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CNPC to buy a stake in Malaysian refinery

CHINA National Petroleum Corp is to invest in a US$10-billion refinery project in Malaysia and to buy its fuel products for 20 years.

Merapoh Resources Corp, a privately-owned Malaysian company, will build the 350,000-barrel-a-day refinery in Kedah. It will be the country's largest refinery, and construction is to begin later this year with completion in 2013 to 2014.

Hong Kong Beijing Star Ltd and Winson Investment Ltd will each put in US$5 billion in exchange for 40-percent equity in Merapoh, with the remaining 20 percent being held by Merapoh's management, Merapoh Chairman Nazri Ramli said in Kuala Lumpur yesterday where it signed an agreement with the Kedah government on the project.

CNPC will take up a stake in the refinery in a later stage, he said.

CNPC signed a memorandum of understanding in 2007 to buy fuel from the Merapoh refinery.

The news came after PetroChina Co, CNPC's listed unit, won Chinese government approval to take a stake in a Nippon Oil Corp refinery in Japan last month and bought a 45.5-percent stake in oil refiner Singapore Petroleum Co for US$1.02 billion in May.

PetroChina is the second-largest refiner in China after Sinopec Corp. Analysts have said such overseas downstream expansion could help Chinese oil companies hedge against any future domestic refinery margin clampdowns.

CNPC said yesterday that PetroChina's refining and chemical segment posted a record profit in the first half since its Hong Kong listing in 2000.


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