PetroChina, Venezuela Are in Talks Over Oil Refinery

by Hongwei Shang on May 6, 2008

in News

By Wang Ying

May 6 (Bloomberg) — PetroChina Co., the nation’s biggest oil producer, said it is in talks with a Venezuelan partner about a plan to build a refinery in China’s southern province of Guangdong.

PetroChina may sign an initial agreement in Venezuela this week, Vice President Shen Diancheng said in Beijing today. The refinery will have annual capacity of 20 million tons, about 400,000 barrels a day, he said.

Chinese oil refiners are expanding capacity to meet rising fuel demand in the world’s fastest-growing major economy. The plant would use orimulsion, an alternative boiler fuel, derived from Venezuela’s bitumen deposits. PetroChina and Venezuela may also agree to explore jointly for the fuel in the South American country, Shen said.

“The two sides are still selecting a site for the refinery,” Shen said. Chinese Vice Premier Hui Liangyu will visit Venezuela on May 8, he said, without giving further details.

The countries signed $11 billion of energy and transportation accords in August 2006 when President Hugo Chavez visited China. China will invest $2 billion in Venezuela’s oil industry, including developing the Junin oilfield, in which PetroChina parent China National Petroleum Corp., has an interest, Chavez said at the time.

PetroChina is also in talks with Qatar to build a refinery in the eastern province of Zhejiang, Shen said today, without elaboration.

Orimulsion, a replacement for fuel oil to burn in power plants, is derived from the bitumen that occurs naturally in Venezuela’s Orinoco belt. It is changed to a mixture of 70 percent bitumen and 30 percent water for transportation by tanker.

To contact the reporter on this story: Wang Ying in Beijing at ywang30@bloomberg.net.

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