Sinopec plant in Zhen­hai eyes big role

Re­fin­ery plans to in­vest 16.9 bil­lion yuan be­fore 2018 to re­struc­ture and up­grade its oil re­fin­ing busi­ness

China Daily (USA) - - BUSINESS - By LYUCHANG lvchang@chi­nadaily.com.cn

Zhen­hai Re­fin­ing & Chem­i­cal Co, Sinopec’s largest re­fin­ing unit, plans to build it­self into a world-class crude pro­cess­ing base, as it ben­e­fits from the re­fin­ing busi­ness amid the big­gest crude price slump in a gen­er­a­tion.

“If we want to play on a global stage, we should build our­selves into a world-class busi­ness. This means that we need a larger ca­pac­ity for high-qual­ity prod­ucts,” said Zhang Yum­ing, gen­eral man­ager of the Zhen­hai re­fin­ery.

Lo­cated in Ningbo, Zhe­jiang prov­ince, the Zhen­hai re­fin­ery is the most prof­itable com­pany un­der Sinopec, the world’s big­gest re­finer.

Last year, the com­pany said its profit al­most tripled com­pared with the pre­vi­ous year, but did not re­veal fur­ther de­tails about the fig­ure.

Zhang said the com­pany is ex­pected to in­vest about 16.9 bil­lion yuan ($2.53 bil­lion) be­fore 2018 in re­struc­tur­ing and up­grad­ing its re­fined oil busi­nesses.

The in­vest­ment came as a slump in crude prices ben­e­fits fuel pro­duc­ers such as Sinopec.

Sinopec an­nounced its first-half profit of 19.9 bil­lion yuan, down 21.3 per­cent year-on-year, ac­cord­ing to a re­cent fil­ing to theHongKong Stock Ex­change.

The other oil ma­jor PetroChina Co, the listed arm ofChi­naNa­tional Pe­tro­leum Corp, saw­its net in­come drop to 531 mil­lion yuan in the first half, a 98 per­cent de­cline.

Lin Bo­qiang, di­rec­tor of the Cen­ter for En­ergy Eco­nom­ics Re­search at Xi­a­men Uni­ver­sity, said the down­ward trend in oil prices is likely to pre­vail for a while, so a big­ger ex­po­sure to the re­fin­ing busi­ness will put Sinopec in a good po­si­tion to weather the losses caused by the worst tur­moil in the oil in­dus­try.

Sinopec pro­cessed 115.9 mil­lion met­ric tons of crude into fuel in the first half of the year. That’s roughly equal to al­most 4.67 mil­lion bar­rels a day, ac­cord­ing to Bloomberg cal­cu­la­tions.

Sinopec will raise re­fin­ing out­put in the sec­ond half of the year to 120 mil­lion tons, up 3.5 per­cent from the first six months, the com­pany said.

Sinopec cut cap­i­tal ex­pen­di­ture in the first half of the year by more than 40 per­cent from the same pe­riod in 2015 to 13.5 bil­lion yuan.

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