Sinochem delays trial runs at new Chinese refinery

By WAYNE MA

BEIJING -- Sinochem Group, China's fourth-largest oil and gas company by assets, has delayed the start of its $4.8-billion refinery on the southeast coast of China, a person familiar with the matter said Friday.

Sinochem has pushed back trial operations at its refinery from June due to construction delays, the person said.

The new refinery, based in the port city of Quanzhou, has the capacity to process 12 million metric tons, or 240,000 bpd, of crude oil each year, and it will mainly produce high-quality gasoline, kerosene and diesel fuel.

Sinochem said Wednesday in a statement that it purchased its first crude cargo for the refinery, which would ship in late September and arrive only in early November. The crude was purchased from Angola, it said, which primarily sells sweet crude.

In 2008, Sinochem signed a preliminary agreement to purchase sour crude from Kuwait and Saudi Arabia for the proposed refinery. Sour crude is typically cheaper than sweet crude because it contains more impurities. However, this makes sour crude more difficult and costly to refine.

The Quanzhou refinery will only process sweet crude during trial operations as a way to minimize damage to the refinery, the person added.

Sinochem is the largest chemicals company in China by production, but ranks a distant fourth in the oil and gas sector.


Dow Jones Newswires

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