Dalian Port Co Ltd, which operates the mainland's second-largest oil port, is pondering a domestic stock listing as early as 2009 to fund a capacity and business expansion, a top executive said yesterday.

The firm, which serves PetroChina's giant but aging Daqing oilfield in the country's frigid northeast, plans to build 12 more crude-oil storage tanks around its port at Dalian, Liaoning province, with a collective capacity of up to 1.2 million tons.

General Manager Jiang Luning told Reuters that the firm, which projected a 20 percent leap in the amount of container cargo it handles in 2008, needs about 1 billion yuan ($140 million) just to fund that storage-capacity expansion over 2008 and 2009.

Chinese oil demand is expected to expand 4 to 5 percent in 2008 as the world's second-biggest energy consumer guzzles up crude to fuel its rip-roaring economy. The country still needs to import about half of the crude oil it needs.

Rival Ningbo Port Group - based in the country's top oil shipping destination of Ningbo - is also considering an A-share listing that could raise as much as $2 billion, as Chinese firms shoot for domestic listings despite speculation that regulators are now hesitant to flood weakening markets with new issues.

"Oil and related products are our major business, and it's hard to imagine that demand will fall given China's rapid development," Jiang said in an interview.

"Next year, (a listing) is possible but not definite, because it will depend on the market situation and other factors," he said.

Analysts say Dalian Port's earnings are more resilient than its listed rivals - which include Tianjin Port and Shanghai International Port - to a US recession because of a heavier reliance on oil than consumer goods.

Jiang was confident of the firm - which listed in the middle of 2006 and is now trading 86 percent above its IPO price of HK$2.58 - would side-step a potential hit to global shipping.

South Korea and Europe are the company's major container markets. Shipments to the United States accounted for about 9 percent of its total in 2007, Citigroup reckoned.

"Electrical products for companies, aquatic products, frozen foods and wood are our main container cargos - which are more resilient to economic slowdowns," Jiang said.

Dalian holds a pivotal position as an import terminal for crude oil from the Middle East - from where China sources the bulk of its imported oil - and as an export destination from Daqing, one of the country's oldest oilfields.

And the firm may benefit from Beijing's plan to revitalize the economy of Northeast China. Located at the entrance to Bohai Bay and the sole gateway for China's icy northeastern provinces of Liaoning, Heilongjiang and Jilin, it plans to eventually operate 18 container berths with a designed capacity of 10 million TEUs (twentyfoot equivalent units).

Reuters

(HK Edition 02/27/2008 page3)