CAPITAL: Beijing
MONETARY UNIT: Yuan Renmimbi
REFINING CAPACITY: 4,346,800 B/D
PRODUCTION: 3.2 million b/d
OIL RESERVES: 24 billion bbl
GAS RESERVES: 48.3 trillion cu ft
China`s long-term energy demand growth looked healthy in 1999, although the aftermath of Asia`s economic turmoil of 1997-98 dampened the outlook for consumption in the short term.
Datamonitor PLC, London, said that while coal would remain China`s primary energy source because of the country`s huge resources of that fuel, consumption of electric power and oil products would rise rapidly over 20 years, driven by economic growth, changing economic structure, and improving living standards.
In particular, demand for petroleum products was expected to more than double by 2010, while the country was expected to add 1.8 million b/d of refining capacity by 2010 to the 3.5 million b/d in 1999.
Datamonitor said China`s crude oil consumption would increase to 9 million b/d by 2010 from 4 million b/d in 1999.
"As has been the case over the last decade, demand for crude oil will grow at a higher rate than domestic production, meaning that import dependency will continue to rise," it said.
It predicted China would import 1.5 million b/d in 2000, with imports rising to 3 million b/d by 2010. Similarly, increasing demand for petroleum products would spur construction of refineries.
The increase in refining capacity was expected to come from consolidation of existing inefficient, small refineries and the addition of new plants.
"As the Chinese refining sector will be forced to open to foreign investors, it was expected that foreign refiners will directly contribute to one third of new refining capacity by 2010."
China`s consumption of diesel fuel, fuel oil, gasoline, and liquefied petroleum gas was expected to grow to 7 million b/d by 2010 from 3 million b/d in 1999, with LPG use showing the fastest growth.
LPG consumption was predicted to soar to 2.2 million b/d by 2010 from 300,000 b/d in 1999, while diesel fuel demand was expected to jump to 2.9 million b/d from 1.1 million b/d.
Meanwhile, Datamonitor said Chinese crude and petroleum products markets were expected to change due to restructuring of the state petroleum firms and the government`s move to encourage foreign investments.
Only two western firms had equity in Chinese refineries: Total with 20% of the Dalian plant and ARCO with 9.9% of the Zhenghai complex. But more foreign participation was anticipated during 2000-2010.
Datamonitorpredictedforeign involvement would grow because increasing reliance on high-sulfur Middle East crude would require China to upgrade refineries.
Also, domestic competition would force Chinese firms into foreign alliances. And the government was having problems financing new refineries, leading to increased reliance on equity joint ventures with foreign partners.
Offshore output
China`s offshore crude production fell about 11% to 14.5 million tonnes in 1999 from 16.3 million tonnes in 1998, the first drop in 5 years.
China National Offshore Oil Corp. (CNOOC) had increased output at an average 29%/year since 1994, largely due to cooperation with foreign oil companies.
It had signed about 140 production-sharing contracts with 70 foreign oil companies from 20 countries over the period.
The drop was inevitable because most of CNOOC`s major fields, in the South China Sea off the Pearl River Mouth delta, were declining.
Most of the decline came from China Offshore Nanhai East Co., a CNOOC subsidiary, whose production was expected to drop 16% from 1998`s level to 10.7 million tonnes.
To stem the production decline after 1999, CNOOC brought five fields on stream in 1998, adding up to 3 million tonnes/year of capacity.
The five fields were Pinhu in the East China Sea, Xijiang 24-1 in the Pearl River Mouth delta, Wei 11-4c and Wei 12-1 in the Beibu Gulf, and Jinzhou 9-3 in the Bohai Sea.
Pinhu, a joint venture of CNOOC, China National Star Petroleum Corp., and Shanghai Municipality, was expected to produce 600,000 tonnes of crude and 210 million cu m of gas in 1999.
CNOOC had targeted exports of 2 million tonnes of crude in 1999, down from 6 million tonnes the previous year. Most of CNOOC`s crude exports went to Australia.
A drop in onshore production prompted the export cut. The main onshore producers and state-owned China National Petroleum Corp. (CNPC) and China National Petrochemical Corp. (Sinopec) cut production in 1999 by a combined 2.2 million tonnes when low oil prices early in the year forced them to shut in marginal and high-cost production.
Onshore revival
CNPC went on a spending spree in late 1999 to boost its crude production in response to higher oil prices in the second half of the year.
CNPC intended to add a combined 600,000 tonnes/year of crude production capacity in six oil producing complexes: Liaohe and Jilin, in northeastern China; Dagang and Huabei, in northern China; and Tuha and Changqing, in northwestern China. The six complexes had combined production of 35 million tonnes/year.
Increasing crude production had been difficult for CNPC, whose major producing fields were in decline. The state firm also had to cope with reduced budgets for exploration and development and a marked cooling of interest from foreign petroleum companies willing to invest in China`s upstream sector.
CNPC`s decision to boost production followed a strong rebound in earnings in the first 8 months of 1999, the result of resurgent oil prices.
The firm was China`s largest crude producer, with production of about 110 million tonnes/year, about 68% of the national total.
WTO push
CNPC and Sinopec planned to cut about 976,000 jobs over 5 years in order to reduce costs and better compete in the global market.
CNPC planned to cut its work force to 1 million by 2004 from 1.5 million in 1999. Sinopec planned to reduce staff to 714,000 from 1.19 million by 2003.
As a result of the government`s policy of full employment, both of China`s major oil concerns had been grossly overstaffed, even by the bloated standards of other national oil companies.
CNPC and Sinopec would have made deeper cuts were it not for the fact the oil industry was one of China`s major employers, and the economy couldn`t bear the stress.
Liu Yan, petroleum division director of the State Administration of Petroleum and Chemicals Industries, explained, "China`s petroleum industry faces very serious challenges today. Our state oil companies have many inefficient units and very high costs of operations."
The changes were driven by China`s desire to join the World Trade Organization.
It had to build a lean oil industry before it dropped tariffs and opened its energy markets to potentially cheaper imports.
The government began preparing the oil industry in March 1998 when it ordered a wholesale reorganization and asset swap.
CNPC and Sinopec were given control of all main offshore fields, with the former taking over operations in the north and west and the latter in the south and east.
Since the revamp, CNPC, Sinopec, and CNOOC continued internal restructuring aimed at shedding unprofitable operations.
In early 1999, the government said it was satisfied with their progress and dropped tentative plans to dissolve them into even smaller companies.
Although better integrated, the oil firms were still burdened with too much refining capacity. CNPC and Sinopec were operating their plants at only 60% of capacity, on average.
In 1998, China announced plans to close small refineries with capacities less than 100,000 tonnes/year, reducing the nation`s capacity by 10%. But that process was moving slowly.
OIL decontrol
The plunge in world oil and petrochemical prices in 1998-99 forced China to slow its oil decontrol schedule.
In June 1998, the government launched a program that would have scaled domestic oil prices down to international levels by the end of 1999.
But the government delayed full decontrol until 2000 to help its oil companies remain profitable.
Liu said, "Domestic companies still face a lot of problems, so we can`t free the market as quickly as we would like.
"The impact on our domestic companies will be immense. We have to tread carefully and slowly, because earnings at state petroleum and petrochemical industries account for about 40% of all the earnings of state-owned enterprises."
Liu said faster oil price decontrol also could damage the health of China`s overall economy.
China planned to begin LNG imports in 2001-02. It said likely sites for LNG terminals were Shenzhen, Shanghai, and Guangdong provinces, all near existing LPG import facilities.
Also, CNOOC planned to buy 1.5 million tonnes/year of LNG from Qatar`s Ras Laffan LNG Co.
Tea kettles close
China closed down 59 "tea kettle" refineries by mid-1999, representing a combined capacity of about 10 million tonnes/year.
Local governments supervised all of the refineries, which were outside the control of CNPC and Sinopec.
China had a policy to close all 166 refinerieswithlessthan100,000 tonnes/year capacity. They had combined totalcapacityof30.01million tonnes/year.
The small refineries produced low-quality oil products that failed to meet the government`s benchmarks for crude supplies, safety, environmental protection, and product quality.
Local authorities opposed closure of the refineries, which they said were an integral part of the local economy.
Separately, China banned the construction of certain industrial facilities, including atmospheric distillation units that processed low-sulfur crude.
China had 4.8 million b/d of low-sulfur crude distillation capacity and expected to begin importing more sour crude as a result of declines in domestic sweet crude output.
The State Economic and Trade Commission also banned the construction of ethylene plants smaller than 600,000 tonnes/year, propylene plants smaller than 70,000 tonnes/year, and acrylonitrile-butadiene-styrene resin plants smaller than 100,000 tonnes/year. The ban nullified plans for about 201 projects in seven industries.
Natural gas
China`s long-dormant natural gas sector was awakening in response to government initiatives on opening markets and improving air quality.
For many years, gas was a relatively unimportant part of China`s energy mix, considered by central planners as too valuable to burn and in short supply.
Most gas was earmarked for fertilizer production. In 1998, over 45% of Sichuan province`s 244 bcf of marketed production was used to produce fertilizer, with much of the remainder used in the petrochemical industry. Only a small fraction, 31 bcf, was used for residential heating and cooking. None was used for power generation.
China`s gas industry had suffered from rationing and price ceilings that bore little resemblance to the nation`s true productive capability and costs. Consequently, gas consumption and production remained stunted at little more than 500-600 bcf/year for the last 20 years of the 1900s.
Meanwhile, China`s proved gas resources were estimated at almost 60 tcf, with recoverable reserves of over 37 tcf, sufficient to last 74-120 years at 1999 consumption rates.
The nation`s ninth 5-year plan had a pro-gas policy, proclaiming that China would consume 6-7 tcf/year by 2010. Much of the extra gas demand would be used to reduce carbon emissions from coal consumption or result from China`s plan to let the marketplace make energy choices.
China had a number of options for expanding its gas supplies. Even with its minimal gas exploration, plus coalbed methane reserves, it had 240 quadrillion btu or more of potential reserves.
China`s Natural Resource Commission estimated that China had 57 quads of proved gas reserves. Southwest China (mainly Sichuan province) had 19 quads, West China (Tarim and Tuha basins) 20 quads, South China Sea (mainly Nanhai basin) 8.5 quads, East China 6.3 quads, and Northeast China 4 quads.
Most of those reserves were essentially undeveloped, with reserves-to-production ratios ranging from 30 years in the Northeast to 65 years in Sichuan province and 243 years in West China.
China produced about 653 bcf/year from four established regions: Sichuan province, Shan-Gan-Ning (Ordos basin), Xinjiang Uygur autonomous region (Tarim, Chungeer, and Caidamu basins), and Nanhai West in the South China Sea.
CNPC forecast domestic production of 1 tcf by 2000, 2.5-2.8 tcf by 2010, and 3.5-3.8 tcf by 2020.
Gas pipelines
China`s gas transmission sector was in its infancy, providing supplies only to consumers near the producing fields.
The exception was an 860-km pipeline from the Ordos basin to Beijing. However, that pipeline operated well below capacity due to the lack of a viable gas market in Beijing.
Analysts said before the gas industry could expand efficiently, China had to restructure its national companies and liberalize the pricing and gas allocation system.
The development of China`s gas industry, both producing and consuming sectors, was predicated on building of an interprovincial and an international pipeline system capable of shipping gas from the western producing regions to the eastern consuming regions.
Analysts said China`s small regional system also needed to be upgraded. China`s latest 5-year plan contained a program to build such a system.
By 2000, it would upgrade regional pipeline systems and convert some town systems for manufactured gas to accept natural gas.
By 2010, it would build three national pipelines and two international pipelines to bring additional gas from Russia and Turkmenistan.
And by 2020, it would connect major inland and coastal cities to long-haul gas pipelines.
Also, CNPC planned to build a domestic pipeline system in three stages that would connect China`s major producing provinces to major inland and East Coast commercial and industrial centers.
Under Stage I, CNPC would construct a pipeline to ship natural gas east, from the Sichuan basin to Wuhan in Hubei province and then on to Shanghai. A pipeline would also be constructed to ship gas from North China (the Ordos basin), south to Xian, from where it would travel southeast to Xinyang in Henan province.
A spur would be built linking Xinyang to the main Sichuan-Shanghai east-west trunkline. Natural gas from Sichuan and the Ordos basin would provide Shanghai with 141 bcf/year by 2002.
A pipeline would also be constructed in western China to ship gas from the Qinghai basin to Lanzhou in Guangsu province.
Stage II would be construction of a pipeline from Lanzhou to Xian, allowing fields in western China to join northern fields and the Sichuan fields to provide gas to the middle and lower Yangtze River Valley.
Stage III would see the completion of a pipeline to link fields in the Tarim basin in far western China to the Stage I pipeline in Qinghai province. By 2010, the entire system should be capable of shipping 670 bcf/year of gas to eastern China.
Major pipelines
CNPC dropped plans to build a pipeline to move crude oil from Kazakhstan to northwestern China, explaining reserves in Kazakhstan`s Uzen and Aktyunbinsk oil fields were insufficient to justify construction.
The projected production from the fields available for the pipeline was estimated at less than 7.6 million tonnes/year, far below the pipeline design capacity of 25 million tonnes/year.
The plan called for CNPC to invest $2.4 billion over 7 years beginning in 1998 to build the 3,277-km pipeline to link Uzen and Aktyubinsk fields, and possibly Tengiz oil field, in Kazakhstan with China`s Xinjiang Uygur autonomous region.
If the project had proceeded, CNPC would have assumed all the risks. China agreed in 1997 to invest $4.3 billion to develop part of the crude reserves of Uzen and Aktyubinsk fields over 20 years.
It also was unclear how supergiant Tengiz oil field would figure into CNPC`s plans for the pipeline. A Chevron Corp. unit was developing the field, and its production was dedicated to a pipeline megaproject headed west.
CNPC had proposed to build the pipeline from Kazakhstan to Xinjiang`s capital city Urumqi. Completion would have been in 2006.
Russia and China agreed to consider building a $12 billion pipeline to China from Siberia`s Kovykta gas field, which had 870 billion cu m of proven gas reserves.
CNPC and OAO Sidanco, a Russian oil producer, were to conduct the 2-year feasibility study. The field was expected to yield up to 35 billion cu m/year.
CNPC also agreed with Yukos Oil Co. and Transneft, the operator of Russia`s oil pipelines, to study building a crude pipeline from Siberian sites to China. The 2,300-km line would cost about $3 billion.
CNPC retailing
Retail market competition was growing between China`s two biggest petroleum companies.
CNPC intensified efforts to expand and consolidate its position for oil product sales in eastern and southern China, the traditional strongholds for Sinopec.
The 1998 industry overhaul gave Sinopec 19 provinces in eastern and southern China to Sinopec as its market base, while CNPC got 12 provinces in northeastern and northwestern China. CNPC`s region was rich in crude resources but had few consumers, while Sinopec`s were the opposite.
CNPC operated six oil product terminals in the two regions, with a combined capacity of 600,000 cu m, and had a retail sales network capable of handling about 20 million tonnes/year of products in eastern and southern China.
In mid-1999 CNPC launched a petroleum exchange in Shanghai for spot trading of China-produced crude oil, gas, and key petrochemicals.
A $2.4 million joint venture of CNPC and Shanghai Commodity Exchange, the Shanghai Huayou Petroleum & Chemical Exchanges, was seen as a major step toward CNPC`s goal of establishing a foothold in eastern China`s oil products markets. Later, CNPC planned to implement spot trading of gasoline, diesel, and kerosine at the exchange.
To consolidate its marketing stronghold in eastern and southern China, CNPC established a joint venture with Ningbo Port Authority (NPA) in East China`s Zhejiang province to own and operate local jetties and oil products storage facilities.
CNPC Ningbo Storage Co. Ltd., 75% owned by CNPC, operated 142,000 cu m of oil products storage capacity and had access to NPA`s deepwater receiving terminals.
Meanwhile, CNPC established a foothold in Guangdong`s fuel oil market by seeking retail partnerships with local traders. Guangdong was China largest fuel oil consumer, using about 15 million tonnes/year of fuel oil, or about 50% of China`s total fuel oil consumption.
Duan Nan
Ivanhoe Energy Inc., Calgary, and partners planned a pilot development program on Duan Nan block in the Dagang oil producing region.
Duan Nan was part of the Kongnan project, which includes five other blocks.
The pilot project would begin with the drilling and testing of five wells and the workover of five existing wells by late 2000.
Ivanhoe began in 1999 by working over three of the 26 wells that produce oil on the six development blocks in the 22,400-acre Kongnan area.
Ivanhoe estimated the Kongnan project area had 394 million bbl of proved and probable oil in place. Crude was 30°-gravity.
Ivanhoe`s long-term plan called for the workover and drilling of 100 wells, including 56 of the area`s 82 existing wells, increasing output to 36,000 b/d by the end of 2003. Ivanhoe said production was a few thousand barrels per day in 1999.
Through its subsidiary Pan-China Resources Ltd., Ivanhoe was to receive 82% of the operating cash flow from the Kongnan project during the cost-recovery phase. That would increase to about 49% after payout.
East China Sea
China was promoting gas exploration and production in the East China Sea, where it brought the first field on production in 1999.
China Offshore Donghai Oil Co. (CODOC), Shanghai, a local affiliate of CNOOC, hoped to establish production of 100-175 MMcfd from the East China Sea by 2010.
CODOC started Pinghu gas and oil field in the Xihu trough in April 1999.
About 14 MMcfd was being transported via a 250-mile pipeline to 3,600 households in the Beicai district of Pudong in Shanghai. That was scheduled to increase to 42 MMcfd by mid-2000, with production continuing for 10-15 years.
Field size was 240 sq km, of which first stage development involved 20 sq km. Water depth was 287 ft.
Chinese entities had made numerous discoveries in the Xihu trough seaward of Pinghu field. Foreign operators drilling to the southwest on 1993 licensing round acreage encountered shows in numerous wells, but only one, Vicky-1, was termed potentially commercial.
Its operator, Primeline Petroleum Corp., London, shot a 3D seismic survey over the Vicky well and surrounding area. Primeline, the only non-Chinese operator in the East China Sea, held blocks 32/32 and 04/20 at opposite ends of the prospective trend.
Primeline drilled Vicky-1, 360 km southwest of Pinghu field and 140 km off Wenzhou, in 1997. It tested 9.86 MMcfd of gas, 117 b/d of hydrocarbon liquids, and 15.7 b/d of water from 33 m of Paleocene Lingfeng sands and shales at about 2,250 m. Reserves were estimated at 660 bcf of gas and 7.9 million bbl of condensates.
Primeline planned to drill another well in 2000.
Bohai Bay
Phillips Petroleum Co. unit Phillips China Inc. confirmed a major oil discovery on Bozhong Block 11/05 in China`s Bohai Bay.
Phillips acquired the right to explore the 2.3 million-acre block from CNOOC in 1994. Phillips held a 100% participating interest, but CNOOC kept the right to participate with a 51% interest in any development.
Phillips said, "Based on the results of the first three wells, the northern portion of this field was estimated to contain 400 million bbl of potentially recoverable reserves. We are extremely encouraged by these results and plan to turn our attention now to the as-yet unexplored southern end of the field."
The third well in the field was drilled to 6,084 ft TD and encountered a gross pay interval of more than 886 ft. About 290 ft of net pay was in the Minghuazhen and Guantao formations. It confirmed the same pay interval as the discovery but was drilled in an untested fault block about 1.5 miles north of and 1,000 ft lower on the structure than the discovery.
The third well tested at 850 b/d of 20°-gravity oil with a gas-oil ratio of 120 scf/bbl. A second test yielded production of 190 b/d of 18°-gravity oil with a gas-oil ratio of 190 scf/bbl.
Due to the shallow water depth of these wells, Phillips expected development and drilling costs to be relatively low. The company was studying development options with CNOOC, which operated production facilities nearby.
Phillips planned more drilling on other prospects of Bozhong 11/05 Block in 2000.
Changbei field
CNPC and Shell Exploration China Ltd. agreed to develop a major gas resource in northwestern China along with the infrastructure to transport and utilize the gas.
The deal called for Shell and CNPC to develop Changbei gas field in the Ordos basin, lay pipelines to move the gas to market in eastern China, and build gas-fired power generation plants in Northeast China that would use the gas.
Investments could total as much as $3 billion.
Shell, serving as the 1,600 sq km Changbei block operator, was to cover all the investment for the gas exploration, production, and pipeline construction. CNPC had drilled 30 gas wells on the block, which resulted in the discovery and delineation of a 73 billion cu m gas resource, of which 30% was estimated to be recoverable.
Shell planned to spend 2 years evaluating the field, which would include the drilling of several wells. Field development and pipeline construction were expected to begin in 2002.
CNPC and Shell planned to bring the gas field into production in 2003 and targeted initial production of 3 billion cu in/year for residential consumption and power generation in Beijing and the Shandong province cities of Tianjin, Hebei, and Shandong.
Pearl River
Santa Fe Snyder Corp. had a second oil discovery on Block 15/34 in the Pearl River Mouth basin in the South China Sea.
The Panyu 5-1-1 well, drilled 18 km east of the Panyu 4-2 discovery, encountered 400 net ft of oil-bearing sands in 20 individual reservoirs.
Two zones were tested. The first, at 2,136-43 m, flowed more than 3,300 b/d of 34°-gravity oil. The second, at 1,844-52 m, flowed as much as 530 b/d of 24°-gravity crude.
Santa Fe said the second wildcat confirmed the existence of a substantial hydrocarbon system in Block 15/34.
It said preliminary evaluations based on logging, testing, and 3D seismic indicated the second discovery to be potentially larger than the first wildcat, which had an estimated 50 million bbl of recoverable crude oil.
Santa Fe was drilling a third wildcat, the Panyu 10-3 prospect, 12 km southwest of Panyu 4-2 field.
Santa Fe Energy Resources of China Ltd. was operator of Block 15/34 and held a 50% working interest. SCS Resources Ltd., a unit of Western Atlas International Inc., had the rest. CNOOC had an option to participate with a 51% working interest in development.
CACT Operators Group started Huizhou (HZ) 32-5 oil field in the Pearl River Mouth basin. The first South China Sea project to use a subsea tie-back to a platform, HZ 32-5 was expected to reach flow of 27,000 b/d of oil from three wells.
CACT consisted of CNOOC 51% and Agip China BV, Chevron Overseas Petroleum Ltd., and Texaco China BV 16.3% each. It was producing 90,000 b/d of oil from four other fields on the Huizhou block.
Petrochemical complexes
BP Amoco PLC and Sinopec were studying the feasibility of building a world-scale ethylene cracker and derivatives complex in Shanghai.
BP Amoco said the Chinese government had approved the proposal for a 650,000 tonne/year plant, as had the Shanghai municipal and Zhejiang provincial governments.
The proposal was first introduced in 1996, when Sinopec and its Shanghai Petrochemical Co. agreed to consider a 50-50 joint venture with the former BP Chemicals Ltd. In July 1997, Sinopec and BP completed a prefeasibility study and submitted a $2.5 billion project proposal to the government.
BP Amoco and Sinopec planned to complete the joint feasibility report, negotiate a joint-venture contract, and complete other commercial agreements by the end of 2000.
The JV would be established by the end of 2001, with a view to completing construction of the cracker and derivatives plants by 2005.
BASF AG of Germany signed a joint venture deal with Sinopec Kantons Holdings Ltd. to build a $2.7 billion petrochemical plant at Nanjing. Start-up would be in 2004 or 2005. The complex would produce ethylene, propylene, and other chemicals.
Discoveries
Kerr-McGee Corp. had a discovery on Block 04/36 in Bohai Bay that logged more than 280 ft of oil pay. The 4,789-ft well was in 80 ft of water.
Kerr-McGee operated the block and had 81.8%, while Pendaries Petroleum Ltd. had the rest.
CNPC had a discovery in the Inner Mongolia Autonomous Region with estimated reserves of 20 million tonnes of crude. More drilling was planned.
CNPC had a discovery with estimated reserves of 100 million tonnes in Guqianshan, near Tianjin in northern China.
A Greka Energy Corp. unit and China United Coalbed Methane Corp. Ltd. signed a deal to jointly explore for coalbed methane in Fengcheng in East China`s Jiangxi province. Greka held a 49% interest and was operator.
The area covered 380,534 acres and had an estimated 1.2 tcf of reserves. Greka planned to drill at least 10 wells over 3 years and spend $4.6 million.
Pipelines, terminals
CNPC completed a gas pipeline in northwest China. The 39 MMcfd, 146-km pipeline in Shaanxi province linked Jingbian to Baoji via Xi`an and Xianyang. The line moved gas produced from CNPC`s Changqing gas field for local industrial and residential consumption.
CNPC was building a 503-km, 660-mm gas pipeline from Sichuan basin in southern China to Jinzhou, Hubei province, in central China. The line, with a capacity of 3 billion cu m/year, was estimated to cost 1.9 billion yuan. Completion was expected in 2000.
China`s Inner Mongolia Autonomous Region planned to build a $104 million, 501-km gas pipeline by late 2000. It would link Changqing gas field in western Uxin Banner county with the capital city of Hohhot.
Zhenhai Refining and Chemical Co. and Zhejiang Petroleum Co. planned to build a $60 million, 210-km products pipeline linking Zhenhai`s Ningbo refinery with Kang Bridge.
China planned to build four large crude oil tanker terminals by 2005: at Qidong, in Jiangsu province; at Cezi, in Zhejiang province; in Tianjin province, northern China, close to Beijing; and Lingao, in southern China`s Hainan province. The terminal at Qidong was designed to handle tankers up to 250,000 dwt; Cezi, for 200,000 dwt tankers; Tianjin, up to 150,000 dwt; and Lingao, up to 200,000 dwt. Each would have a handling capacity of 10-20 million tonnes/year of crude oil. China in 1999 had 11 crude oil tanker terminals, and only five were capable of handling tankers larger than 200,000 dwt.
Sinopec planned to build 300 gasoline stations for 2 billion yuan and buy 400-500 stations owned by local concerns. The plan was part of Sinopec`s larger strategy to increase its products market share by 10%. Sinopec owned about a tenth of the 86,000 gasoline stations in China.
Sinopec was planning to build a 150,000 cu m/day gas liquefaction plant in Zhongyuan, Henan province. Road tankers would transport the LNG, which was intended to supply neighboring residential areas.
Processing activity
Yanshan Petrochemical Co. planned to upgrade its ethylene production facilities near Beijing. In 1994, Yanshan expanded its ethylene output to 450,000 tonnes/year from 300,000 tonnes/year.
The planned upgrade would increase production to 660,000 tonnes/year. It included revamps of the ethylene, butadiene, and benzene units and construction of high-pressure polyethylene and polypropylene units.
Infineum Singapore Pte. Ltd. signed a deal with China`s Shanghai Gaoqiao Petrochemical Corp. for a lubricants additives joint venture.
It would build a $10 million, 20,000 tonne/year plant in Shanghai.
Construction would be completed in 2001. Infineum was a 50-50 joint venture of Royal/Dutch Shell and Exxon Corp.
Chevron Corp. and China`s Daqing Petrochemical Works started a 200,000 tonne/year base oil unit in Daqing in late 1999. It was completed a year earlier, but sluggish demand for base oil products delayed the start-up.
China`s Yangtze River Acetyls Co. started up a $200 million acetic acid plant at Chuanwei in southwestern China. The company was owned by BP Amoco PLC 51%, Sinopec 44%, and Chongqing Investment & Construction Co. 5%. Capacity was 150,000 tonnes/year.
Citgo (Dalian) Co. Ltd. planned to build a 50,000 tonne lubricants blender at Dalian, Liaoning province. The $20 million unit was due completion in late 2000.
Jilin Chemical Industrial Group was building a $144-million, 1,000-tonne/day ammonia plant at Jilin. Completion was due in 2002.
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