Sinopec Expects to Start Zhanjiang Oil Refinery at End of July

China’s Sinopec Corp is expected to start commercial operations at its oil refining and petrochemical complex in Zhanjiang at the end of July, a company spokesperson said on Thursday.

The refinery is capable of processing 200,000 barrels per day (bpd) of crude oil and the petrochemical plant will produce 800,000 tonnes per year of ethylene. The project, with first phase investment of 40 billion yuan ($5.59 billion), is located in southern China’s Guangdong province.

The refinery received its first crude oil cargo of 128,900 tonnes from a very large crude carrier (VLCC) that arrived at the plant’s 300,000-tonne capacity berth in early May, Sinopec said on May 9.

The Zhanjiang refinery is Sinopec’s first capacity addition since the start up of the similar-sized Qingdao refinery on China’s east coast in 2009.

The Zhanjiang plant is located about 60 km (37 miles) from Sinopec’s 400,000-bpd Maoming refinery.

Sinopec also owns commercial crude oil storage tanks in Zhanjiang that serve as a delivery point for crude oil futures contracts traded on China’s International Energy Exchange (INE).

The Guangdong provincial government aims to set up an oil refining and petrochemical industry base to shore up its economy. German chemical giant BASF is also building a $10-billion integrated petrochemical project in Zhanjiang.

An Sinopec executive at the Zhanjiang refinery proposed during China’s annual parliament conference, the National People’s Congress (NPC), to include the Maoming-Zhanjiang base into the list of national-level petrochemical bases, according to a report on the proceedings released by the NPC on Monday.

Companies involved in the national petrochemical bases would be expected to receive preferential policies from the government on taxes and land purchases.

China has seven national-level petrochemical bases at Dalian in Liaoning province, Caofeidian in Hebei province, Lianyungang in Jiangsu province, Shanghai, Ningbo in Zhejiang province, Gulei in Fujian province and Huizhou in Guangdong.

$1 = 7.1558 Chinese yuan renminbi

(Reporting by Muyu Xu and Chen Aizhu; Editing by Christian Schmollinger)