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BP talking to oil firms for refinery

By Zhi Hong (China Daily)
Updated: 2009-07-24 08:04

British oil major BP is in talks with Chinese partners to build a large refinery in the country to meet the growing domestic demand for refined oil, according to media reports, which a source separately confirmed to China Daily yesterday.

A customer uses a diesel pump at a BP petrol station in London. BP, together with PetroChina and Sinopec, operate 500 service stations each in Zhejiang and Guangdong. [Bloomberg News]

BP is now negotiating with domestic companies to build a joint-venture refinery, Chen Liming, president of BP China told China Business News in Shanghai. Chen did not disclose which company BP was talking to for the project.

But a source close to the matter yesterday told China Daily that BP was working with China's oil majors PetroChina and Sinopec on the project, tapping three coastal cities.

The company was in talks with Sinopec on a refinery in Beihai, Guangxi Zhuang autonomous region or Zhanjiang in Guangdong province, said the source, who declined to be named.

BP is also working with PetroChina to build a plant in Shanghai, he said.

But all these plans were still at a very early stage, and they needed approval from the government, he said.

When contacted, BP yesterday told China Daily in an emailed statement: "We continually explore options to expand and deepen our business in the country and a refinery could potentially complement BP's current asset portfolio."

"With a total investment of $4.6 billion, BP is a leading foreign investor in the Chinese energy sector, with all the BP businesses, including upstream, retail and chemicals, alternative energy, represented in the country," the company statement said.

Currently, BP is partnering with Sinopec on an ethylene plant in Shanghai, which has a production capacity of 900,000 tons per year. It is, by far, one of the largest petrochemical projects in China.

Industry insiders said that BP might consider integrating its potential China refinery with its petrochemical operations in Shanghai.

BP is now working together with both PetroChina and Sinopec to operate 500 service stations each in Zhejiang and Guangdong provinces.

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With a refinery in eastern China, BP can supply refined oil to these service stations, they said.

Under China's petrochemical stimulus plan, the country will build three or four oil refining bases in the Yangtze River Delta, Pearl River Delta, and Bohai Sea-rim economic zone. The oil refining bases will have a minimum refining capacity of 20 million tons each.

Together with the refining facilities, three or four ethylene projects with annual production capacities of 2 million tons each will also be built.

China's three main oil companies, PetroChina, Sinopec and CNOOC, have all quickened their pace in increasing their refining capacities. Foreign companies like Exxon Mobil, Saudi Aramco and France's Total have also entered the area by buying stakes in some refineries.

BP unloaded its 9.41 percent stake in Sinopec's Zhenhai refinery in early 2006.