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CNOOC's US$6.5b plan to expand

CHINA National Offshore Oil Corp will spend 44.2 billion yuan (US$6.5 billion) to expand a petrochemical complex that includes its first major refinery in the southern Guangdong Province.

The company aims to almost double the capacity of the refinery to take advantage of a revamped oil products pricing system.

CNOOC signed the investment agreement with the local government in Huizhou in the province on Tuesday, according to the city's government Website.

The offshore oil and gas major aims to boost its annual refining capacity to 22 million tons, or 440,000 barrels a day, from 12 million tons, and also add a 1-million-ton-a-year ethylene plant in the second phase expansion of its Huizhou complex, according to local media and company sources.

The expansion plan still needs central government approval.

CNOOC, parent of Hong Kong-listed CNOOC Ltd, started processing crude at its Huizhou refinery last month, as it diversifies from upstream exploration into downstream fuel distribution to compete with Sinopec Corp and PetroChina Co, the nation's two dominant refiners.

CNOOC also plans to build 300 pump stations in the province to sell products from the Huizhou plant.

China implemented a new fuel pricing mechanism in late December which aims at "reasonable" profit margins for refiners.

The new system is giving a boost to the nation's refining sector, long hit by high crude prices and a cap on domestic fuel prices.


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