China National Petroleum Corp (CNPC), the country's largest oil producer, began building an 8.2-billion-yuan refinery in the Ningxia Hui autonomous region on Sunday.

The project will have an annual refining capacity of 5 million tons. It is scheduled to come onstream at the end of 2010, CNPC said on its website.

Once in operation, the project will produce 1.73 million tons of gasoline and 2.38 million tons of diesel per year, with annual sales revenue of 15 billion yuan, it said.

The project is an important part of CNPC's plan to boost refining capacity along its oil pipelines in western regions such as Ningxia, it said.

The company earlier said it plans to invest 12 billion yuan this year in its Dushanzi refinery in Xinjiang, which would be the largest petrochemical project in the western region.

The company "has invested 18.6 billion yuan in the Dushanzi refinery and petrochemicals complex, and will accelerate construction of the project this year", CNPC said in an earlier statement.

Construction of the project started in 2005, with a total investment of around 30 billion yuan. It consists of oil refining facilities with a capacity of 10 million tons per year and ethylene production facilities with an annual capacity of 1 million tons.

Industry insiders said China will have 21 giant oil refining projects by 2010. These projects will have total processing capacity of 240 million tons per year, accounting for 57 percent of the country's total.

The country's third largest oil producer China National Offshore Oil Corp (CNOOC) said it plans to invest 45 billion yuan to expand its new Huizhou oil refinery project in Guangdong province, which is expected to come onstream next month.

The company signed a framework contract for the project on Aug 26 in Shenzhen, under which it will be expected to boost the capacity of the refinery to 22 million tons per year from the present 12 million during the 12th Five-Year Plan period (2011-15).

CNOOC will also add a new ethylene production project to the Huizhou refinery, with an annual capacity of 1 million tons.

The nation's oil companies are quickening their pace in oil processing to meet rising domestic demand. According to the China Petroleum and Chemical Industry Association, the nation processed 200 million tons of crude oil and produced 120 million tons of refined oil in the January to July period, an increase of 5.8 percent and 6.9 percent respectively over the same period last year.

The total output value of petrochemical products hit 3.83 trillion yuan in January-July period on high demand in world markets, representing a 32.4 percent increase on a yearly basis.

(China Daily September 23, 2008)