BEIJING (Reuters) - State-run China National Petroleum Corp (CNPC) and Petroleos de Venezuela SA (PDVSA) will start building their mega joint refinery on China’s southern coast later this month, a move would pave the way for more Venezuelan oil to flow to the world’s second-largest oil user.
CNPC, which operates key businesses via PetroChina (601857.SS)(0857.HK)(PTR.N), has been preparing for a formal construction kickoff of the 400,000 barrels-per-day (bpd) Jieyang plant in the coming weekend, two company officials said.
Construction of the plant in the eastern part of Guangdong province could take three to four years, a CNPC planning official said.
Caracas’ oil sales to China could almost triple on completion of the refinery, which is designed to process Venezuelan heavy oil.
China’s environment watchdog cleared the way for the 57.3 billion yuan ($9.08 billion) refinery in January last year and the State Council, the country’s cabinet, was reported by Chinese media to have endorsed the project recently.
CNPC owns 60 percent of the refinery and PDVSA 40 percent.
It would be the second major stronghold for CNPC in the south China market after it started up its 200,000-bpd Qinzhou refinery in Guangxi in late 2010.
CNPC is also considering a 400,000-bpd refinery and a 1.2 million tonne-per-year ethylene complex in Taizhou in Zhejiang province with partners Qatar Petroleum and Royal Dutch Shell(RDSa.L).
China Petrochemical Corp, which operates refineries via China Petroleum and Chemical Corp (Sinopec Corp)(600028.SS)(0386.HK), is the leading fuel supplier in south China but its dominance is being eroded by CNPC and China National Offshore Oil Corp (CNOOC).
($1 = 6.3085 Chinese yuan)
Reporting by Jim Bai and Ken Wills; Editing by Kim Coghill