to its subsidiary plants in northeast China including a newly upgraded plant in Liaoyang to process exclusively Russian crude.
“The 15 million tonnes is all we have from the ESPO pipeline. If we are asked to provide more, we will have to bid in the spot market,” said the official.
Top executives from Rosneft will meet their CNPC counterparts in Beijing around August to hammer out a final decision for the 200,000-bpd refinery estimated to cost $4-$5 billion, said the Rosneft official.
“For now, everything is a maybe.”
The firms have almost completed feasibility studies for the Tianjin refinery, based on assumptions that crude supply for the plant will be a mix of Middle Eastern and Russian oil, said the official. (Reporting by Chen Aizhu; Editing by Valerie Lee)
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