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Thrust on refining, ethene projects

By Fu Jing (China Daily)
Updated: 2009-05-19 07:57

China will boost oil-refining capacities and start large-scale ethene projects in the coastal areas by 2010, a national plan detailed yesterday said.

The central government listed the projects in the 'Petrochemical Stimulus Plan', which was unveiled yesterday.

According to the plan, China will build three or four oil refining bases in the Pearl River Delta, Yangtze River Delta and Bohai Sea-rim economic zone, which contribute nearly 60 percent to China's economy. The oil refining bases will have a minimum refining capacity of 20 million tons each.

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

The government also announced a batch of targets in the petrochemical stimulus plan and encouraged petrochemical companies to merge as demand gradually increased.

It said China's refineries should process 405 million tons of crude oil in 2011 from the 342 million tons of crude oil they processed in 2008. This means China would increase annual oil refining volume 18 percent by 2011.

The country will expand two to three large refineries in the near term and will phase out small processing plants, the central government said without elaborating. The government plans to have about 20 refining bases each with at least a 10 million-ton capacity.

The government also said China's ethene production will reach 15.5 million tons. However, China only consumed about 10 million tons of ethene in 2008.

A senior vice-president of the China Petrochemical Industry Association (CPIA) warned that overcapacity of ethene production is a worldwide problem and China should pay close attention to the trend.

The CPIA official said the global ethene production capacity was 20 percent higher than demand now. And new production bases will be built worldwide in the next three years. The overcapacity will only increase, he said.

"However, I am all for boosting refining capacities in the coastal areas," he said declining to be named.

China has exported nearly half of its oil consumed and the refining facilities in the coastal areas will help cut cost, Bai Yi, vice-president of Beijing-based Planning Institute of Petrol and Chemical Industry said commenting on yesterday's national plan.

Bai said the government should offer financial help for its State-owned companies to explore resources projects overseas and increase stockpiles since prices are currently lower.

She said yesterday's measures were a continuation of a batch of stimulus plans for various sectors unveiled by the central government since the beginning of this year.

The financial crisis has slowed China's economic growth. The demand for oil, coal and petrochemicals has deceased, their prices have been declining, and some companies have been losing money.

"But we should set higher targets and improve the competitiveness of the petrochemical industry," said Bai. "And we should be well prepared for the next high economic cycle."