China National Offshore Oil Corp has acquired a controlling stake in a refinery in Shandong Province.

The company bought a 51-percent share in Shandong Haihua Group Co from the Weifang Municipal State-owned Assets Supervision and Administration Commission, unit Shandong Haihua Co said in a statement to the Shenzhen Stock Exchange. China National, parent of Hong Kong-listed Cnooc Ltd, is buying small oil processing plants to tap the country's demand for fuel. China turned 310 million tons of crude into fuels and chemicals last year. The so-called teapot refineries in Shandong have a combined annual processing capacity of about 45 million tons, Bloomberg News said.

Shandong Haihua Group, mainly a chemical producer, can refine 3 million tons of crude a year, the Securities Times said yesterday.

China National may invest 7 billion yuan (US$1.02 billion) in Shandong Haihua Group in the next three years to build an additional 5 million tons of capacity, the newspaper said.

China National is in talks to acquire seven independent refineries in Shandong, Liu Aiying, president of the Shandong Oil Refining Association, said on August 21. The company is "doing due diligence on several rather big privately owned processing plants in Shandong," China National said on March 18.

The nation's teapot refineries are mostly located in Shandong and Shaanxi provinces. China National is starting operations this month at its first refinery in Guangdong Province.

(Shanghai Daily September 9, 2008)