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PetroChina sets sights on 45% market share

(China Daily/Agencies)
Updated: 2008-05-07 09:08

PetroChina, the nation's biggest oil producer, plans to increase its share of the domestic oil refining market to 45 percent by 2020 as demand for fuels and chemicals rises.

The State-controlled oil company will more than double annual refining capacity to 300 million tons by 2020, about 6 million barrels a day, Vice-President Shen Diancheng said on Tuesday. PetroChina currently accounts for about 40 percent of the nation's oil refining.

PetroChina and China Petroleum & Chemical Corp, or Sinopec, Asia's largest refiner, are boosting chemical production to supply manufacturers in the world's fastest growing economy. Rising wealth is driving increased sales of cars and pushing up consumption of gasoline and diesel. China will have to double refining capacity by 2020 to meet demand, Shen said.

"PetroChina and Sinopec are facing more and more competition from domestic rivals and are trying to shore up their market share," said Qiu Xiaofeng, an oil analyst at China Merchant Securities Co in Shanghai.

Sinopec plans to expand the capacity of its largest crude-oil processing plant by 15 percent by September next year to boost production of ethylene and fuels, its parent company said yesterday.

Sinopec Zhenhai Refining & Chemical Co's annual capacity will rise to 23 million metric tons, about 460,000 barrels a day, from 20 million tons, China Petrochemical Corp said in its company newsletter Sinopecnews.

PetroChina and Sinopec are expanding even as State curbs on fuel prices and record crude oil costs limit their ability to profit from selling fuels in the world's most populous nation. China controls fuel prices to limit their impact on inflation.

China's diesel prices are 2,840 yuan ($406.19) a ton lower than the global level and those of gasoline are 2,745 yuan a ton lower, Shen said. That's causing "large-scale" losses at China's State-controlled refineries, he said.

"Everything is in short supply now. The supply of diesel and gasoline are very tight at the moment. We still face pressure to ensure market supplies."

PetroChina's refining capacity will reach 165 million tons by 2010, about 40 percent of the nation's total, from about 140 million tons last year, Shen said. PetroChina plans to have six 10-million-ton-a-year refineries by 2010 and 18 such plants by 2020.

Rivals of PetroChina and Sinopec are increasing their market presence. China National Offshore Oil Corp, which has concentrated on oil and gas exploration, aims to increase its refining capacity fivefold to 60 million tons, Zhang Guoxiang, senior engineer at the company's Huizhou refinery, said recently.

Sinochem Corp, China's biggest chemical trader, is building a 12 million-ton-a-year refinery in the southern province of Fujian. The plant in Meizhou Bay will process 5 million tons of heavy crude when its first phase is completed by 2009, President Liu Deshu had said last year.

PetroChina's capacity to produce ethylene, a raw material used to make plastics, paints and household detergents, will rise to 4.57 million tons by 2010 and 12 million tons by 2020, compared with 2.71 million tons last year, Shen said.