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Yanchang Petroleum Group, China's fourth largest oil producer, has started building an integrated refinery project in Northwest China's Shaanxi Province, involving an investment of 6.1 billion yuan (US$796 million).

The project will be built in two phases and comprises a benzene extractor with annual capacity of 200,000 tons, a diesel hydrotreater with an annual capacity of 1.4 million tons and a gas distillation facility with an annual capacity of 600,000 tons.

The first phase of the project at Yangzhuanghe in Shaanxi will begin trial operations in the first half of 2009, with phase two due to come online in 2010, the company said.

The refinery will produce vehicle fuels which are compliant with the Euro III standard and will generate estimated sales of 17.1 billion yuan per year.

(US$1 = 7.64 yuan)