China's new 160,000 barrel-per-day (bpd) Hainan
refinery is expected to receive its first cargo of crude oil in late April as it
prepares for start-up in May, Chinese trading sources said on Wednesday.
The launch of the $1.3 billion plant will be in line with the schedule set by
second-largest state oil group Sinopec Group, but earlier than many outside
observers had expected.
Its first cargo, a 2 million-barrel Very Large Crude Carrier (VLCC) of
Yemen's Masila crude, is due to arrive in late April at the refinery.
"Everything is on schedule," said one source close to the operations of the
refinery, located on tropical Hainan island, off the southern tip of China and
about 150 nautical miles (280 km) east of Vietnam's Hai Phong port.
If all goes smoothly the refinery, which will add about 3 percent to China's
total capacity, is aiming to process close to 3-4 million tonnes (22-29 million
barrels) of crude for the rest of the year, said the source.
The refinery has sophisticated hydrocracking units to produce premium quality
fuels, he added.
Sinopec has yet to decide marketing plans for the refined fuels, which could
go to supply the nearby Guangdong province, China's manufacturing hub and
largest regional energy user.
It may also export to Southeast Asian consumers such as Vietnam, which has
yet to build its own first major refinery.
Sources said Sinopec Group might transfer the refinery to its listed unit
Sinopec Corp. , Asia's largest refiner, at a later time.
The investment, which includes a 300,000-tonne-capacity crude oil terminal,
accounted for roughly one-seventh of the local economy of Hainan, whose governor
is the former chief of China's third-largest oil firm China National Offshore
Oil Company (CNOOC).
China, the world's second-largest oil consumer after the United States, plans
to add nearly 2.5 million bpd of refining capacity by 2010, or nearly 40 percent
of its current market size, to meet strong fuel demand on the back of robust
economic growth.